Exhibit 10.51
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THIS LEASE AGREEMENT HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO
THE EXTENT, IF ANY, THAT THIS LEASE AGREEMENT 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
AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY
COUNTERPART OTHER THAN THE ORIGINAL EXECUTED COUNTERPART
CONTAINING THE RECEIPT EXECUTED BY LESSOR OR, IF LESSOR HAS ASSIGNED ITS
RIGHTSTO A THIRD PARTY IN ACCORDANCE WITH THIS
LEASE AGREEMENT, SUCH THIRD PARTY ON THE
SIGNATURE PAGE OF THIS LEASE AGREEMENT.
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DATED: January 22, 1997
ACG ACQUISITION VIII LLC
(Lessor)
- and -
ALOHA AIRLINES, INC.
(Lessee)
------------------------------
LEASE AGREEMENT 804
- relating to -
Boeing 737-2Q9 Aircraft
Manufacturers Serial No: 21719
U.S. Registration Xxxx N804AL
------------------------------
FELTMAN, KARESH, MAJOR & XXXXXXX,
Limited Liability Partnership
Carnegie Hall Tower
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
RECORDED
FEDERAL AVIATION ADMINISTRATION
Date 3-19-97 Time 12:32 pm
Conveyance Number RR011675
Xxxxxx Xxxxxxx
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THIS LEASE AGREEMENT HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO
THE EXTENT, IF ANY, THAT THIS LEASE AGREEMENT 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
AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY
COUNTERPART OTHER THAN THE ORIGINAL EXECUTED COUNTERPART
CONTAINING THE RECEIPT EXECUTED BY LESSOR OR, IF LESSOR HAS ASSIGNED ITS
RIGHTS TO A THIRD PARTY IN ACCORDANCE WITH THIS
LEASE AGREEMENT, SUCH THIRD PARTY ON THE
SIGNATURE PAGE OF THIS LEASE AGREEMENT.
--------------------------------------------------------------------------------
DATED: January 22, 1997
ACG ACQUISITION VIII LLC
(Lessor)
- and -
ALOHA AIRLINES, INC.
(Lessee)
------------------------------
LEASE AGREEMENT 804
- relating to -
Boeing 737-2Q9 Aircraft
Manufacturers Serial No: 21719
U.S. Registration Xxxx N804AL
------------------------------
FELTMAN, KARESH, MAJOR & XXXXXXX,
Limited Liability Partnership
Carnegie Hall Tower
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
TABLE OF CONTENTS
CLAUSE PAGE
1. DEFINITIONS and INTERPRETATION .............................................................. 1
1.1 Definitions ........................................................................ 1
1.2 Interpretation ..................................................................... 14
2. REPRESENTATIONS and WARRANTIES .............................................................. 15
2.1 Lessee's Representations and Warranties ............................................. 15
2.2 Lessee's Further Representations and Warranties ..................................... 16
2.3 Repetition .......................................................................... 17
2.4 Lessor's Representations and Warranties ............................................. 17
2.5 Repetition .......................................................................... 18
3. CONDITIONS PRECEDENT ........................................................................ 19
3.1 Lessor's Documentary Conditions Precedent ........................................... 19
3.2 Lessor's Other Conditions Precedent ................................................. 20
3.3 Lessor's Waiver ..................................................................... 20
3.4 Lessee's Conditions Precedent ....................................................... 20
3.5 Lessee's Waiver ..................................................................... 21
4. COMMENCEMENT ................................................................................ 21
4.1 Leasing ............................................................................. 21
4.2 Delivery ............................................................................ 21
4.3 Acceptance and Risk ................................................................. 22
5. PAYMENTS .................................................................................... 22
5.1 Security Deposit; Letter of Credit .................................................. 22
5.2 Rental Periods ...................................................................... 24
5.3 Basic Rent .......................................................................... 24
5.4 Payments ............................................................................ 24
5.5 Gross-up ............................................................................ 25
5.6 Taxation ............................................................................ 25
5.7 Information ......................................................................... 26
5.8 Taxation of Indemnity Payments ...................................................... 26
5.9 Default Interest .................................................................... 27
5.10 Contest ............................................................................. 27
5.11 Absolute ............................................................................ 28
6. MANUFACTURER'S WARRANTIES ................................................................... 29
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TABLE OF CONTENTS
continued
CLAUSE PAGE
6.1 Assignment .......................................................................... 29
6.2 Proceeds ............................................................................ 30
6.3 Parts ............................................................................... 30
6.4 Agreement ........................................................................... 30
7. LESSOR'S COVENANTS and DISCLAIMERS .......................................................... 31
7.1 Quiet Enjoyment ..................................................................... 31
7.2 Maintenance Contribution ............................................................ 31
7.3 Registration and Filings ............................................................ 31
7.4 Agreed Maintenance Performers ....................................................... 32
7.5 Exclusion ........................................................................... 32
7.6 Lessee's Waiver ..................................................................... 32
7.7 Lessee's Confirmation ............................................................... 33
8. LESSEE'S COVENANTS .......................................................................... 33
8.1 Duration ............................................................................ 33
8.2 Information ......................................................................... 33
8.3 Lawful and Safe Operation ........................................................... 35
8.4 Taxes and Other Charges ............................................................. 37
8.5 Sub-Leasing ......................................................................... 37
8.6 Inspection .......................................................................... 40
8.7 Protection of Title ................................................................. 40
8.8 General ............................................................................. 41
8.9 Records ............................................................................. 42
8.10 Registration and Filings ............................................................ 42
8.11 Maintenance and Repair .............................................................. 43
8.12 Removal of Engines and Parts ........................................................ 44
8.13 Installation of Engines and Parts ................................................... 45
8.14 Non-Installed Engines and Parts ..................................................... 47
8.15 Pooling of Engines and Parts ........................................................ 47
8.16 Equipment Changes ................................................................... 48
8.17 Title to Engines and Parts .......................................................... 48
8.18 Third Parties ....................................................................... 49
9. INSURANCE ................................................................................... 49
9.1 Insurances .......................................................................... 49
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TABLE OF CONTENTS
continued
CLAUSE PAGE
9.2 Requirements ........................................................................ 49
9.3 Insurance Covenants ................................................................. 50
9.4 Failure to Insure ................................................................... 51
9.5 Continuing Indemnity ................................................................ 52
9.6 Application of Insurance Proceeds ................................................... 52
10. INDEMNITY ................................................................................... 53
10.1 General ............................................................................. 53
10.2 Mitigation .......................................................................... 54
10.3 Duration ............................................................................ 55
11. EVENTS OF LOSS .............................................................................. 55
11.1 Total Loss .......................................................................... 55
11.2 Requisition ......................................................................... 56
12. RETURN OF AIRCRAFT .......................................................................... 57
12.1 Redelivery .......................................................................... 57
12.2 Final Checks ........................................................................ 57
12.3 Final Inspection .................................................................... 58
12.4 Non-Compliance ...................................................................... 59
12.5 Export Documentation ................................................................ 59
12.6 Acknowledgment ...................................................................... 59
12.7 Maintenance Program ................................................................. 60
12.8 Storage ............................................................................. 60
13. DEFAULT ..................................................................................... 61
13.1 Events .............................................................................. 61
13.2 Rights .............................................................................. 65
13.3 Export .............................................................................. 65
13.4 Default Payments .................................................................... 66
14. ASSIGNMENT and TRANSFER ..................................................................... 66
14.1 No assignment by Lessee ............................................................. 67
14.2 Lessor Assignment ................................................................... 67
14.3 Grants of Security Interests ........................................................ 69
14.4 Sale and Leaseback by Lessor ........................................................ 70
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TABLE OF CONTENTS
continued
CLAUSE PAGE
14.5 Further Acknowledgments ............................................................. 71
14.6 Certain Protections for Lessee's Benefit ............................................ 71
15. MISCELLANEOUS ............................................................................... 71
15.1 Waivers, Remedies Cumulative ........................................................ 71
15.2 Delegation .......................................................................... 72
15.3 Appropriation ....................................................................... 72
15.4 Currency Indemnity .................................................................. 72
15.5 Payment by the Lessor ............................................................... 73
15.6 Severability ........................................................................ 73
15.7 Remedy .............................................................................. 73
15.8 Expenses ............................................................................ 73
15.9 Time of Essence ..................................................................... 74
15.10 Notices ............................................................................. 74
15.11 Law and Jurisdiction ................................................................ 75
15.12 Sole and Entire Agreement ........................................................... 76
15.13 Indemnities ......................................................................... 76
15.14 Counterparts ........................................................................ 76
15.15 Confidentiality ..................................................................... 76
SCHEDULES
1. Aircraft Specification 76
2. Certificate of Acceptance 804 80
3. Operating Condition at Redelivery 84
4. Insurance Requirements 89
5. Form of Legal Opinion 94
6. Form of Letter of Credit 95
7. Form of Semi-Annual Status Report 96
-iv-
THIS LEASE AGREEMENT is made the 22nd day of January, 1997
BETWEEN:
(1) ACG ACQUISITION VIII LLC, a Delaware limited liability company, having
its principal place of business at Three Stamford Landing, 00
Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, X.X.X. (the "LESSOR"),
and
(2) ALOHA AIRLINES, INC., a Delaware corporation having its principal place
of business at 000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxx 00000 (the "LESSEE").
WHEREAS:
(A) The Aircraft has previously been owned and operated by the Lessee.
(B) Pursuant to a Purchase Option Agreement 804, dated as of September 26,
1996, between Lessee, as seller, and Lessor, as buyer (the "Purchase
Agreement"), Lessor has exercised its option to purchase the Aircraft
from Lessee, and Lessor has agreed to lease the Aircraft to the Lessee
with effect from the purchase of the Aircraft upon and subject to the
covenants, terms and conditions set out in this Agreement.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement the following expressions shall, unless the context
otherwise requires, have the following respective meanings:
ACTUAL COST as it applies to any maintenance work on the
Aircraft means the actual cost of
replacement parts plus the cost of the
associated labor at Lessee's in-house labor
rates (if the work is performed by Lessee)
or at third party costs charged to Lessee
(if the work is performed by third parties)
and shall in no event include late charges,
interest or other similar amounts.
AFFILIATE in relation to any person, any other person
controlled directly or indirectly by that
person, any other person that controls
directly or indirectly that person or any
other person under common control with that
person. For this purpose "control" of any
entity or person
-1-
means ownership of a majority of the voting
power of the entity or person.
AGREED MAINTENANCE PERFORMER the Lessee or any other reputable
maintenance organization that is (i)
experienced in maintaining aircraft and/or
engines of the same type as the Aircraft and
the Engines, (ii) duly certificated by the
FAA under FAR Part 145, and (iii) not
objected to by Lessor pursuant to Clause
7.4.
AGREED MAINTENANCE PROGRAM the Lessee's current Maintenance Program, as
the same may be amended from time to time in
accordance with this Agreement.
AGREED VALUE $6,000,000.
AIRCRAFT the aircraft described in Part 1 of Schedule
1 (which term includes, where the context
admits, a separate reference to all Engines,
Parts and Aircraft Documents).
AIRCRAFT DOCUMENTS the documents, data and records identified
in Part 2 of Schedule 1 and all additions,
renewals, revisions and replacements from
time to time made in accordance with this
Agreement.
AIRFRAME the Aircraft, excluding the Engines and the
Aircraft Documents.
APU (i) the auxiliary power unit listed in
Schedule 1, (ii) any and all Parts, so long
as such Parts are incorporated in, installed
on or attached to such auxiliary power unit
or so long as title to such Parts is vested
in the Lessor in accordance with the terms
of Clause 8.17(a) after removal from such
auxiliary power unit, and (iii) insofar as
the same belong to Lessor, all
substitutions, replacements or renewals from
time to time made in or to such auxiliary
power unit or to any of the Parts referred
to in clause (ii) above, as required or
permitted under this Agreement.
APPRAISAL PROCEDURE shall mean, with respect to any amount to be
determined, the amount mutually agreed by
Lessor
-2-
and Lessee or, if Lessor and Lessee are
unable to agree upon any such amount to be
determined, the average of the amounts
determined by three FAA-approved service.
centers in the continental United States,
one such service centers appointed by
Lessor, one by Lessee and one by their
appointed service centers, except that if
any party fails to appoint a service center
the Manufacturer or the Engine Manufacturer
(whichever is appropriate) shall be deemed
appointed.
ASSIGNMENT any present or future assignment by the
Lessor in favor of the Lender of the
Lessor's rights under this Agreement as
security for its obligations to the Lender.
AVIATION AUTHORITY the FAA or (if the State of Registration
ceases to be the United States of America)
the authority and/or Government Entity
and/or agency which, under the laws of the
State of Registration, from time to time (a)
has control or supervision of civil
aviation; or (b) has jurisdiction over
registration, airworthiness or operation of
the Aircraft.
BASIC RENT all amounts payable pursuant to Clause 5.3.
BUSINESS DAY a day (other than a Saturday or Sunday) on
which business of the nature required by
this Agreement is carried out in Stamford,
Connecticut and the State of Incorporation
or, where used in relation to payments, on
which banks are open for business in
New
York,
New York and Honolulu, Hawaii.
CERTIFICATE OF ACCEPTANCE a certificate in the form of Schedule 2 to
be completed and executed by the Lessee on
Delivery.
CYCLE one take-off and landing of an airframe.
DAMAGE NOTIFICATION THRESHOLD $500,000.
DEFAULT any Event of Default and any event which
with the giving of notice, lapse of time,
determination of materiality or fulfilment
of other condition or any
-3-
combination of the foregoing would
constitute an Event of Default.
DELIVERY the deemed delivery of the Aircraft to the
Lessee in accordance with the terms of this
Agreement.
DELIVERY DATE the date on which Delivery takes place.
DELIVERY LOCATION a location selected by Lessee and reasonably
acceptable to Lessor.
DOLLARS AND $ the lawful currency of the United States of
America.
ENGINE whether or not installed on the Aircraft:
(a) each engine of the manufacture,
model and serial number specified
in Part 1 of Schedule 1 and having
750 or more rated take-off
horsepower, title to which shall
belong to the Lessor; or
(b) any engine which replaces that
engine, title to which passes to
the Lessor in accordance with
Clause 8.17(a);
and in each case includes all modules and
Parts from time to time belonging to,
installed in or appurtenant to that engine
but excludes any engine replaced in
accordance with Clause 8.13(a) title to
which has, or should have, passed to the
Lessee in accordance with Clause 8.17(c)
pursuant to this Agreement.
ENGINE LOSS DATE the relevant date determined in accordance
with the definition of "Total Loss Date" as
if that definition applied to an Engine
Loss.
ENGINE MANUFACTURER the Xxxxx & Xxxxxxx Division of United
Technologies Corporation.
EVENT OF DEFAULT an event specified in Clause 13.1.
-4-
EXPIRY DATE the day preceding the fifth anniversary of
the date of the Purchase Agreement or if
earlier the date on which:
(a) the Aircraft has been redelivered
in accordance with this Agreement
and all obligations of Lessee have
been satisfied; or
(b) the Lessor receives the Agreed
Value following a Total Loss and
any other amounts then due and
owing in accordance with this
Agreement.
FAA the United States Federal Aviation
Administration, the Department of
Transportation, the Administrator of the
Federal Aviation Administration or any
person or Government Entity succeeding to
the functions thereof.
FAR the Federal Aviation Regulations for the
time being in force, issued by the FAA
pursuant to the Federal Aviation Law and
published in Title 14 of the Code of Federal
Regulations.
FEDERAL AVIATION LAW Title 49 of the United States Code, as
amended, or any successor statutory
provisions and the regulations promulgated
under such provisions.
FINANCIAL INDEBTEDNESS any indebtedness in respect of
(a) moneys borrowed;
(b) any liability under any debenture,
bond, note, loan stock, acceptance
credit, documentary credit or other
security;
(c) the acquisition cost of any asset
to the extent payable before or
after the time of acquisition or
possession; or
(d) the capitalized value (determined
in accordance with accounting
practices generally accepted in the
State of Incorporation) of
obligations under finance leases;
or
-5-
(e) any guarantee, indemnity or similar
assurance against financial loss of
any person in respect of the above.
FLIGHT HOUR each hour or part thereof (rounded up to one
decimal place) elapsing from the moment the
wheels of an airframe leave the ground on
take off until the moment the wheels of such
airframe next touch the ground.
GAAP generally accepted accounting principles as
in effect from time to time and, subject to
changes in such principles from time to
time, consistently applied in accordance
with the past practices of a person.
GOVERNMENT ENTITY (a) any national government, political
subdivision thereof or local
jurisdiction therein;
(b) any instrumentality, board,
commission, court, or agency of any
thereof, however constituted; and
(c) any association, organization, or
institution of which any of the
above is a member or to whose
jurisdiction any thereof is subject
or in whose activities any of the
above is a participant.
HABITUAL BASE the State of Hawaii or, subject to the prior
written consent of the Lessor and Lender,
any other state, province or country in
which the Aircraft is for the time being
habitually based.
INDEMNITEES each of the Lender and the Lessor, including
any of their respective successors and
assigns, shareholders, Affiliates, partners,
contractors, directors, officers, servants,
agents and employees.
IRS the Internal Revenue Service of the
Department of the Treasury of the United
States of America.
LANDING GEAR the landing gear assembly of the Aircraft
excluding the wheels and brake units.
-6-
LENDER FINOVA Capital Corporation, a Delaware
corporation, and any other person or persons
that may from time to time refinance the
Aircraft for the Lessor and/or for whose
benefit a security interest in respect of
the Aircraft and/or this Agreement is
granted by the Lessor.
LESSEE INSTALLED PART means passenger seats, overhead bins and
galleys title to which is held by Lessee
subject to a Security Interest in favor of
an unrelated third party or title to which
is held by an unrelated third party and such
Part is leased or conditionally sold to
Lessee.
LESSOR LIEN (a) the Mortgage and any other security
interest whatever from time to time
created by or arising through the
Lessor and/or the Lender in
connection with the financing or
refinancing of the Aircraft;
(b) any other security interest in
respect of the Aircraft that
results from acts or omissions of,
or claims against, the Lessor
and/or the Lender not related to
the operation of the Aircraft or
the transactions contemplated by or
permitted under this Agreement; and
(c) liens in respect of the Aircraft
for Lessor Taxes.
LESSOR TAXES (a) Taxes imposed as a direct result of
activities of the Lessor and/or the
Lender in the jurisdictions
imposing the liability unrelated to
the Lessor's and/or the Lender's
dealings with the Lessee pursuant
to this Agreement or to the
transactions contemplated by this
Agreement or the operation of the
Aircraft by the Lessee;
(b) Taxes imposed on the income,
profits or gains of the Lessor
and/or the Lender by any Federal
Government Entity in the United
States of America or by any
Government Entity of the States of
Delaware and/or Connecticut or by
any Government Entity in any other
jurisdiction where the Lessor
and/or the Lender is liable for
such Taxes but only to the extent
that
-7-
such liability has or would
have arisen in the absence of the
transactions contemplated by this
Agreement;
(c) Taxes imposed with respect to any
period commencing or event
occurring before the date of this
Agreement or after the Expiry Date
and unrelated to the Lessor's
and/or the Lender's dealings with
the Lessee pursuant to this
Agreement or to the transactions
contemplated by this Agreement;
(d) Taxes imposed as a direct result of
the sale or other disposition of
the Aircraft, unless such sale or
disposition occurs as a consequence
of an Event of Default;
(e) Taxes imposed by a taxing
jurisdiction for a particular tax
period in which none of the
following is true for that tax
period (i) the operation,
registration, location, presence or
use of the Aircraft, the Airframe,
any Engine or any Part thereof in
such jurisdiction, (ii) the place
of incorporation, commercial
domicile or other presence in such
jurisdiction of the Lessee, any
sublessee or any user of or person
in possession of the Aircraft, the
Airframe, any Engine or any Part
thereof in such jurisdiction, or
(iii) any payments made under this
Agreement and related documents
being made from such jurisdiction;
(f) Taxes to the extent caused by the
gross negligence or intentional or
willful misconduct of Lessor or
Lender;
(g) Taxes to the extent caused by a
failure by Lessor or Lender to
furnish in a timely manner notice
or information which it is required
to furnish to Lessee by the terms
of this Agreement; and
-8-
(h) Taxes based on or measured by the
value or principal amount of
indebtedness incurred by Lessor
with respect to or secured by a
Security Interest on the Aircraft,
the Airframe, any Engine or any
interest therein.
LETTER OF CREDIT an irrevocable standby letter of credit, in
the form set out in Schedule 6 or otherwise
in form and substance reasonably
satisfactory to the Lessor, to be issued (at
the Lessee's option) in favor of the Lessor
by a reputable bank in the United States of
America reasonably acceptable to the Lessor
for the payment of the Security Deposit.
MAINTENANCE PROGRAM an Aviation Authority approved maintenance
program for the Aircraft encompassing
scheduled maintenance, condition monitored
maintenance and/or on-condition maintenance
of Airframe, Engines and Parts, including
servicing, testing, preventative
maintenance, repairs, structural
inspections, system checks, overhauls,
approved modifications, service bulletins,
engineering orders, airworthiness
directives, corrosion control, inspections
and treatments.
MAJOR CHECKS any C-Check, multiple C-Check, D-Check or
annual heavy maintenance visit or segment
thereof suggested for commercial aircraft of
the same model as the Aircraft by its
manufacturer (however denominated) as set
out in the Agreed Maintenance Program.
MANUFACTURER The Boeing Company, a Delaware corporation
with a place of business in Seattle,
Washington.
MINIMUM LIABILITY COVERAGE $300,000,000 on each occurrence.
MORTGAGE the first priority aircraft chattel mortgage
and security agreement to be granted by the
Lessor as debtor to the Lender as secured
party, whereby the Lessor will grant to the
Lender a first priority security interest in
the Aircraft and its right, title and
interest in this Agreement.
-9-
OTHER PERMITTED AIR CARRIER any air carrier (i) that shall be domiciled
in and duly certificated or authorized as an
air carrier in a Permitted Jurisdiction,
(ii) is not subject to any event of the
types described in Clauses 13.1(g) and (h)
as of the commencement of a sublease, and
(iii) has a net worth of at least
$20,000,000, calculated in accordance with
GAAP, as of the commencement of a sublease.
PARENT Aloha Airgroup, Inc., a Hawaii corporation
and the sole stockholder of Lessee.
PART whether or not installed on the Aircraft:
(a) any component, furnishing or
equipment (other than a complete
Engine) furnished with, installed
on or appurtenant to the Airframe
and Engines on Delivery; and
(b) any other component, furnishing or
equipment (other than a complete
Engine) title to which has, or
should have, passed to the Lessor
pursuant to the Purchase Agreement
or Clause 8.17(a),
but excludes any such items title to which
has, or should have, passed to the Lessee
pursuant to Clause 8.17(c) and any Lessee
Installed Part.
PERMITTED JURISDICTIONS Argentina, Australia, Belgium, Canada,
Chile, Finland, France, Germany, Iceland,
the Netherlands, New Zealand, Norway,
Sweden, Switzerland, United Kingdom and
United States of America.
PERMITTED LIEN (a) any lien for Taxes not assessed or,
if assessed, not yet due and
payable, or being contested in good
faith by appropriate proceedings;
(b) any lien of a repairer, mechanic,
carrier, hangar keeper, unpaid
seller or other similar hen arising
in the ordinary course of business
or by operation of law in respect
of obligations which are not
overdue in accordance with
applicable
-10-
law (or, if applicable,
generally accepted accounting
principles and practices in the
relevant jurisdiction) or are
being contested in good faith by
appropriate proceedings; and
(c) any Lessor Lien;
but only if, in the case of (a) and (b): (i)
adequate reserves have been provided by the
Lessee for the payment of the Taxes or
obligations in accordance with generally
accounting principles and practices in the
relevant jurisdiction; and (ii) such
proceedings, or the continued existence of
the Lien, do not give rise to any reasonable
likelihood of the sale, forfeiture or other
loss of the Aircraft or any interest therein
or of criminal liability on the Lessor or
any Lender.
REDELIVERY LOCATION Honolulu, Hawaii or an airport in one of the
States on the West Coast of the United
States of America, as agreed by Lessor and
Lessee before the Expiry Date.
RENT collectively, all Basic Rent and all
Supplemental Rent.
RENTAL PERIOD each period ascertained in accordance with
Clause 5.2.
RENT DATE the Delivery Date and the 26th day of each
calendar month during the Tenn.
SECURITY DEPOSIT the amount of $220,000.
SECURITY INTEREST any mortgage, charge, pledge, lien,
assignment, hypothecation, right of set-off,
or any agreement or arrangement having the
effect of creating a security interest,
other than a Permitted Lien.
STATE OF INCORPORATION State of Delaware.
STATE OF REGISTRATION United States of America.
SUBSIDIARY (a) in relation to any reference to
accounts, any company wholly or
partially owned by Parent,
-11-
including the Lessee, whose
accounts are consolidated with the
accounts of the Parent in
accordance with accounting
principles generally accepted under
accounting standards of the State
of Incorporation; and
(b) for any other purpose, an entity
from time to time:
(i) of which another has direct or
indirect control or owns
directly or indirectly more
than 50% of the voting share
capital; or
(ii) which is a direct or indirect
subsidiary of another under
the laws of the jurisdiction
of its incorporation.
SUPPLEMENTAL RENT all amounts, liabilities and obligations
(other than Basic Rent) which Lessee assumes
or agrees to pay under this Agreement to
Lessor or any other person, including
payment of the Security Deposit, other
deposits, indemnities and the Agreed Value.
TAXES all present and future taxes, levies,
imposts, duties or charges in the nature of
taxes, whatever and wherever imposed,
including customs duties, value added taxes
or similar taxes and any franchise,
transfer, sales, use, business, occupation,
excise, personal property, stamp or other
tax or duty imposed by any national or local
taxing or fiscal authority or agency,
together with any withholding, penalties,
additions to tax, fines or interest thereon
or with respect thereto.
TERM the period commencing on the Delivery Date
and ending on the Expiry Date.
TOTAL LOSS with respect to the Airframe:
(a) the actual, arranged or
constructive total loss of the
Airframe (including any damage to
the Airframe which results in an
insurance settlement on the basis
of a total loss,
-12-
or requisition for use or
hire which results in an
insurance settlement on the basis
of a total loss);
(b) the Airframe being destroyed,
damaged beyond repair or
permanently rendered unfit for
normal use for any reason
whatsoever;
(c) the requisition of title, or other
compulsory acquisition, capture,
seizure, deprivation, confiscation
or detention for any reason of the
Airframe by the government of the
State of Registration (whether, DE
JURE or DE FACTO), but excluding
requisition for use or hire not
involving requisition of title; or
(d) the hijacking, theft, condemnation,
confiscation, seizure or
requisition for use or hire of the
Airframe which deprives any person
permitted by this Agreement to have
possession and/or use of the
Airframe of its possession and/or
use for more than 60 consecutive
days.
TOTAL LOSS DATE (a) in the case of an actual total
loss, the actual date on which the
loss occurs or, if such date is
unknown, the day on which the
Aircraft was last heard of;
(b) in the case of any of the events
described in sub-paragraph (a) of
the definition of "Total Loss"
(other than an actual total loss),
the earlier of (i) 30 days after
the date on which notice claiming
such total loss is given to the
relevant insurers, and (ii) the
date on which such loss is admitted
or compromised by the insurers;
(c) in the case of any of the events
described in sub-paragraph (b) of
the definition of "Total Loss", the
date on which such destruction,
damage or rendering unfit occurs;
(d) in the case of any of the events
described in sub-paragraph (c) of
the definition of "Total Loss", the
date on which the relevant
requisition
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of title or other compulsory
acquisition, capture, seizure,
deprivation, confiscation or
detention occurs;
(e) in the case of any of the events
described in sub-paragraph (d) of
the definition of "Total Loss", the
expiry of the period of 60 days
referred to in such sub-paragraph
(d);
and, in each case, the Total Loss shall be
deemed to have occurred at noon Greenwich
Mean Time on such date.
U.S. AIR CARRIER means any domestic air carrier that (i)
is authorized by the FAA to operate
B737-200 aircraft in commercial passenger
or cargo service, (ii) is "a citizen of
the United States (as defined in 40102 of
title 49) holding an air carrier
operating certificate issued by the
Secretary of Transportation pursuant to
chapter 447 of title 49 for aircraft
capable of carrying 10 or more
individuals or 6,000 pounds or more of
cargo", as defined in 11 U.S.C. Section
1100, as amended, (iii) is not subject to
any event of the types described in
Clauses 13.1(g) and (h) as of the
commencement of a sublease, and (iv) has
a net worth of at least $20,000,000,
calculated in accordance with GAAP, as of
the commencement of a sublease.
1.2 INTERPRETATION
(a) In this Agreement, unless the contrary intention is stated, a
reference to:
(i) each of "THE LESSOR", "THE LESSEE", "THE LENDER" or
any other person includes without prejudice to the
provisions of this Agreement any successor in title
to it and any permitted assignee;
(ii) words importing the plural shall include the singular
and vice versa;
(iii) the term "including", when used in this Agreement,
means "including without limitation" and "including
but not limited to".
(iv) any document shall include that document as amended,
novated or supplemented;
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(v) a law (1) includes any statute, decree, constitution,
regulation, order, judgment or directive of any
Government Entity; (2) includes any treaty, pact,
compact or other agreement to which any Government
Entity is a signatory or party; (3) includes any
judicial or administrative interpretation or
application thereof; and (4) is a reference to that
provision as amended, substituted or re-enacted; and
(vi) a Clause or a Schedule is a reference to a clause of
or a schedule to this Agreement.
(b) The headings in this Agreement are to be ignored in construing
this Agreement.
2. REPRESENTATIONS AND WARRANTIES
2.1 LESSEE'S REPRESENTATIONS AND WARRANTIES
The Lessee represents and warrants to the Lessor as follows:
(a) STATUS: The Lessee is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Incorporation, has the corporate power to own its assets and
carry on its business as it is being conducted and is (or will
at the relevant time be) the holder of all necessary air
transportation licences required in connection therewith and
with the use and operation of the Aircraft.
(b) POWER AND AUTHORITY: The Lessee has the corporate power to
enter into and perform, and has taken all necessary corporate
action to authorize the entry into, performance and delivery
of, this Agreement and the transactions contemplated by this
Agreement.
(c) LEGAL VALIDITY: This Agreement constitutes the Lessee's legal,
valid and binding obligation.
(d) NON-CONFLICT: The entry into and performance by the Lessee of,
and the transactions contemplated by, this Agreement do not
and will not:
(i) conflict with any laws binding on the Lessee;
(ii) conflict with the constitutional documents of the
Lessee; or
(iii) conflict with or result in default under any document
which is binding upon the Lessee or any of its
assets, or result in the creation of any Security
Interest over any of its assets.
(e) AUTHORIZATION: All authorizations, consents and registrations
required by, and all notifications to be given by, the Lessee
in connection with the entry into, performance,
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validity and enforceability of, this Agreement and the
transactions contemplated by this Agreement have been (or will
on or before Delivery have been) obtained, effected or given
(as appropriate) and are (or will on their being obtained or
effected be) in full force and effect.
(f) NO IMMUNITY:
(i) The Lessee is subject to civil commercial law with
respect to its obligations under this Agreement.
(ii) Neither the Lessee nor any of its assets is entitled
to any right of immunity and the entry into and
performance of this Agreement by the Lessee
constitute private and commercial acts.
(g) FINANCIAL STATEMENTS: the audited consolidated financial
statements of the Parent and its Subsidiaries most recently
delivered to the Lessor:
(i) have been prepared in accordance with accounting
principles and practices generally accepted and
consistently applied in the State of Registration;
and
(ii) fairly present the consolidated financial condition
of the Parent and its Subsidiaries as at the date to
which they were drawn up and the consolidated results
of operations of the Parent and its Subsidiaries for
the periods covered by such statements.
2.2 LESSEE'S FURTHER REPRESENTATIONS AND WARRANTIES
The Lessee further represents and warrants to the Lessor that:
(a) NO DEFAULT: No Event of Default has occurred and is continuing
or might reasonably be expected to result from the entry into
or performance of this Agreement.
(b) REGISTRATION:
(i) It is not necessary or advisable under the laws of
the State of Incorporation, the State of Registration
or the Habitual Base in order to ensure the validity,
effectiveness and enforceability of this Agreement,
the Mortgage or the Assignment or to establish,
perfect or protect the property rights of the Lessor
or the Lender in the Aircraft, any Engine or Part
that this Agreement or any other instrument relating
thereto be filed, registered or recorded or that any
other action be taken or, if any such filings,
registrations, recordings or other actions are
necessary, the same have been effected or will have
been effected on or before Delivery.
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(ii) Under the laws of the State of Incorporation, the
State of Registration and the Habitual Base the
property rights of the Lessor and the Lender
(pursuant to the Mortgage) in the Aircraft have been
fully established, perfected and protected and this
Agreement will have priority in all respects over the
claims of all creditors of the Lessee, with the
exception of such claims as are mandatorily preferred
by law and not by virtue of any contract.
(c) LITIGATION: No litigation, arbitration or administrative
proceedings are pending or, to the Lessee's knowledge,
threatened against the Lessee which, if adversely determined,
would have a material adverse effect upon its financial
condition or business or its ability to perform its
obligations under this Agreement.
(d) PARI PASSU: The obligations of the Lessee under this Agreement
rank at least PARI PASSU with all other present and future
unsecured and unsubordinated obligations (including contingent
obligations) of the Lessee, with the exception of such
obligations as are mandatorily preferred by law and not by
virtue of any contract.
(e) TAXES: The Lessee has delivered all necessary returns and
payments due to the tax authorities in the State of
Incorporation, the State of Registration and the Habitual Base
and is not required by law to deduct or withhold any Taxes
from any payments under this Agreement.
2.3 REPETITION
The representations and warranties in Clause 2.1 and Clause 2.2 will
survive the execution of this Agreement. The representations and
warranties contained in Clause 2.1 and Clause 2.2 (other than Clause
2.2(c) above) will be deemed to be repeated by the Lessee on Delivery
with reference to the facts and circumstances then existing. The
representations and warranties contained in Clause 2.1 will be deemed
to be repeated by the Lessee on each Rent Date as if made with
reference to the facts and circumstances then existing.
2.4 LESSOR'S REPRESENTATIONS AND WARRANTIES
The Lessor represents and warrants to the Lessee that:
(a) STATUS: The Lessor is a limited liability company duly formed
and validly existing under the laws of Delaware and has the
power to own its assets and carry on its business as it is now
being conducted.
(b) POWER AND AUTHORITY: The Lessor has the power to enter into
and perform, and has taken all necessary action to authorize
the entry into, performance and delivery of, this Agreement
and the transactions contemplated by this Agreement.
-17-
(c) LEGAL VALIDITY: This Agreement constitutes the Lessor's legal,
valid and binding obligation.
(d) NON-CONFLICT: The entry into and performance by the Lessor of,
and the transactions contemplated by, this Agreement do not
and will not:
(i) conflict with any laws binding on the Lessor;
(ii) conflict with the constitutional documents of the
Lessor; or
(iii) conflict with any document which is binding upon the
Lessor or any of its assets.
(e) AUTHORIZATION: So far as concerns the obligations of the
Lessor, all authorizations, consents, registrations and
notifications required under the laws of the States of
Delaware and
New York in connection with the entry into,
performance, validity and enforceability of, and the
transactions contemplated by, this Agreement by the Lessor
have been (or will on or before Delivery have been) obtained
or effected (as appropriate) and are (or will on their being
obtained or effected be) in full force and effect.
(f) NO IMMUNITY:
(i) The Lessor is subject to civil commercial law with
respect to its obligations under this Agreement.
(ii) Neither the Lessor nor any of its assets is entitled
to any right of immunity and the entry into and
performance of this Agreement by the Lessor
constitute private and commercial acts.
(g) RIGHT TO LEASE: On the Delivery Date, the Lessor shall have
the right to lease the Aircraft to the Lessee under this
Agreement.
2.5 REPETITION
The representations and warranties in Clause 2.4 will survive the
execution of this Agreement. The representations and warranties
contained in Clause 2.4 will be deemed to be repeated by the Lessor on
Delivery and on each subsequent Rent Date as if made with reference to
the facts and circumstances then existing.
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3. CONDITIONS PRECEDENT
3.1 LESSOR'S DOCUMENTARY CONDITIONS PRECEDENT
The Lessor's obligation to lease the Aircraft to the Lessee under this
Agreement is subject to the receipt of the following by the Lessor from
the Lessee on or before Delivery in form and substance satisfactory to
the Lessor, PROVIDED THAT it shall not be a condition precedent to the
obligations of the Lessor that any document be produced, or action
taken, which is to be produced or taken by it or any person within its
control:
(a) CONSTITUTIONAL DOCUMENTS: a copy of the constitutional
documents of the Lessee;
(b) RESOLUTIONS: a copy of a resolution of the board of directors
of the Lessee approving the terms of, and the transactions
contemplated by, this Agreement, resolving that it enter into
this Agreement, and authorizing a specified person or persons
to execute this Agreement and accept delivery of the Aircraft
on its behalf;
(c) OPINION: an opinion, in the form set out in Schedule 5, in
respect of the Lessee's obligations under this Agreement
issued by independent legal counsel acceptable to the Lessor
in the State of Incorporation;
(d) APPROVALS: evidence of the issue of each approval, licence and
consent which may be required in relation to, or in connection
with, the performance by Lessee of any of its obligations
hereunder;
(e) LICENCES: copies of the Lessee's air transport license, air
operator's certificate and all other licenses, certificates
and permits required by the Lessee in relation to, or in
connection with, the operation of the Aircraft;
(f) CERTIFICATE: a certificate of a duly authorized officer of the
Lessee:
(i) setting out a specimen of each signature referred to
in Clause 3.1 (b); and
(ii) certifying that each copy of a document specified in
this Clause 3.1 is correct, complete and in full
force and effect;
(g) INSURANCES: certificates of insurance, brokers' undertakings
and other evidence satisfactory to the Lessor that the Lessee
is taking the required steps to ensure due compliance with the
provisions of this Agreement as to insurances with effect on
and after Delivery;
(h) REGISTRATION: evidence that the Aircraft has been validly
registered under the laws of the State of Registration and
that all filings, registrations, recordings and other actions
-19-
have been or will be taken which are necessary to ensure the
validity, effectiveness and enforceability of this Agreement,
the Mortgage and the Assignment and to protect the respective
rights of the Lessor and the Lender in the Aircraft or any
Part; and
(i) GENERAL: such other documents as the Lessor may reasonably
request.
3.2 LESSOR'S OTHER CONDITIONS PRECEDENT
The obligation of the Lessor to deliver and lease the Aircraft under
this Agreement is also subject to the following additional conditions
precedent:
(a) that the representations and warranties of the Lessee under
Clauses 2.1 and 2.2 are correct and would be correct if
repeated on Delivery;
(b) that all payments due to the Lessor under this Agreement on or
before Delivery, including the first payment of Basic Rent,
shall have been received by the Lessor;
(c) all conditions precedent to the purchase of the Aircraft and
the Aircraft Documents by the Lessor under the Purchase
Agreement shall have been satisfied (or waived by the Lessor),
the Lessor shall have drawn down under its financing facility
with the Lender the amount required to pay the "Purchase
Price" (as defined in the Purchase Agreement) due to the
Lessee and the Lessee has delivered the Aircraft and Aircraft
Documents to Lessor pursuant to the Purchase Agreement; and
(d) the Mortgage shall be in full force and effect.
3.3 LESSOR'S WAIVER
The conditions specified in Clauses 3.1 and 3.2(a) and (b) are for the
sole benefit of the Lessor and the Lender and may be waived or deferred
in whole or in part and with or without conditions by the Lessor. If
any of those conditions are not satisfied on or before Delivery and the
Lessor (in its absolute discretion) nonetheless agrees to deliver the
Aircraft to the Lessee, the Lessee will ensure that those conditions
(other than the representation set forth in Clause 2.2(c) being correct
on the Delivery Date) are fulfilled within one month after the Delivery
Date and the Lessor may treat as an Event of Default the failure of the
Lessee to do so.
3.4 LESSEE'S CONDITIONS PRECEDENT
The Lessee's obligation to accept the Aircraft on lease from the Lessor
under this Agreement is subject to the satisfaction by the Lessor of
the following conditions precedent:
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(a) RESOLUTIONS: the receipt by the Lessee of a copy of
resolutions of the board of directors of the Lessor approving
the terms of, and the transactions contemplated by, this
Agreement, resolving that it enter into this Agreement, and
authorizing a specified person or persons to execute this
Agreement and deliver the Aircraft on its behalf;
(b) CERTIFICATE: the receipt by the Lessee of a certificate of a
duly authorized officer of the Lessor:
(i) setting out a specimen of each signature referred to
in sub-clause (a) above; and
(ii) certifying that the copy of the resolutions referred
to in sub-clause (a) above is correct, complete and
in full force and effect;
(c) REPRESENTATIONS AND WARRANTIES: that the representations and
warranties of the Lessor under Clause 2.4 are correct and
would be correct if repeated on Delivery; and
(d) LENDER'S COVENANT OF QUIET ENJOYMENT: the receipt by the
Lessee of the Lender's Letter of Quiet Enjoyment, duly signed
by the Lender.
3.5 LESSEE'S WAIVER
The conditions specified in Clause 3.4 are for the sole benefit of the
Lessee and may be waived or deferred in whole or in part and with or
without conditions by the Lessee. If any of those conditions are not
satisfied on or before Delivery and the Lessee (in its absolute
discretion) nonetheless agrees to lease the Aircraft from the Lessor,
the Lessor will ensure that those conditions are fulfilled within one
month after the Delivery Date.
4. COMMENCEMENT
4.1 LEASING
(a) The Lessor will lease the Aircraft to the Lessee and the
Lessee will take the Aircraft on lease in accordance with this
Agreement for the duration of the Term.
(b) The Lessor and the Lessee intend that this Agreement
constitute a "true lease" and a lease for all United States
federal income tax purposes. The Lessor and the Lessee further
intend and agree that the Lessor shall be entitled to the full
benefits afforded lessors of aircraft under 11 U.S.C. Section
1110, as amended.
4.2 DELIVERY
The Aircraft will be deemed to have been delivered to, and will be
accepted by, the Lessee at the Delivery Location, or such other
location as may be agreed, on the Delivery Date
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immediately following satisfaction of the conditions precedent
specified in Clauses 3.1, 3.2 and 3.4 (or their waiver or deferral by
the party entitled to grant such waiver or deferral).
4.3 ACCEPTANCE AND RISK
(a) Immediately following satisfaction of the conditions precedent
specified in Clauses 3.1, 3.2 and 3.4 (or their waiver or
deferral by the party entitled to grant such waiver or
deferral), the Lessee and the Lessor shall forthwith complete
Annex 1 to the Certificate of Acceptance (specifying the
maintenance status of the Airframe, Engines, APU and Landing
Gear) and the Lessee shall sign and deliver to the Lessor the
Certificate of Acceptance. Delivery of the signed Certificate
of Acceptance to the Lessor shall constitute deemed delivery
of the Aircraft to the Lessee.
(b) On and from Delivery, the Aircraft and every Part will be in
every respect at the sole risk of the Lessee, which will bear
all risk of loss, theft, damage or destruction to the Aircraft
from any cause whatsoever.
(c) Immediately following Delivery, the Lessor shall file for
recordation this Lease at the FAA Aircraft Registry together
with the Mortgage and the Assignment.
5. PAYMENTS
5.1 SECURITY DEPOSIT: LETTER OF CREDIT
(a) SECURITY DEPOSIT: On the date of this Agreement, Lessee shall
pay the Security Deposit to Lessor. The Security Deposit shall
constitute additional security for performance by Lessee of
its obligations under this Agreement, and the following
provisions shall apply:
(i) If an Event of Default occurs and for as long as it
continues, the Lessor may (but shall not be obligated
to) apply all or any portion of the Security Deposit
in or towards satisfaction of any sums due and
payable to the Lessor under this Agreement or to
compensate the Lessor for any sums which it may, in
its discretion, advance or expend as a result of any
such Event of Default. Notwithstanding any such use
or application by the Lessor, the Lessee shall remain
in default under this Agreement until the full amount
owed by the Lessee, including interest accrued
thereon pursuant to Clause 5.9, shall have been paid
to the Lessor. If the Lessor so uses or applies all
or any portion of the Security Deposit, the Lessee
shall immediately, on demand of the Lessor, replenish
the Security Deposit in an amount equal to the amount
so used or applied within five Business Days after
Lessor's demand therefor.
-22-
(ii) Lessor may commingle the Security Deposit with its
general funds, and any interest earned on the
Security Deposit will be for Lessor's account.
(iii) The Security Deposit shall be returned to the Lessee
within five Business Days of (1) redelivery of the
Aircraft to the Lessor in the condition required by
Clause 12 of, and Schedule 3 to, this Agreement, (2)
receipt by the Lessor of the Agreed Value following a
Total Loss and all other amounts due under Clause
11.1(b), or (3) at such later time as the Lessor is
satisfied that the Lessee has irrevocably paid to the
Lessor all amounts which are at that time outstanding
under this Agreement; provided always that the Lessor
shall not be obliged to return the Security Deposit
if, at the relevant time, a Default shall have
occurred and be continuing.
(b) LETTER OF CREDIT: the Lessee shall be entitled, instead of
paying the Security Deposit in cash in accordance with
sub-clause (a) above, to provide the Lessor with the Letter of
Credit. In the event that the Lessee elects to provide the
Letter of Credit, the following provisions shall apply:
(i) Lessee shall cause the Letter of Credit to be renewed
or replaced by the issuing bank not later than 10
Business Days before the expiration of such Letter of
Credit, and shall cause the Letter of Credit to
remain in effect, as renewed, until 90 days after the
scheduled Expiry Date.
(ii) If an Event of Default occurs and for as long as it
continues, the Lessor may (but shall not be obliged
to) call on the Letter of Credit and use or apply the
proceeds in or towards satisfaction of any sums due
and payable to the Lessor under this Agreement or to
compensate the Lessor for any sums which it may, in
its discretion, advance or expend as a result of any
such Event of Default. Notwithstanding any such use
or application by the Lessor, the Lessee shall remain
in default under this Agreement until the full amount
owed by the Lessee, including interest accrued
thereon pursuant to Clause 5.9, shall have been paid
to the Lessor. If the Lessor so uses or applies all
or any portion of the amount available under the
Letter of Credit, the Lessee shall immediately, on
demand of the Lessor, procure the issue of a new
Letter of Credit acceptable to the Lessor for an
amount equal to the amount so used or applied, or
shall pay to the Lessor an amount in cash equal to
the amount so used or applied to be held pursuant to
Clause 5.1(a).
(iii) The Letter of Credit shall be returned to the Lessee
within five Business Days of:
(1) redelivery of the Aircraft to the Lessor in
the condition required by Clause 12 of, and
Schedule 3 to, this Agreement; or
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(2) receipt by the Lessor of the Agreed Value
following a Total Loss and all other amounts
due under Clause 11.1(b); or
in either case, at such later time as the Lessor is
satisfied that the Lessee has irrevocably paid to the
Lessor all amounts which are at that time outstanding
under this Agreement; provided always that the Lessor
shall not be obliged to return the Letter of Credit
if, at the relevant time, a Default shall have
occurred and be continuing.
5.2 RENTAL PERIODS
The first Rental Period will commence on the Delivery Date and each
subsequent Rental Period will commence on the date succeeding the last
day of the previous Rental Period. Each Rental Period will end on the
date immediately preceding the next succeeding Rent Date except that if
a Rental Period would otherwise overrun the Expiry Date, it will end on
the Expiry Date.
5.3 BASIC RENT
(a) TIME OF PAYMENT: the Lessee will pay to the Lessor or its
order Basic Rent in advance on each Rent Date. Payment must be
initiated adequately in advance of the Rent Date to ensure
that the Lessor receives credit for the payment on the Rent
Date.
(b) AMOUNT: The Basic Rent payable in respect of each Rental
Period will be as follows:
(i) The Basic Rent payable in respect of the first Rental
Period will be the product of $110,000 multiplied by
a fraction (1) the numerator of which is the number
of days from and including the Delivery Date to but
excluding the next succeeding Rent Date and (2) the
denominator of which is the number of days in the
calendar month immediatley preceding the calendar
month in which such next succeeding Rent Date occurs.
(iii) The Basic Rent payable in respect of each subsequent
Rental Period will be the amount of $110,000.
5.4 PAYMENTS
(a) All payments of Rent by the Lessee to the Lessor under this
Agreement will be made for value on the due date, for the full
amount due, in Dollars and in same day funds, settled through
the
New York Clearing House System or such other funds as may
for the time being be customary for the settlement in
New York
City of payments in Dollars by telegraphic transfer to the
account of the Lender at Citibank, N.A., New
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York,
New York, ABA No. 000000000, Account No. 00000000,
reference "Aloha Airlines/N802AL-N804AL".
(b) if any Rent or other payment would otherwise become due on a
day which is not a Business Day, it shall be due on the
immediately succeeding Business Day.
5.5 GROSS-UP
(a) All payments by the Lessee under or in connection with this
Agreement will be made without offset or counterclaim, free
and clear of and without deduction or withholding for or on
account of any Taxes (other than Lessor Taxes that Lessee is
compelled by law to deduct or withhold).
(b) All Taxes (other than Lessor Taxes) in respect of payments
under this Agreement shall be for the account of the Lessee.
(c) If the Lessee is compelled by law to make payment to the
Lessor under or in connection with this Agreement subject to
any Tax and the Lessor does not actually receive for its own
benefit on the due date a net amount equal to the full amount
provided for under this Agreement (other than Lessor Taxes
that Lessee is compelled by law to deduct or withhold), the
Lessee will pay all necessary additional amounts to ensure
receipt by the Lessor of the full amount (other than Lessor
Taxes that Lessee is compelled by law to deduct or withhold)
so provided for.
5.6 TAXATION
(a) The Lessee will on demand pay and indemnify the Lessor and the
Lender against all Taxes (other than Lessor Taxes) levied or
imposed against or upon the Lessor, the Lender or the Lessee
and relating to or attributable to the Lessee, this Agreement
or the Aircraft directly or indirectly in connection with the
importation, exportation, registration, ownership, leasing,
sub-leasing, purchase, delivery, possession, use, operation,
repair, maintenance, overhaul, transportation, landing,
storage, presence or redelivery of the Aircraft or any part
thereof or any rent, receipts, insurance proceeds, income or
other amounts arising therefrom.
(b) If the Lessor or the Lender shall, based upon its own
reasonable interpretation of any relevant laws or regulations,
realize any Tax savings (by way of refund, deduction, credit
or otherwise) in respect of any amount with respect to which
the Lessee shall have made a payment (or increased payment)
pursuant to Clause 5.5 or 5.8 or shall have indemnified the
Lessor or the Lender pursuant to sub-clause (a) above, or in
respect of the occurrence or transaction which gave rise to
such payment or indemnification, and such Tax savings shall
not have been taken into account previously in calculating any
indemnity payment made by the Lessee, then the Lessor or the
Lender (as the case may
-25-
be) shall, to the extent that it can do so without prejudice
to the retention of the relevant savings and subject to the
Lessee's obligations to repay such amount to the Lessor or the
Lender (as applicable) if the relevant savings are
subsequently disallowed or canceled, pay to the Lessee such
amount as the Lessor or the Lender (as the case may be) shall
in its opinion have concluded to be the amount of such Tax
savings (together with, in the case of a refund, any interest
received thereon); provided however that neither the Lessor
nor the Lender shall be obliged to make any payment to the
Lessee pursuant to this sub-clause (b) to the extent that the
amount of any Tax savings in respect of which such payment is
to be made would exceed the aggregate amount of all prior
payments made by the Lessee to, on behalf of or as
indemnification of the Lessor or the Lender under this
Agreement for Taxes less the amount of all prior payments made
pursuant to this sub-clause (b) in respect of such Tax
savings. The Lessee acknowledges that nothing contained in
this sub-clause (b) shall interfere with the right of the
Lessor or the Lender to arrange its tax affairs in whatsoever
proper manner it thinks fit (or give the Lessee any right to
investigate, or impose any obligation on the Lessor or the
Lender to disclose, the same) and, in particular, neither the
Lessor nor the Lender shall be under any obligation to claim
any Tax savings in priority to any other savings available to
it; provided, that subject to the foregoing Lessor shall use
reasonable good faith diligence to realize Tax savings as
described above.
5.7 INFORMATION
If the Lessee is required by any applicable law, or by any third party,
to deliver any report or return in connection with any Taxes, the
Lessee will duly complete the same and, in particular, will state
therein that the Lessee is exclusively responsible for the use and
operation of the Aircraft and for the Taxes (other than Lessor Taxes)
arising therefrom, and the Lessee will, on request, supply a copy of
the report or return to the Lessor. If Lessee requires any information
or cooperation from Lessor or Lender in order to satisfy its
obligations as set forth above, Lessor and Lender shall promptly
furnish such information or cooperation as Lessee may reasonably
request upon written request by Lessee. If actual notice is given by
any taxing authority to Lessor that a report or return is required to
be filed with respect to any Taxes (other than Lessor Taxes), the
Lessor shall promptly notify Lessee of such required report or return.
5.8 TAXATION OF INDEMNITY PAYMENTS
(a) If and to the extent that any sums payable to the Lessor or
the Lender by the Lessee under this Agreement by way of
indemnity are insufficient, by reason of any Taxes payable in
respect of those sums, for the Lessor or the Lender to
discharge the corresponding liability to the relevant third
party (including any taxation authority), or to reimburse the
Lessor or the Lender for the cost incurred by it to a third
party (including any taxation authority) the Lessee will pay
to the Lessor or the Lender (as the case may be) such sum as
will, after the tax liability has been fully satisfied, leave
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the Lessor or the Lender (as the case may be) with the same
amount as it would have been entitled to receive in the
absence of that liability, together with interest on the
amount of the deficit at the Default Rate in respect of the
period commencing on the date on which the payment of taxation
is finally due until payment by the Lessee (both before and
after judgment).
(b) If and to the extent that any sums constituting (directly or
indirectly) an indemnity to the Lessor or the Lender but paid
by the Lessee to any person other than the Lessor or the
Lender are treated as taxable in the hands of the Lessor or
the Lender, the Lessee will pay to the Lessor or the Lender
such sum as will, after the tax liability has been fully
satisfied, indemnify the Lessor or the Lender to the same
extent as it would have been indemnified in the absence of
such liability, together with interest on the amount payable
by lessee under this sub-clause at the Default Rate in respect
of the period commencing on the date on which the payment of
taxation is finally due until payment by the Lessee (both
before and after judgment).
5.9 DEFAULT INTEREST
If the Lessee fails to pay any amount payable under this Agreement on
the due date, the Lessee will pay on demand from time to time to the
Lessor or the Lender (as the case may be) interest (both before and
after judgment) on the amount, from the due date to the day of payment
in full by the Lessee to the Lessor or the Lender, at the prime rate
for the time being charged by Citibank, N.A. plus 3.0% (the "DEFAULT
RATE"). All such interest will be compounded monthly and calculated on
the basis of the actual number of days elapsed and on a 360 day year.
5.10 CONTEST
If written claim is made against Lessor or Lender for or with respect
to any Taxes (other than Lessor Taxes), Lessor shall, and shall cause
Lender to, promptly notify the Lessee. If reasonably requested by the
Lessee in writing within 30 days after such notification, Lessor shall
or shall cause Lender to, upon receipt of indemnity satisfactory to
Lessor or Lender, as the case may be, and at the expense of the Lessee
(including all costs, expenses, losses, legal and accountants' fees and
disbursements, penalties and interest), in good faith contest or to the
extent permissible by law allow Lessee to contest in Lessee's, the
Lessors or the Lender's name, the validity, applicability or amount of
such Taxes by either (i) resisting payment thereof if practicable and
permitted by applicable law, or (ii) if payment is made, using
reasonable efforts to obtain a refund thereof in appropriate
administrative and judicial proceedings, and in the contest of any such
claim by Lessor or Lender, Lessor shall, and shall cause Lender to,
apprise the Lessee of all material developments with respect to such
contest, shall forward copies of all material submissions made in such
contest and shall materially comply in good faith with any reasonable
request concerning the conduct of any such
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contest; provided, however, the Lessor or the Lender (as the case may
be) will not be obliged to take any such action:
(a) which the Lessor or the Lender (as the case may be) considers,
in its reasonable discretion, may prejudice it; or
(b) which the Lessor or the Lender (as the case may be) reasonably
considers does not have a reasonable prospect of success; or
(c) for which the Lessee has not made adequate provision to the
reasonable satisfaction of the Lessor or the Lender (as the
case may be) in respect of the expense concerned; or
(d) if such action gives rise to any material likelihood of the
Aircraft or any interest therein being sold, forfeited or
otherwise lost or of criminal liability on the part of the
Lessor or the Lender.
If Lessor or Lender, in accordance with the foregoing, determines to
pay such Taxes and seek a refund, Lessee will either pay such Taxes on
Lessor's or Lender's behalf and pay Lessor or Lender, as the case may
be, any amount due with respect to such payment or will promptly
reimburse Lessor for such Taxes. If Lessor shall obtain a refund of all
or any part of such Taxes paid by the Lessee, Lessor shall pay the
Lessee the amount of such refund; provided that such amount shall not
be payable before such time as the Lessee shall have made all payments
or indemnities to Lessor then due with respect to Taxes and so long as
no Default has occurred and is continuing. If in addition to such
refund Lessor shall receive an amount representing interest, attorneys
fees or any other amount on the amount of such refund, the Lessee shall
be paid that proportion of such interest, attorneys fees or any other
amount which is fairly attributable to the Taxes paid by the Lessee
prior to the receipt of such refund. Lessor and/or Lender shall not
enter into a settlement or other compromise with respect to, or
otherwise concede, any claim by a taxing authority on account of Taxes
being contested by Lessee pursuant to this Clause 5. 10 without the
written consent of Lessee, which consent shall not be unreasonably
withheld, unless Lessor waives its right and the right of Lender to be
indemnified by Lessee with respect to such claim (but not with respect
to any future claims).
5.11 ABSOLUTE
The Lessee's obligations under this Agreement are absolute and
unconditional irrespective of any contingency whatever including (but
not limited to):
(a) any right of offset, counterclaim, recoupment, defense or
other right which either party to this Agreement may have
against the other;
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(b) any unavailability of the Aircraft for any reason, including a
requisition of the Aircraft or any prohibition or interruption
of, interference with or other restriction against the
Lessee's use, operation or possession of the Aircraft;
(c) any lack or invalidity of title or any other defect in title,
airworthiness, merchantability, fitness for any purpose,
condition, design or operation of any kind or nature of the
Aircraft for any particular use or trade, or for registration
or documentation under the laws of any relevant jurisdiction,
or any Total Loss in respect of or any damage to the Aircraft;
(d) any insolvency, bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar
proceedings by or against the Lessor or the Lessee;
(e) any invalidity, unenforceability or lack of due authorization
of, or other defect in, this Agreement; or
(f) any other cause which, but for this provision, would or might
otherwise have the effect of terminating or in any way
affecting any obligation of the Lessee under this Agreement;
provided always, however, that this Clause 5.11 shall be without
prejudice to the Lessee's right to claim damages and other relief from
the courts in the event of any breach by the Lessor of its obligations
under this Agreement, or in the event that, as a result of any lack or
invalidity of title to the Aircraft on the part of the Lessor, the
Lessee is deprived of its possession of the Aircraft.
6. MANUFACTURER'S WARRANTIES
6.1 ASSIGNMENT
Notwithstanding this Agreement and subject to the rights of the Lender
pursuant to the Assignment, the Lessor will remain entitled to the
benefit of each warranty, express or implied, and any unexpired
customer and/or product support given or provided in respect of the
Aircraft, any Engine or Part by any manufacturer, vendor, maintenance
performer, subcontractor or supplier. Unless an Event of Default shall
have occurred and be continuing, the Lessor hereby authorizes the
Lessee to pursue any claim thereunder in relation to defects affecting
the Aircraft, any Engine or Part and the Lessee agrees diligently to
pursue any such claim which arises at its own cost. The Lessee will
notify the Lessor promptly upon becoming aware of any such claim. The
Lessor will provide such assistance to the Lessee in making a claim
under any such warranties or customer and/or product support as the
Lessee may reasonably request, and, if requested by the Lessee and at
the Lessee's expense, will pursue a claim in its own name where the
relevant manufacturer, vendor, maintenance
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performer, subcontractor or supplier has refused to acknowledge the
Lessee's right to pursue that claim.
6.2 PROCEEDS
Unless an Event of Default shall have occurred and be continuing, all
proceeds of any such claim as is referred to in Clause 6.1 and which
exceed $100,000 will be paid direct to the Lender, but if and to the
extent that such claim relates:
(a) to defects affecting the Aircraft which the Lessee has
rectified; or
(b) to compensation for loss of use of the Aircraft, an Engine or
any Part during the Tenn; or
(c) to costs incurred by the Lessee in pursuing such claim
(whether or not proceeds of such claim are payable to the
Lessee);
and provided no Default shall have occurred and be continuing, the
proceeds will be promptly paid to the Lessee by the Lender but, in the
case of (a), only on receipt of evidence reasonably satisfactory to the
Lessor and the Lender that the Lessee has rectified the relevant
defect.
6.3 PARTS
Except to the extent the Lessor otherwise agrees in a particular case,
the Lessee will procure that all engines, components, furnishings or
equipment provided by the manufacturer, vendor, maintenance performer,
subcontractor or supplier as a replacement for a defective Engine or
Part pursuant to the terms of any warranty or customer and/or product
support arrangement comply with Clause 8.13 (a), are installed on the
Aircraft promptly and that title thereto vests in the Lessor in
accordance with Clause 8.17(a). On installation those items will be
deemed to be an Engine or Part, as applicable.
6.4 AGREEMENT
To the extent any warranties or customer and/or product support
relating to the Aircraft are made available under an agreement between
any manufacturer, vendor, maintenance performer, subcontractor or
supplier and the Lessee, this Clause 6 is subject to that agreement.
However the Lessee will:
(a) pay the proceeds of any claim thereunder that exceed $100,000
to the Lender to be applied pursuant to Clause 6.2 and,
pending such payment, will hold the claim and the proceeds on
trust for the Lender; and
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(b) take all such steps as are necessary and requested by the
Lessor at the end of the Term to ensure the benefit of any of
those warranties or customer and/or product support which have
not expired are vested in the Lessor (but subject to the
rights of the Lender under the Mortgage).
7. LESSOR'S COVENANTS AND DISCLAIMERS
7.1 QUIET ENJOYMENT
Provided no Event of Default shall have occurred and be continuing,
none of the Lessor, its successors and assigns, the Lender or any
Person claiming by, through or on account of any of such parties will
interfere with the quiet use, possession and enjoyment of the Aircraft
by the Lessee.
7.2 MAINTENANCE CONTRIBUTION
(a) Provided no Default has occurred and is continuing, upon the
performance by Lessee of "Qualifying Work" (as hereinafter
defined) relating to any airworthiness directive, the Lessor
will pay to the Lessee, by way of contribution to the cost of
maintenance of the Aircraft, an amount equal to the product of
(a) the amount by which the Actual Cost of the Qualifying Work
for such airworthiness directive exceeds $225,000, multiplied
by (b) a fraction the numerator of which is 60 minus the
number of months (rounded to the nearest whole number of
months) from the date of the completion of such Qualifying
Work until the scheduled Expiry Date and the denominator is
60.
(b) "Qualifying Work" means maintenance work performed on the
Aircraft solely in order to comply fully with airworthiness
directives issued by the Aviation Authority (whether or not
such airworthiness directives were issued before or after the
Delivery Date) on a terminating action basis, and excluding
work performed for any other purpose, such as compliance with
airworthiness directives by means of repetitive inspections,
recording compliance work in the Aircraft Documents and all
other maintenance work.
(c) The Lessor will be obligated to pay any amount specified in
Clause 7.2(a) within 14 days after submission by the Lessee to
the Lessor of an invoice and supporting documentation
reasonably satisfactory to the Lessor evidencing the
performance of Qualifying Work for an airworthiness directive.
7.3 REGISTRATION AND FILINGS
The Lessor shall, at the Lessor's cost:
(a) maintain the registration of the Aircraft with the Aviation
Authority reflecting (so far as permitted by applicable law)
the respective interests of the Lessor and the Lender and
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not do or suffer to be done anything which might reasonably be
expected to adversely affect that registration; and
(b) do all acts and things (including making any filing or
registration with the Aviation Authority or any other
Government Entity) as may be required following any change in
the ownership or financing of the Aircraft.
7.4 AGREED MAINTENANCE PERFORMERS
The Lessor may object to and may exclude any maintenance organization
(other than Lessee) being included as an "Agreed Maintenance Performer"
for a valid business reason. The Lessor shall furnish to Lessee in
writing from time to time a list of all maintenance organizations
excluded from the definition of "Agreed Maintenance Performer" pursuant
to the preceding sentence, which list may be amended by Lessor from
time to time. The Lessor and the Lessee shall consult in good faith
regarding any organizations on such list from time to time at the
request of either party.
7.5 EXCLUSION
THE AIRCRAFT IS ACCEPTED BY THE LESSEE "AS IS, WHERE IS WITH ALL
FAULTS" AND LESSEE AGREES AND ACKNOWLEDGES THAT, SAVE AS IS EXPRESSLY
STATED IN THIS AGREEMENT, LESSOR WILL HAVE NO LIABILITY IN RELATION TO,
AND LESSOR HAS NOT AND WILL NOT BE DEEMED TO HAVE MADE OR GIVEN, ANY
CONDITIONS, WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, WITH
RESPECT TO THE AIRCRAFT, INCLUDING BUT NOT LIMITED TO:
(a) THE DESCRIPTION, AIRWORTHINESS, MERCHANTABILITY, FITNESS FOR
ANY USE OR PURPOSE, VALUE, CONDITION, OR DESIGN, OF THE
AIRCRAFT OR ANY PART; OR
(b) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT,
WHETHER OR NOT ARISING FROM LESSOR'S NEGLIGENCE, ACTUAL OR
IMPUTED (BUT EXCLUDING ANY SUCH OBLIGATION, LIABILITY, RIGHT,
CLAIM OR REMEDY IN TORT WHICH ARISES FROM LESSOR'S GROSS
NEGLIGENCE OR WILFUL MISCONDUCT); OR
(c) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF
OR DAMAGE TO THE AIRCRAFT, FOR ANY LIABILITY OF LESSEE TO ANY
THIRD PARTY, OR FOR ANY OTHER DIRECT, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES.
7.6 LESSEE'S WAIVER
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LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND THE LESSOR, ALL
ITS RIGHTS IN RESPECT OF ANY CONDITION, WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, ON THE PART OF LESSOR AND
ALL CLAIMS AGAINST LESSOR HOWSOEVER AND WHENEVER ARISING AT
ANY TIME IN RESPECT OF OR OUT OF THE OPERATION OR PERFORMANCE
OF THE AIRCRAFT OR THIS AGREEMENT EXCEPT AS IS OTHERWISE
EXPRESSLY STATED IN THIS AGREEMENT.
7.7 LESSEE'S CONFIRMATION
LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF CLAUSES 7.5
AND 7.6 AND ACKNOWLEDGES THAT BASIC RENT AND OTHER AMOUNTS HAVE BEEN
CALCULATED NOTWITHSTANDING ITS PROVISIONS.
8. LESSEE'S COVENANTS
8.1 DURATION
The undertakings in this Clause 8 and in Clause 12 will:
(a) except as otherwise stated, be performed at the expense of the
Lessee; and
(b) remain in force until redelivery of the Aircraft to the Lessor
in accordance with this Agreement and thereafter to the extent
of any accrued rights of the Lessor in relation to those
undertakings.
8.2 INFORMATION
The Lessee shall:
(a) furnish to the Lessor, with a copy to the Lender:
(i) within 60 days after the last day of the first three
fiscal quarters of each fiscal year of the Parent,
unaudited consolidated quarterly financial statements
of the Parent prepared for such quarter, including a
consolidated balance sheet of the Parent and its
Subsidiaries as of the last day of such quarter and
consolidated statements of income and retained
earnings for such fiscal quarter and on a comparative
basis figures for the corresponding period of the
immediately preceding fiscal year, all in reasonable
detail, each such statement to be certified in a
certificate of Lessee's chief financial officer or
chief accounting officer as fairly presenting the
financial position and the results of operations of
the Parent
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as at its date and for such quarter (subject to
year-end audit adjustments) and as having been
prepared in accordance with GAAP;
(ii) as soon as available but not in any event later than
120 days after the last day of each fiscal year of
the Parent, audited consolidated financial statements
of the Parent prepared for such year, including a
consolidated balance sheet of the Parent and its
Subsidiaries as of the last day of such year,
consolidated statements of income and retained
earnings of the Parent and its Subsidiaries for such
fiscal year, a consolidating balance sheet of the
Lessee and its Subsidiaries as of the last day of
such year and consolidating statements of income and
retained earnings of the Lessee and its Subsidiaries
for such fiscal year and in all cases on a
comparative basis figures for the immediately
preceding fiscal year, all in reasonable detail, each
prepared in accordance with GAAP and certified
without qualification by Coopers & Xxxxxxx or another
of the largest national firms of independent
certified public accountants as fairly presenting the
financial position and the results of operations of
Lessee and its Subsidiaries at the end of and for
such fiscal year and as having been prepared in
accordance with GAAP;
(iii) in lieu of the financial statements referred to in
sub-clauses (i) and (ii) above, any Quarterly Reports
on Form 10-Q and Annual Report on Form 10-K for the
respective periods filed by the Parent pursuant to
and in accordance with the Securities Exchange Act of
1934, as amended;
(iv) concurrently with the financial statements furnished
pursuant to Clauses 8.2(a)(i) and (ii) above, an
officer's certificate signed by the chief financial
officer or chief accounting officer of Lessee
certifying to the best knowledge after due inquiry of
such officer that no Default occurred during the
period covered by such financial statements and no
Default exists on the date of such officer's
certificate or, if a Default occurred or exists,
stating that fact and specifying the nature and
period of existence of such Default and the actions
Lessee took or proposes to take with respect to such
Default;
(v) at the same time as it is issued to the creditors of
the Lessee, a copy of each notice or circular issued
to the Lessee's creditors as a group; and
(vi) on request from time to time such other information
regarding the Lessee and its business and affairs as
the Lessor may reasonably request;
(b) on request, inform the Lessor as to the current serial numbers
of the Engines and any engine installed on the Airframe;
(c) promptly furnish to the Lessor all information which the
Lessor from time to time reasonably requests regarding the
Aircraft any Engine or any Part and its use, location
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and condition, including the hours available on the Aircraft
and any Engine until the next scheduled check, inspection,
overhaul or shop visit, as the case may be;
(d) on request, furnish to the Lessor evidence reasonably
satisfactory to the Lessor that all Taxes and charges incurred
by the Lessee with respect to the Aircraft have been paid and
discharged in full;
(e) provide to the Lessor, within 15 days following the end of
June and December of each calendar year during the Term, or
upon reasonable request by Lessor, a monthly report on the
Aircraft in the form set out in Schedule 7 or such other form
as the Lessee may select providing substantially the same
information;
(f) promptly notify the Lessor of
(i) any Total Loss, any loss of an Engine, any theft of
the Airframe or any Engine, any damage to the
Aircraft if the potential cost of repair may
reasonably be expected to exceed the Damage
Notification Threshold, or any modification to the
Aircraft if the potential cost may reasonably be
expected to exceed the Damage Notification Threshold;
(ii) any claim or other occurrence likely to give rise to
a claim under the Insurances (but, in the case of
hull claims only, in excess of the Damage
Notification Threshold) and details of any
negotiations with the insurance brokers over any such
claim; and
(iii) any litigation, arbitration or administrative
proceedings that are pending or, to the Lessee's
knowledge, threatened against the Lessee which, if
adversely determined, would have a material adverse
effect upon its financial condition or business or
its ability to perform its obligations under this
Agreement.
8.3 LAWFUL AND SAFE OPERATION
The Lessee shall:
(a) comply with the law for the time being in force in any country
or jurisdiction in which the Aircraft is being operated which
is applicable to the Aircraft or the use and operation of the
Aircraft;
(b) not use the Aircraft in any manner contrary to any
recommendation of the Aviation Authority or the manufacturers
of the Aircraft, any Engine or any Part or any rule or
regulation of the Aviation Authority or for any purpose for
which the Aircraft is not designed or reasonably suitable;
-35-
(c) ensure that the crew and engineers employed by it in
connection with the operation and maintenance of the Aircraft
have the qualifications and hold the licences required by the
Aviation Authority and applicable law;
(d) use the Aircraft solely in commercial or other operations for
which the Lessee is duly authorized by the Aviation Authority
and applicable law;
(e) not knowingly use the Aircraft (or use it when the Lessee
ought reasonably to have known that it was being so used) for
the carriage of:
(i) whole animals, living or dead, except in the cargo
compartments according to I.A.T.A. regulations, and
except domestic pet animals carried in a suitable
container to prevent the escape of any liquid and to
ensure the welfare of the animal;
(ii) acids, toxic chemicals, other corrosive materials,
explosives, nuclear fuels, nuclear wastes or any
nuclear assemblies or components, except as permitted
for cargo aircraft under the "Restriction of Goods"
schedule issued by I.A.T.A. from time to time and
provided that all the requirements for packaging or
otherwise contained therein are fulfilled;
(iii) any other goods, materials or items of cargo which
could reasonably be expected to cause damage to the
Aircraft and which would not be adequately covered by
the Insurances; or
(iv) any illegal item or substance;
(f) not utilize the Aircraft for purposes of training, qualifying
or re-confirming the status of cockpit personnel except for
the benefit of the Lessee's cockpit personnel, and then only
if the use of the Aircraft for such purpose is not
disproportionate to the use for such purpose of other aircraft
of the same type operated by the Lessee;
(g) not (other than for bona fide safety reasons) cause or permit
the Aircraft to proceed to, or remain at, any location which
is for the time being the subject of a prohibition order (or
any similar order or directive) by:
(i) any Government Entity of the State of Registration or
the Habitual Base; or
(ii) any Government Entity of the country in which such
location is situated; or
(iii) any Government Entity having jurisdiction over the
Lessor, the Lender or the Aircraft;
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(h) obtain and maintain in full force all certificates, licences,
permits and authorizations required for the use and operation
of the Aircraft for the time being, and for the making of
payments required by, and the compliance by the Lessee with
its other obligations under, this Agreement.
8.4 TAXES AND OTHER CHARGES
THE Lessee will promptly pay:
(a) all licence and registration fees, Taxes (other than Lessor
Taxes) and other amounts of any nature imposed by any
Government Entity that are imposed on the Lessee or for which
the Lessee is responsible under this Agreement with respect to
the Aircraft, including the purchase, ownership, delivery,
leasing, possession, use, operation, return, sale or other
disposition of the Aircraft; and
(b) all rent, fees, charges, Taxes (other than Lessor Taxes)
imposed on the Lessee and other amounts in respect of any
premises where the Aircraft or any Part thereof is located
from time to time during the Term;
except to the extent that such payment is being contested in good
faith by appropriate proceedings in accordance with Clause 5.10.
8.5 SUB-LEASING
(a) Subject to sub-clause (b) below, the Lessee will not, without
the prior written consent of the Lessor and the Lender (such
consent not to be unreasonably withheld), sub-lease, "wet
lease" or otherwise part with possession of the Aircraft, the
Engines or any Part except that the Lessee may part with
possession:
(i) so long as no Default or Event of Default has
occurred and is continuing, with respect to the
Aircraft, the Engines or any Part to the relevant
manufacturers for testing or similar purposes or to
an Agreed Maintenance Performer for service, repair,
maintenance or overhaul work or for alterations,
modifications or additions to the extent required or
permitted by this Agreement;
(ii) with respect to an Engine or Part, as expressly
permitted by this Agreement; and
(iii) so long as no Default or Event of Default has
occurred and is continuing, sublease the Aircraft,
the Airframe or any Engines for a term (including any
renewals or extensions) not to continue beyond the
remaining Term, (1) to any U.S. Air Carrier or (2)
upon the written consent of Lessor and Lender (which
consent shall not be unreasonably withheld), to a
Other Permitted Air Carrier.
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(b) The Lessor's consent shall not be required in relation to a
"wet lease" or charter of the Aircraft in which operational
control of the Aircraft remains with the Lessee at all times,
provided the Aircraft remains registered with the Aviation
Authority.
(c) With respect to any transaction pursuant to Clause
8.5(a)(iii):
(i) except as expressly provided below, the rights of any
sublessee who receives possession by reason of a
transfer permitted by Clause 8.5(a)(iii) shall be
subject and subordinate to, and any sublease shall be
made expressly subject and subordinate to, all the
terms of this Agreement, including the rights to
repossession pursuant to Clause 13.2 and to terminate
and avoid such Permitted Sublease upon such
repossession;
(ii) Lessee shall remain fully liable for the performance
of all the terms of this Agreement to the same extent
as if such sublease had not occurred;
(iii) such sublease shall be consistent with the
requirements of this Agreement, shall not affect the
registration of the Aircraft, shall not permit any
action not permitted to Lessee under this Agreement
and shall include appropriate provisions not more
favorable or extensive to the sublessee than those
contained in this Agreement for the continued
registration, insurance, maintenance and operation of
the Aircraft, the Airframe, the Engines and the
Parts;
(iv) at least 15 days prior to such sublease becoming
effective, Lessee shall give Lessor written notice of
its intent to sublet the Aircraft, the Airframe or
any Engine, which notice shall include the identity
of the proposed sublessee, the term and rental rate
of the proposed sublease and either a copy of such
sublease or the latest draft thereof (in which case
Lessee shall provide Lessor with copies of subsequent
drafts and a copy of the definitive sublease
agreement promptly after its effectiveness);
(v) such sublease shall expressly provide that the
sublessee may not further sublease the Aircraft,
Airframe or Engines except to the extent permitted to
Lessee pursuant to Clauses 8.5(a)(i) and (ii);
(vi) such sublease shall be assigned to Lessor as security
for Lessee's obligations under this Agreement, which
assignment (1) shall be assigned to Lender, and
Lessee shall have consented to the assignment of such
sublease as security to the Lender, (2) may provide
that so long as no Event of Default has occurred and
is continuing, Lessee shall retain all rights of
sublessor under such sublease, including the right to
receive payments of rent and to grant waivers and
consents thereunder, (3) shall otherwise be in form
and substance reasonably satisfactory to Lessor and
Lender, (4) shall be executed and delivered by Lessee
to Lessor and
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Lender, and all steps required for perfection shall
have been taken at Lessee's expense, at or before
commencement of such sublease, and (5) shall be
consented to by the sublessee; and any monies
received by Lessor pursuant to such assignment as a
result of the occurrence of a Default or an Event of
Default shall be held by Lessor as additional
security for the performance by Lessee of its
obligations under this Agreement and, to the extent
not applied against amounts due and owing by Lessee
under this Agreement and the exercise of remedies
under this Agreement, shall be returned to Lessee at
such time as no Default or Event of Default shall be
continuing;
(vii) Lessee shall have furnished to Lessor and Lender, at
no expense to Lessor or Lender, (1) a legal opinion
in form and substance reasonably satisfactory to
Lessor and Lender, from counsel to Lessee reasonably
satisfactory to Lessor and Lender, as to the due
execution, delivery and enforceability of the
sublease against Lessee, the due execution, delivery,
enforceability and perfection of such assignment and
as to such other matters as Lessor and Lender may
reasonably request, and (2) a legal opinion in form
and substance reasonably satisfactory to Lessor and
Lender, from counsel to the sublessee reasonably
satisfactory to Lessor and Lender, as to the due
execution, delivery and enforceability of the
sublease against sublessee and as to such other
matters as Lessor and Lender may reasonably request;
(viii) in the case of a sublease to a foreign sublessee,
Lessee shall have furnished to Lessor and Lender, at
no expense to Lessor or Lender, a legal opinion in
form and substance reasonably satisfactory to Lessor
and Lender from counsel reasonably satisfactory to
Lessor and Lender admitted to practice in the
jurisdiction in which such foreign sublessee is
domiciled to the effect that such sublease will not
impair the respective rights of, perfection and
priority of interest of and availability of remedies
to Lessor and Lender in respect of the subleased
Aircraft, Airframe or Engines and as to such other
matters relating to the laws of, and the enforcement
of foreign contracts and judgments in, such
jurisdiction as Lessor and Lender may reasonably
request; and
(ix) all necessary action shall be taken at Lessee's
expense which is required to continue the perfection
of Lessor's title and interest in and to, and
Lender's security interests in, the Aircraft,
Airframe, Engines, Parts and rights under this
Agreement, and such sublease and all other necessary
documents shall be duly filed, registered or recorded
in such public offices as may be required or
advisable to preserve fully the title and the
priority of the interest of the Lessor, and the
perfection and priority of the Liens of the Lender,
in and to the Aircraft, Airframe, Engines and Parts
and in and to this Agreement.
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8.6 INSPECTION
(a) The Lessor, the Lender and any person designated by the Lessor
or the Lender may at any time visit, inspect and survey the
Aircraft, any Engine or any Part and for such purpose may,
subject to any applicable Aviation Authority regulation,
travel on the Right deck as observer.
(b) The Lessor and the Lender shall bear its own costs and
expenses in connection with any such visit, inspection or
survey unless the visit, inspection or survey discloses that
the Lessee is in breach of its material obligations under this
Agreement, in which case such costs and expenses shall be paid
by the Lessee on demand.
(c) The Lessor shall:
(i) have no duty to make, or liability arising out of,
any such visit, inspection or survey; and
(ii) so long as no Default has occurred and is continuing,
not exercise such right other than on reasonable
notice and so as not to disrupt unreasonably the
maintenance or operation of the Aircraft.
8.7 PROTECTION OF TITLE
The Lessee shall:
(a) not do or knowingly permit to be done or omit or knowingly
permit to be omitted to be done any act or thing which might
reasonably be expected to jeopardize the respective rights,
title and interest of the Lender as mortgagee of the Aircraft
and assignee of this Agreement or the Lessor as owner of the
Aircraft and lessor under this Agreement or the validity,
enforceability or priority of the Mortgage and the Assignment;
(b) on all occasions when the ownership of the Aircraft, any
Engine or any Part is relevant, make clear to third parties
that title is held by the Lessor and is subject to the
Mortgage;
(c) not at any time:
(i) represent or hold out the Lessor or the Lender as
carrying goods or passengers on the Aircraft or as
being in any way connected or associated with any
operation or carriage (whether for hire or reward or
gratuitously) which may be undertaken by the Lessee;
or
(ii) pledge the credit of the Lessor or the Lender;
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(d) ensure that there is always affixed, and not removed or in any
way obscured, a fireproof plate (having dimensions of not less
than 6 in. x 4 in.) in a reasonably prominent position on the
Aircraft and on each Engine stating:
"This Aircraft/Engine is owned by ACG Acquisition
VIII LLC, is leased to Aloha Airlines, Inc. and is
subject to a mortgage and security agreement in favor
of FINOVA Capital Corporation. It may not be operated
by any other person without the prior written consent
of ACG Acquisition VIII LLC and FINOVA Capital
Corporation.";
(e) not create or permit to exist any Security Interest upon the
Aircraft, any Engine or any Part;
(f) not do or permit to be done anything which may reasonably be
expected to expose the Aircraft, any Engine or any Part to
penalty, forfeiture, impounding, detention, appropriation,
damage or destruction and, without prejudice to the foregoing,
if any such penalty, forfeiture, impounding, detention,
appropriation, damage or destruction occurs, give the Lessor
notice and use its best efforts to procure the immediate
release of the Aircraft, such Engine or such Part, as the case
may be;
(g) not abandon the Aircraft, the Engine or any Part;
(h) pay and discharge or cause to be paid and discharged when due
and payable or make adequate provision by way of security or
otherwise for all debts, damages, claims and liabilities which
have given or might reasonably be expected to give rise to a
Security Interest over or affecting the Aircraft, any Engine
or any Part; and
(i) not attempt, or hold itself out as having any power, to sell,
lease or otherwise dispose of the Aircraft, any Engine or any
Part other than as expressly permitted by this Agreement.
8.8 GENERAL
The Lessee will:
(a) not make any substantial change in the nature of the business
in which it is engaged if such change, in the reasonable
opinion of the Lessor, might reasonably be expected to have a
material adverse effect on the Lessee's performance of its
obligations under this Agreement;
(b) preserve its corporate existence, and will not merge or
consolidate with any person unless the successor person
resulting from such merger or consolidation (the "SUCCESSOR"):
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(i) is the Lessee or an Affiliate incorporated in the
State of Incorporation or another State of the United
States of America;
(ii) shall have a net worth immediately after such merger
or consolidation of not less than the Lessee's net
worth immediately prior thereto;
(iii) shall be authorized under applicable law to perform
the Lessee's obligations under this Agreement to the
same extent as the Lessee;
(iv) shall deliver to the Lessor an agreement in form and
substance reasonably satisfactory to the Lessor
containing an assumption by the Successor of the
Lessee's representations and warranties under this
Agreement, together with the due and punctual
performance of all the Lessee's obligations under
this Agreement; and
(v) shall deliver to the Lessor an opinion of counsel
reasonably satisfactory in form and substance to the
Lessor to the effect that the agreement referred to
in subclause (iii) above constitutes the Successor's
legal, valid and binding obligations; and
(c) ensure that no change will occur in the Habitual Base of the
Aircraft without the prior written consent of the Lessor.
8.9 RECORDS
The Lessee shall procure that accurate, complete and current records of
all flights made by, and all maintenance carried out on, the Aircraft
(including, in relation to each Engine and Part subsequently installed,
before the installation) are kept in English, and shall keep the
records in such manner as the Aviation Authority may from time to time
require. The records will form part of the Aircraft Documents.
8.10 REGISTRATION AND FILINGS
The Lessee shall:
(a) not do anything that might reasonably be expected to adversely
affect the registration of the Aircraft with the Aviation
Authority reflecting (so far as permitted by applicable law)
the respective interests of the Lessor and the Lender;
(b) do all acts and things (including making any filing or
registration with the Aviation Authority or any other
Government Entity) and executing and delivering all documents
(including any amendment of this Agreement) as may be required
by the Lessor
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following any modification of the Aircraft, any Engine or any
Part or the permanent replacement of any Engine or Part in
accordance with this Agreement, so as to ensure that the
respective rights of the Lessor and the Lender under this
Agreement apply with the same effect as before.
8.11 MAINTENANCE AND REPAIR
THE Lessee shall:
(a) keep the Aircraft airworthy in all respects and in good repair
and condition;
(b) advise the Lessor and Lender in writing of all material
changes to the Agreed Maintenance Program;
(c) maintain the Aircraft in accordance with the Agreed
Maintenance Program through Agreed Maintenance Performers and
perform (at the respective intervals provided in the Agreed
Maintenance Program) all Major Checks;
(d) maintain the Aircraft in accordance with FAR Part 121 and any
other rules and regulations of the Aviation Authority as are
applicable to aircraft of the same type as the Aircraft
operated by United States of America air carriers, subject to
the special exemptions permitted Lessee regarding compliance
with the Airport Noise and Capacity Act of 1990, as amended,
and the regulations promulgated by the FAA thereunder;
(e) comply with all mandatory inspection and modification
requirements, airworthiness directives and similar
requirements applicable to the Aircraft, any Engine or Part
having a compliance date during the Term and that are required
by the Aviation Authority;
(f) comply with all alert service bulletins issued by any
manufacturer of the Aircraft, Engines or Parts, and comply
(including scheduling complying work and then performing such
work on schedule) with all other service bulletins issued by
any such manufacturer if and to the extent that the Lessee
brings or schedules to bring in compliance at least one-half
of the applicable aircraft it operates (excluding for purposes
of such calculation aircraft acquired from unrelated third
parties that already comply with such other service
bulletins);
(g) comply with all applicable laws and the regulations of the
Aviation Authority and any other aviation authorities with
jurisdiction over the Lessee or the Aircraft, any Engine or
Part that relate to the maintenance, condition, use or
operation of the Aircraft or require any modification or
alteration to the Aircraft, any Engine or Part;
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(h) maintain in good standing a current U.S. Standard Transport
Category Certificate of Airworthiness for the Aircraft issued
by the Aviation Authority in accordance with FAR Part 21
except when the Aircraft is undergoing maintenance,
modification or repair required or permitted by this Agreement
and shall from time to time provide to the Lessor a copy on
request;
(i) if required by the Aviation Authority, maintain a current
certification as to maintenance issued by or on behalf of the
Aviation Authority in respect of the Aircraft and shall from
time to time provide to the Lessor a copy on request;
(j) maintain the Engines with respect to overhaul build standards
and disc replacements at a level which is consistent with the
level applied by the Lessee in relation to other engines of
the same type as the Engines in its fleet, provided, however,
Lessee may maintain the Engines with respect to overhaul build
standards and disc replacements in such manner as to achieve
minimal compliance with return conditions;
(k) maintain the Engines and the APU in a "on condition" program
as set forth in the respective manufacturer's maintenance
planning document; and
(1) subject to Clause 11. 1 (c), procure promptly the replacement
of any Engine or Part which has become time, cycle or calendar
expired, lost, stolen, seized, confiscated, destroyed, damaged
beyond repair, unserviceable or permanently rendered unfit for
use, with an engine or part complying with the conditions set
out in Clause 8.13 (a).
8.12 REMOVAL OF ENGINES AND PARTS
The Lessee will ensure that no Engine or Part installed on the Aircraft
is at any time removed from the Aircraft other than:
(a) if replaced as expressly permitted by this Agreement; or
(b) if the removal is of an obsolete item and is in accordance
with the Agreed Maintenance Program; or
(c) pursuant to, and in accordance with, Clause 8.15; or
(d) (i) during the course of maintaining, servicing,
repairing, overhauling or testing that Engine or the
Aircraft, as the case may be; or
(ii) as part of a normal engine or part rotation program;
or
(iii) for the purpose of making such modifications to the
Engine or the Aircraft, as the case may be, as are
permitted under this Agreement,
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and then in each case only if it is reinstalled or replaced by
an engine or part complying with Clause 8.13(a) as soon as
practicable and in any event no later than the Expiry Date.
8.13 INSTALLATION OF ENGINES AND PARTS
(a) The Lessee will ensure that, except as permitted by this
Agreement, no engine or part is installed on the Aircraft
unless:
(i) in the case of an engine, it is an engine of the same
model as, or an improved or advanced version of the
Engine it replaces (provided, in the case of an
improved or advanced version, it can be installed and
operated on the Airframe without modification of the
Airframe or the engine, whether or not the other
installed Engine is also such an improved or advanced
version), which has attached to it a current
"serviceable tag" issued by the manufacturer or
supplier indicating that the engine is new,
serviceable or overhauled, and the Lessee shall
retain all such tags;
(ii) in the case of a part, it is in as good operating
condition, is of the same interchangeable
modification status as the replaced Part and has
attached to it a current "serviceable tag" issued by
the manufacturer or supplier indicating that the part
is new, serviceable or overhauled, and the Lessee
shall retain all such tags;
(iii) in the case of a part, it has become and remains the
property of the Lessor free from Security Interests
and on installation on the Aircraft will, without
further act, be subject to this Agreement and to the
security interest created by the Mortgage, in which
case title to the removed part shall automatically
become vested in Lessee without further action or
warranty on the part of Lessor except that such Part
shall be free of Lessor Liens; and
(iv) in each case, the Lessee has full details as to its
source and maintenance records.
(b) If no Default has occurred which is continuing, the Lessee
will be entitled to install any engine or part on the Aircraft
by way of replacement notwithstanding Clause 8.13(a) if.
(i) there is not available to the Lessee at the time and
in the place that engine or part is required to be
installed on the Aircraft a replacement engine or
part complying with the requirements of Clause 8.13
(a);
(ii) it would result in an unreasonable disruption of the
operation of the Aircraft or the business of the
Lessee to ground the Aircraft until an engine or part
complying with Clause 8.13(a) becomes available for
installation on the Aircraft; and
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(iii) as soon as practicable after installation of the same
on the Aircraft but, in any event, no later than the
earlier of (1) 60 days after such installation and
(2) the Expiry Date, the Lessee removes any such
engine or part and replaces it with the Engine or
Part replaced by it or by an engine or part complying
with Clause 8.13(a).
(c) If no Default has occurred which is continuing, the Lessee
will be entitled to install Lessee Installed Parts on the
Airframe by way of replacement notwithstanding Clause
8.13(a)(iii) so long as:
(i) the terms of any lease, conditional sale agreement or
security agreement, as the case may be, covering such
Lessee Installed Part will not have the effect of
prejudicing the title and interest of the Lessor in
and to the Aircraft (including its Engines and Parts)
or the interest of the Lender in respect thereof
under the Mortgage;
(ii) the secured party, lessor or conditional vendor, as
the case may be, of such Lessee Installed Part has
confirmed and acknowledged in writing (which such
confirmation and acknowledgment may be contained in
the lease, conditional sale agreement or security
agreement) to the Lessor and the Lender, in form and
substance satisfactory to the Lessor, that it will
recognize the respective rights, title and interest
of the Lessor and the Lender in and to the Aircraft
(including its Engines and Parts) and that it will
not seek to exercise any rights whatever in relation
thereto; and
(iii) before the Expiry Date the Lessee removes any such
Lessee Installed Part and replaces it with the Part
replaced by it or by another part, in either case
complying with Clause 8.13(a).
(d) The Lessor agrees, for the benefit of the Lessee and any
mortgagee or holder of any other Security Interest in any
engine (other than an Engine) or Lessee Installed Part owned
by the Lessee, any lessor of any engine (other than an Engine
leased to the Lessee) or Lessee Installed Part and any
conditional vendor of any engine (other than an Engine
purchased by the Lessee subject to a conditional sale
agreement or any other security agreement) or Lessee Installed
Part, that no right, title to or interest in any such engine
or Lessee Installed Part shall be exercised or asserted by the
Lessor and the Lessor acknowledges and confirms that it will
not acquire any right, title or interest to or in any such
engine or Lessee Installed Part as a result of its
installation on the Airframe.
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8.14 NON-INSTALLED ENGINES AND PARTS
(a) The Lessee shall ensure that any Engine or Part which is not
installed on the Airframe (or any other airframe as permitted
by this Agreement) is, except as expressly permitted by this
Agreement, properly and safely stored and kept free from
Security Interests, with insurance thereon complying with the
requirements of this Agreement.
(b) Notwithstanding sub-clause (a), the Lessee shall be permitted,
if no Default has occurred and is continuing, to install any
Engine on an airframe and any Part on an airframe or engine:
(i) owned and operated by the Lessee free from Security
Interests;
(ii) leased or hired to the Lessee pursuant to a lease or
conditional sale agreement on a long-term basis and
on terms whereby the Lessee has full operational
control of that aircraft or engine; or
(iii) acquired or financed by the Lessee and operated by
the Lessee on terms that ownership of that aircraft
or engine, as the case may be, pursuant to a lease,
conditional sale agreement or Security Interest is
vested in or held by any other person;
provided that in the case of (ii) and (iii):
(1) the terms of any such lease, conditional sale
agreement or Security Interest will not have the
effect of prejudicing the title and interest of the
Lessor in and to that Engine or Part or the interest
of the Lender in respect thereof under the Mortgage;
and
(2) the lessor under such lease, the seller under such
conditional sale agreement or the secured party of
such Security Interest, as the case may be, has
confirmed and acknowledged in writing (which such
confirmation and acknowledgment may be contained in
the lease, conditional sale agreement or document
creating the Security Interest) to the Lessor and the
Lender, in form and substance satisfactory to the
Lessor, that it will recognize the respective rights,
title and interest of the Lessor and the Lender to
and in that Engine or Part and that it will not seek
to exercise any rights whatever in relation thereto.
8.15 POOLING OF ENGINES AND PARTS
The Lessee will not enter into nor permit any pooling agreement or
arrangement in respect of an Engine or Part without the prior written
consent of the Lessor and the Lender, such consent not to be
unreasonably withheld in any case where an Engine or Part is leased,
let
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on hire or otherwise made available by the Lessee (on terms conferring
no more than a contractual right IN PERSONAM against the Lessee and not
a right IN REM against such Engine or Part) pursuant to a pooling
agreement to which the Lessee is a party and:
(a) the other parties to which are reputable, solvent commercial
air carriers or the manufacturers or suppliers of the Engine
or Part (or other reputable, solvent organizations whose
business includes the administration of and participation in
such pooling agreements or arrangements); and
(b) which does not contemplate the transfer of title to the pooled
Engine or Part; and
(c) either provides that the Lessor (or the Lender, as the case
may be) will be sole loss payee in respect of any loss or
damage to the Engine or Part, or provides for Lessor to
acquire title to a substitute engine or part satisfying the
conditions set out in Clause 8.13(a) if the Engine or Part is
destroyed.
8.16 EQUIPMENT CHANGES
(a) The Lessee will not make any modification or addition to the
Aircraft (each an "EQUIPMENT CHANGE"), except for an Equipment
Change that:
(i) is expressly permitted by any other provision of this
Agreement, or
(ii) has the prior written approval of the Lessor and the
Lender (which approval shall not be unreasonably
withheld provided the proposed Equipment Change will
not, in the reasonable opinion of the Lessor and the
Lender, diminish the value, utility, condition or
airworthiness of the Aircraft), except for painting
or minor cabin interior modifications not affecting
the structure of the Airframe, any or all of which
may be made without such prior approval.
(b) So long as no Event of Default has occurred and is continuing,
the Lessee may remove any Equipment Change if it can be
removed from the Aircraft without diminishing or impairing the
value, utility, condition or airworthiness of the Aircraft.
8.17 TITLE TO ENGINES AND PARTS
(a) Title to all engines and parts installed on the Aircraft,
whether by way of replacement as the result of an Equipment
Change or otherwise (except those installed pursuant to Clause
8.13(b) or Clause 8.15) will on installation, without further
act, vest in the Lessor subject to this Agreement free and
clear of all Security Interests. The Lessee will at its own
expense take all such steps and execute, and procure the
execution of, all such instruments that are necessary to
ensure that title so passes to the Lessor and is subject to
the Security Interest created by the Mortgage according to all
applicable
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laws. At any time when requested by the Lessor, the Lessee
will provide evidence to the Lessor's reasonable satisfaction
(including the provision, if required, to the Lessor of one of
more legal opinions) that title has so passed to the Lessor
and is subject to the Security Interest created by the
Mortgage.
(b) The Lessor may require the Lessee to remove any Equipment
Change and to restore the Aircraft to its condition prior to
that Equipment Change.
(c) Except as referred to in Clause 8.16(b), any Engine or Part at
any time removed from the Aircraft will remain the property of
the Lessor until a replacement has been made in accordance
with this Agreement and until title to that replacement has
passed, according to applicable laws, to the Lessor subject to
this Agreement free of all Security Interests, whereupon title
to the Engine or Part will, provided no Default has occurred
and is continuing, pass to the Lessee free of Lessor Liens.
8.18 THIRD PARTIES
The Lessee shall procure that no person having possession of the
Aircraft during the Term (other than the Lessor or the Lender) will act
in any manner inconsistent with the Lessee's obligations under this
Agreement and that all such persons shall comply with those obligations
as if references to "Lessee" included a separate reference to those
persons.
9. INSURANCE
9.1 INSURANCES
The Lessee will maintain in full force and effect during the Term
insurances in respect of the Aircraft in form and substance reasonably
satisfactory to the Lessor (the "INSURANCES") through such brokers and
with such insurers and having such deductibles and being subject to
such exclusions as are usual and customary in the worldwide aviation
insurance marketplace for air carriers operating similar equipment who
are similarly situated with Lessee. The Insurances will be effected
either on a direct basis with insurers of recognized standing who
normally participate in aviation insurances in the leading
international insurance markets and led by reputable underwriters
approved by the Lessor and the Lender, such approval not to be
unreasonably withheld. The Lessor acknowledges and confirms that the
current deductibles and exclusions, together with the existing brokers
and insurers, in respect of the insurances maintained by Lessee on the
date of the Purchase Agreement are acceptable to it and the Lender.
9.2 REQUIREMENTS
The Lessor's current requirements as to required Insurances are as
specified in this Clause and in Part I of Schedule 4. Except for the
amount of the Agreed Value, the Minimum
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Liability Coverage and the deductible under Lessee's hull and war risk
insurance policies, the Lessor may from time to time stipulate such
other requirements for the Insurances as the Lessor reasonably
considers necessary to ensure that the scope and level of cover is
maintained in accordance with the then prevailing industry practice in
relation to aircraft of the same type as the Aircraft and in relation
to operators of similar standing to the Lessee. In the event that the
Lessor proposes any such stipulation, it shall notify the Lessee
accordingly and the Lessor and/or its brokers will then consult in good
faith with the Lessee and the Lessee's brokers (as for the time being
approved by the Lessor) with regard to such proposed stipulation. If,
following the consultation, the Lessor is satisfied that the
stipulation should be made, the Lessee shall then comply with the
stipulated requirements.
9.3 INSURANCE COVENANTS
The Lessee shall:
(a) ensure that all legal requirements as to insurance of the
Aircraft, any Engine or any Part that may from time to time be
imposed by the laws of the State of Registration or any
jurisdiction to, from or over which the Aircraft may be flown,
in so far as they affect or concern the operation of the
Aircraft, are complied with and, in particular, those
requirements compliance with which is necessary to ensure
that:
(i) the Aircraft does not become subject to detention or
forfeiture;
(ii) the Insurances remain valid and in full force and
effect; and
(iii) the interests of the Indemnitees in the Insurances
and the Aircraft or any Part are not thereby
prejudiced;
(b) not use, cause or permit the Aircraft, any Engine or any Part
to be used for any purpose or in any manner not covered by the
Insurances or outside any geographical limit imposed by the
Insurances;
(c) comply with the terms and conditions of each policy of the
Insurances and not do, consent or agree to any act or omission
that:
(i) invalidates or may reasonably be expected to
invalidate the Insurances;
(ii) renders or may reasonably be expected to render void
or voidable the whole or any part of any of the
Insurances; or
(iii) brings any particular liability within the scope of
an exclusion or exception to the Insurances;
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(d) not take out without the prior written approval of the Lessor
any insurance in respect of the Aircraft other than those of
the type required under this Agreement unless relating solely
to hull total loss, business interruption, engine break-down,
profit commission and deductible risk;
(e) commence renewal procedures at least 30 days prior to the
expiration of any of the Insurances and provide to the Lessor
and the Lender:
(i) if requested by the Lessor, a written status report
of renewal negotiations 14 days prior to each
expiration date;
(ii) telefaxed confirmation of completion of renewal prior
to each expiration date; and
(iii) a certificate of insurance and broker's letter of
undertaking substantially in the form set out in
Parts 2 and 3 of Schedule 4, detailing the coverage
and confirming the insurers' agreement to the
specified insurance requirements of this Agreement
within seven days after each renewal date;
(f) provide to the Lessor and the Lender copies of those documents
evidencing the Insurances which the Lessor and the Lender may
reasonably request;
(g) on request, provide to the Lessor and the Lender evidence that
the Insurance premiums have been paid;
(h) not make any modification or alteration to the Insurances
material and adverse to the interests of any of the
Indemnitees;
(i) be responsible for any deductible under the Insurances; and
(j) provide any other insurance related information, or
assistance, in respect of the Insurances as the Lessor may
reasonably request.
9.4 FAILURE TO INSURE
If the Lessee fails to maintain the Insurances in compliance with this
Agreement, each of the Indemnitees will be entitled but not obligated
(without prejudice to any other rights of the Lessor under this
Agreement):
(a) to pay the premiums due or to effect and maintain insurances
satisfactory to it or otherwise remedy the Lessee's failure in
such manner (including to effect and maintain an "owner's
interest" policy) as it considers appropriate. Any sums so
expended by it will become immediately due and payable by the
Lessee to the Lessor on demand (such demand being made as soon
as reasonably practicable following the incurring of such
-51-
expenditure), together with interest thereon at the Default
Rate from the date of expenditure by it up to the date of
reimbursement by the Lessee (before and after any judgment);
and
(b) at any time while such failure is continuing to require the
Aircraft to remain at any airport or to proceed to and remain
at any airport designated by it until the failure is remedied
to its reasonable satisfaction.
9.5 CONTINUING INDEMNITY
The Lessor may require the Lessee to effect and to maintain insurance
after the Expiry Date with respect to its liability under the
indemnities in Clause 10 for such period as the Lessor may reasonably
require (but in any event not more than three years) providing for each
Indemnitee to be named as additional insured. The Lessee's obligation
under this Clause 9.5 shall not be affected by the Lessee ceasing to be
lessee of the Aircraft or any of the Indemnitees ceasing to have any
interest in respect of the Aircraft.
9.6 APPLICATION OF INSURANCE PROCEEDS
As between the Lessor and the Lessee:
(a) All insurance payments, up to the Agreed Value, received as
the result of a Total Loss occurring during the Term will be
paid to the Lender.
(b) All insurance proceeds in respect of any damage or loss to the
Aircraft, any Engine or any Part occurring during the Term not
constituting a Total Loss and involving insurance proceeds in
excess of the Damage Notification Threshold will be paid to
the Lender and applied in payment (or to reimburse the Lessee)
for repairs or replacement property upon the Lessor being
reasonably satisfied that the repairs or replacement have been
effected in accordance with this Agreement. Insurance proceeds
in amounts below the Damage Notification Threshold may be paid
by the insurer directly to the Lessee. Any balance remaining
may be retained by the Lessee.
(c) All insurance proceeds in respect of third party liability
will be paid to the relevant third party.
(d) Notwithstanding Clauses 9.6(a) and (b), if at the time of the
payment of any such insurance proceeds a Default has occurred
and is continuing all such proceeds will be paid to or
retained by the Lender to be applied toward payment of any
amounts that may be or become payable by the Lessee in such
order as the Lessor and the Lender see fit or as the Lessor
and the Lender may elect. In the event that the Lessee
remedies any such Default to the reasonable satisfaction of
the Lessor, the Lessor shall procure that all such insurance
proceeds then held by the Lender in excess of the amounts (if
any)
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applied by the Lessor in accordance with this sub-clause (d)
shall be paid promptly to the Lessee.
10. INDEMNITY
10.1 GENERAL
The Lessee shall defend, indemnify and hold harmless the Indemnitees
from and against any and all claims, proceedings, losses, liabilities,
suits, judgments, costs, expenses, penalties or fines (each a "CLAIM")
regardless of when the same is made or incurred, whether during or
after the Term (but not before):
(a) that may at any time be suffered or incurred directly or
indirectly as a result of or connected with possession,
delivery, performance, management, registration, control,
maintenance, condition, service, repair, overhaul, leasing,
sub-leasing, use, operation or return of the Aircraft, any
Engine or Part (either in the air or on the ground) whether or
not the Claim may be attributable to any defect in the
Aircraft, any Engine or any Part or to its design, testing,
use or otherwise, and regardless of when the same arises or
whether it arises out of or is attributable to any act or
omission, negligent or otherwise, of any Indemnitee;
(b) that arise out of any act or omission that invalidates or that
renders voidable any of the Insurances;
(c) that may at any time be suffered or incurred as a consequence
of any design, article or material in the Aircraft, any Engine
or any Part or its operation or use constituting an
infringement of patent, copyright, trademark, design or other
proprietary right or a breach of any obligation of
confidentiality owed to any person,
but excluding any Claim to the extent that:
(1) it arises directly as a result of the wilful
misconduct or gross negligence of an Indemnitee;
(2) it arises directly as a result of a breach by the
Lessor of its express obligations under this
Agreement or as a result of a representation or
warranty given by the Lessor in this Agreement not
being true and correct at the date when, or when
deemed to have been, given or made;
(3) it constitutes a Lessor Tax or Lessor Lien;
(4) it represents a Tax or loss of tax benefits (the
Lessee's liabilities for which, to the extent
thereof, are set out in Clauses 5.5, 5.6 and 5.8);
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(5) it constitutes a cost or expense that is required to
be borne by the Lessor in accordance with any other
provision of this Agreement;
(6) it results from any disposition not caused by Lessee
of all or any part of Lessor's rights, title or
interest in or to the Aircraft or under this
Agreement, unless such disposition occurs as a
consequence of an Event of Default;
(7) it is attributable to an event occurring after the
Term unless the Claim results from or arises out of
an act or omission by the Lessee, or any circumstance
existing, during the Term; or
(8) it is brought after the Term and relates to a claimed
patent infringement by the Manufacturer.
10.2 MITIGATION
(a) The Lessor agrees that it shall, as soon as reasonably
practicable after it becomes aware of any circumstances that
would, or would reasonably be expected to, become the subject
of a claim for indemnification pursuant to Clause 10.1, notify
the Lessee in writing accordingly. The Lessor (and any other
Indemnitee seeking indemnification, as the case may be) and
the Lessee shall then consult with one another in good faith
in order to determine what action (if any) may reasonably be
taken to avoid or mitigate such Claim. The Lessee shall have
the right to take all reasonable action (on behalf and, if
necessary, in the name of the Lessor or such other Indemnitee)
in order to resist, defend or settle (provided such settlement
is accompanied by payment) any claims by third parties giving
rise to such Claim, provided always that the Lessee shall not
be entitled to take any such action unless adequate provision,
reasonably satisfactory to the Lessor and such other
Indemnitee, shall have been made in respect of the third party
claim and the costs thereof. The Lessee or, if the Claim is
covered by Lessee's Insurances, the Lessee's insurers shall be
entitled to select any counsel to represent it or them, the
Lessor and such other Indemnitee in connection with any such
action, subject in the case of Lessee to the approval of the
Lessor and such other Indemnitee (such approval not to be
unreasonably withheld) and any action taken by the Lessee
shall be on a full indemnity basis in respect of the Lessor
and such other Indemnitee.
(b) Any sums paid by the Lessee to the Lessor or any Indemnitee in
respect of any Claim pursuant to Clause 10.1 shall be paid
subject to the condition that, in the event that the Lessor or
such Indemnitee is subsequently reimbursed in respect of that
Claim by any other person, the Lessor or such Indemnitee
shall, provided no Default shall have occurred and be
continuing, promptly pay to the Lessee an amount equal to the
sum paid to it by the Lessee, including any interest on such
amount to the extent attributable thereto and received by the
Lessor or such Indemnitee, less any Tax payable by the Lessor
or such Indemnitee in respect of such reimbursement.
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10.3 DURATION
The indemnities contained in this Agreement will survive and continue
in full force after the Expiry Date.
11. EVENTS OF LOSS
11.1 TOTAL LOSS
(a) PRE-DELIVERY: If a Total Loss occurs prior to Delivery, this
Agreement will immediately terminate and, except as expressly
stated in this Agreement, neither party will have any further
obligation or liability under this Agreement except that the
Lessor will rebate to the Lessee the Security Deposit (if
theretofore paid pursuant to Clause 5.1) or, as the case may
be, return the Letter of Credit to the Lessee.
(b) POST-DELIVERY: If a Total Loss occurs after Delivery, the
Lessee will pay the Agreed Value to the Lender no later than
60 days after the Total Loss Date (the "SETTLEMENT DATE")
unless the Aircraft is restored to the Lessor or the Lessee
within that period (or, in the case of a Total Loss coming
within paragraph (c) of the definition of Total Loss and
involving the loss of the Lessor's title to the Aircraft, if
both the Aircraft and the Lessor's title thereto are restored
to the Lessor or, in the case of the Aircraft, to the Lessee
and the Lender's rights under the Mortgage are fully
restored). The receipt by the Lender of the insurance proceeds
in respect of the Total Loss on or prior to the Settlement
Date shall discharge the Lessee from its obligation to pay the
Agreed Value to the Lessor pursuant to this sub-clause (b),
provided such proceeds are not less than the Agreed Value. In
the event that the insurance proceeds are paid initially to
the Lessee and not to the Lender, they may be retained by the
Lessee if the Lessee shall have paid the Agreed Value to the
Lender, otherwise the Lessee shall pay the Agreed Value to the
Lender not later than the next Business Day following receipt
by the Lessee of such proceeds. In the event that the Lessee
pays the Agreed Value to the Lessor in accordance with this
sub-clause (b), the Lessor shall promptly assign to the Lessee
its rights under the Insurances to receive the insurance
proceeds in respect of the Total Loss to the extent that such
proceeds shall not have been paid to the Lessee. Subject to
the rights of any insurers or other third parties, upon
irrevocable payment in full to the Lessor of that amount and
all other amounts that may be or become payable to the Lessor
under this Agreement, the Lessor shall:
(i) without recourse or warranty (except as to the
absence of Lessor Liens), and without further act, be
deemed to have transferred to the Lessee all of the
Lessor's rights to any Engines or Parts not installed
when the Total Loss occurred, all on an "as-is where
is" basis, and shall, at the Lessee's expense,
execute and deliver such bills of sale and other
documents and instruments as the Lessee may
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reasonably request to evidence (on the public record
or otherwise) the transfer and the vesting of the
Lessor's rights in such Engines and Parts in the
Lessee, free and clear of all rights of the Lessor
and any Lessor Liens; and
(ii) pay to Lessee, as a rebate of prepaid Basic Rent, and
amount equal to the product of (1) one month's Basic
Rent multiplied by (2) a fraction the numerator of
which is the number of days remaining in the then
current Rental Period and the denominator of which is
the number of days in the then current Rental Period.
(c) ENGINE LOSS: Upon the occurrence of an Engine Loss (including,
for the avoidance of doubt, at a time when the Engine is not
installed on the Airframe) in circumstances in which there has
not also occurred a Total Loss, the Lessee shall give the
Lessor and the Lender written notice promptly upon becoming
aware of the same and shall (unless the Lessor has received
the insurance proceeds relating to such Engine Loss), within
60 days after the Engine Loss Date, convey or cause to be
conveyed to the Lessor, as replacement for such Engine, title
to a replacement engine that is in the same or better
operating condition, has the same or greater value and utility
as the lost Engine and that complies with the conditions set
out in Clause 8.13(a). The Lessee shall, at the time of such
conveyance, comply in all respects with Clause 8.17(a) so that
the replacement engine becomes an Engine, whereupon the
leasing of the replaced Engine the subject of the Engine Loss
shall cease and title to such replaced Engine shall (subject
to any salvage rights of insurers) vest in the Lessee pursuant
to Clause 8.17(c), free of Lessor Liens. If the Lessor or the
Lender subsequently receives any insurance proceeds relating
to such Engine Loss, the Lessor shall promptly remit such
proceeds or cause such proceeds to be remitted to the Lessee.
No Engine Loss with respect to any Engine that is replaced in
accordance with the provisions of this Clause 11.1 (c) shall
result in any increase or decrease in Basic Rent or the Agreed
Value.
11.2 REQUISITION
During any requisition for use or hire of the Aircraft, any Engine or
Part that does not constitute a Total Loss:
(a) the Basic Rent and Supplemental Rent payable under this
Agreement will not be suspended or abated either in whole or
in part, and the Lessee will not be released from any of its
other obligations under this Agreement (other than operational
obligations with which the Lessee is unable to comply solely
by virtue of the requisition); and
(b) so long as no Default has occurred and is continuing, the
Lessee will be entitled to any compensation payable by the
requisitioning authority in respect of the Term. The Lessee
will, as soon as practicable after the end of any such
requisition (with the Term being extended if and to the extent
that the period of requisition continues beyond the scheduled
Expiry Date), cause the Aircraft to be put into the condition
required by this
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Agreement. The Lessor will be entitled to all compensation
payable by the requisitioning authority in respect of any
change in the structure, state or condition of the Aircraft
arising during the period of requisition, and the Lessor will
apply such compensation in reimbursing the Lessee for the cost
of complying with its obligations under this Agreement in
respect of any such change, but so that, if any Default has
occurred and is continuing, the Lessor may apply the
compensation in or towards settlement of any amounts owing by
the Lessee under this Agreement. All such sums shall be held
by the Lender.
12. RETURN OF AIRCRAFT
12.1 REDELIVERY
On the Expiry Date or termination of the leasing of the Aircraft under
this Agreement, the Lessee shall, unless a Total Loss has occurred, at
its expense, redeliver the Aircraft and Aircraft Documents to the
Lessor at the Redelivery Location or such other airport as is mutually
acceptable to Lessor and Lessee in a condition complying with this
Clause 12 and Schedule 3, free and clear of all Security Interests and
Permitted Liens (other than the Lessor Liens).
12.2 FINAL CHECKS
Immediately prior to return of the Aircraft, Lessee shall perform the
following:
(a) Lessee shall perform (or have performed by an Agreed
Maintenance Performer) a full and complete zonal, systems and
structural check ("C" or its equivalent), including the
corresponding lower checks ("A" and "B" or equivalent) and any
other maintenance and inspections tasks that are a part
thereof, all in accordance with the Agreed Maintenance
Program. At return, the Airframe will have zero Flight Hours
since such "C" check, except for the acceptance Rights and the
ferry flight to the Redelivery Location. Lessee will also
weigh the Aircraft. Any discrepancies revealed during such
inspection will be corrected in accordance with Manufacturer's
maintenance and repair manuals or FAA-approved data. Lessee
shall also perform during such check, to the extent it is
able, any other work reasonably required by Lessor (and not
otherwise required under this Agreement) so long as such work
does not prevent Lessee from returning the Aircraft on the
Expiry Date, and Lessor shall reimburse Lessee for such work
at Lessee's preferred customer rates.
(b) Lessee shall perform (or have performed by an Agreed
Maintenance Performer) an internal and external corrosion
inspection in accordance with the manufacturer's corrosion
prevention and control program ("CPCP") specified for the
model type and correct any discrepancies in accordance with
the recommendations of the manufacturer and the manufacturer's
structural repair manual ("SRM"). In addition, all inspected
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areas will be properly treated with corrosion inhibitor as
recommended by manufacturer.
(c) If Lessee performed any structural inspections or tasks on a
sampling basis but did not perform such inspections on the
Aircraft, such work shall also be performed on the Aircraft.
(d) Lessee shall perform a videotape borescope inspection of the
low pressure and high pressure compressors and the turbine
area of the Engines. All items beyond the applicable Engine
manufacturer's maintenance manual limits will be rectified at
Lessee's sole cost and expense. No Engine will be "on watch"
for any reason requiring special or out of sequence
inspection.
(e) In accordance with the applicable maintenance manual, Lessee
shall perform a maximum power assurance run and condition,
acceleration and bleed valve scheduling checks on the Engines.
Lessee will record and evaluate the Engine performance, with
Lessor and/or its representative entitled to be present. The
performance and all operating parameters of each Engine will
be within the limits specified in the Engine manufacturer's
maintenance manual.
(f) Lessee shall have removed and blended all external and
interior markings.
(g) If the Engine historical and technical records and the
condition trend monitoring data of any Engine or the APU
indicate an abnormal acceleration in the rate of deterioration
in the performance of such Engine or APU, Lessee shall correct
such conditions causing the accelerated rate of deterioration.
12.3 FINAL INSPECTION
(a) During the 15 days prior to redelivery of the Aircraft, the
Lessee will make the Aircraft available to the Lessor and the
Lender for inspection ("FINAL INSPECTION") in order to verify
that the condition of the Aircraft complies with this
Agreement. The Final Inspection will be long enough to permit
the Lessor and the Lender to inspect, at their own cost, the
Aircraft Documents, the Aircraft and uninstalled Parts and the
Engines. The Lessor and the Lender shall attend and conduct
the Final Inspection diligently and, without limiting their
right to conduct the fall Final Inspection permitted by this
Agreement, will cooperate with the Lessee in order to complete
the Final Inspection as soon as reasonably practical.
(b) The Lessor and the Lender shall also be entitled, as part of
the Final Inspection, to require the Lessee to perform an
acceptance flight of up to three hours at the Lessee's cost
(with the Lessor's and the Lender's representatives as
on-board observers) and such further acceptance flights as may
be necessary in the event that the first or subsequent
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flights do not confirm that the Aircraft complies with the
requirements of this Agreement.
(c) At the request of Lessor, Lessee shall perform "bridging"
maintenance procedures for the purpose of standardizing the
Aircraft to the maintenance program of any subsequent
operator of the Aircraft; provided, however, that Lessor
shall pay to Lessee the Actual Cost of all "bridging"
procedures that are in excess of or not in lieu of the "C"
Check to be performed pursuant to Clause 12.2 and Schedule 3.
12.4 NON-COMPLIANCE
To the extent that, at the time of Final Inspection, the condition of
the Aircraft does not comply with this Agreement, the Lessee shall at
the option of the Lessor and the Lender:
(a) immediately rectify the non-compliance and, to the extent the
non-compliance extends beyond the Expiry Date, the Term will
be automatically extended until the non-compliance has been
rectified; or
(b) redeliver the Aircraft to the Lessor and indemnify the Lessor,
and provide security reasonably acceptable to the Lessor and
the Lender for that indemnity, against the cost of putting the
Aircraft into the condition required by this Agreement.
During any extension of the Term pursuant to sub-clause (a), this
Agreement will remain in full force and effect, including the
obligation to pay Basic Rent (which Lessee shall pay on a PER DIEM
basis weekly in advance); provided, however, that Lessee shall not
operate, or permit others to operate, the Aircraft after the Expiry
Date except for acceptance flights pursuant to Clause 12.2 and a ferry
flight to the Redelivery Location.
12.5 EXPORT DOCUMENTATION
Upon redelivery and upon request by the Lessor, the Lessee shall (a)
provide to the Lessor all documents necessary to export the Aircraft
from the State of Registration (including a valid and subsisting export
licence for the Aircraft), and (b) provide any documents requested by
the Lessor in connection with, and otherwise cooperate with, the
deregistration of the Aircraft by the Aviation Authority, including
causing the Aviation Authority to issue an Export Certificate of
Airworthiness to a country specified by the Lessor.
12.6 ACKNOWLEDGMENT
Provided the Lessee has complied with its obligations under this
Agreement, following redelivery of the Aircraft by the Lessee to the
Lessor at the Redelivery Location, the Lessor will deliver to the
Lessee an acknowledgment confirming that the Lessor is satisfied that
the
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Aircraft is in the condition required by this Agreement and has been
redelivered to the Lessor in accordance with this Agreement.
12.7 MAINTENANCE PROGRAM
(a) During the 20 day period preceding the scheduled Expiry Date
and upon the Lessor's request, the Lessee will provide the
Lessor or its agent reasonable access to the Agreed
Maintenance Program and the Aircraft Documents in order to
facilitate the Aircraft's integration into any subsequent
operator's fleet. The Lessor agrees that it will not disclose
the contents of the Agreed Maintenance Program to any person
or entity except to the extent necessary to monitor the
Lessee's compliance with this Agreement and/or to bridge the
maintenance program for the Aircraft from the Agreed
Maintenance Program to another program after the Expiry Date.
(b) Concurrent with providing the Aircraft Documents for Lessor's
review, Lessee shall provide to Lessor a written summary of
all sampling programs involving or affecting the Aircraft.
12.8 STORAGE
If the Lessor so requests, and subject to the availability of the
requisite space, the Lessee shall park and store the Aircraft at a
secure storage area, which may be at the Redelivery Location or at any
other suitable facility of the Lessee selected by the Lessee, wherever
located (the "STORAGE LOCATION"), on behalf of the Lessor for a period
not exceeding 30 days from the Expiry Date. During that period the
Aircraft shall be at the Lessee's risk (save as to any loss or damage
caused by the Lessor's wilful misconduct or gross negligence), and the
Lessee shall maintain and store the Aircraft in accordance with the
respective manufacturer's maintenance planning document and shall
insure the Aircraft in accordance with a "ground risk only" policy
usual and customary in the worldwide aviation insurance marketplace.
All storage, maintenance and insurance costs shall be borne by the
Lessee. If the Lessor so requests, and subject to the availability of
the requisite space, the Lessee shall continue to park and store the
Aircraft at the Storage Location on behalf of the Lessor for a further
period not exceeding 60 days. During that further period the Aircraft
shall be at the Lessor's risk (save as to any loss or damage caused by
the Lessee's wilful misconduct or gross negligence), but the Lessee
shall continue to maintain, store and insure the Aircraft in accordance
with this Clause 12.8. All reasonable storage, maintenance and
insurance costs incurred by the Lessee (excluding any profit element
accruing to the Lessee) during such further period shall be reimbursed
by the Lessor promptly upon presentation of supporting invoices and/or
receipts.
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13. DEFAULT
13.1 EVENTS
Each of the following events will constitute an Event of Default and a
repudiation of this Agreement by the Lessee:
(a) NON-PAYMENT: the Lessee fails to pay any amount payable by it
under this Agreement within 3 Business Days of the due date
for payment; or
(b) INSURANCE: the Lessee fails to comply with any provision of
clause 9 or any insurance required to be maintained under this
Agreement is canceled or terminated; or
(c) BREACH: the Lessee fails to comply with any other provision of
this Agreement and, if such failure is, in the reasonable
opinion of the Lessor, capable of remedy, the failure
continues for 30 days after notice from the Lessor to the
Lessee, PROVIDED HOWEVER, that, if such failure cannot
reasonably be remedied within such 30 day period and the
Lessee is diligently undertaking all necessary remedial
action, the 30 day period shall be extended for a further 15
days; or
(d) REPRESENTATION: any representation or warranty made (or deemed
to be repeated) by the Lessee in this Agreement or in any
document or certificate furnished to the Lessor pursuant to or
in connection with this Agreement is or proves to have been
incorrect in any material respect when made or deemed to be
repeated and the Lessee's ability to comply with its
obligations under this Agreement, and/or the Lessor's rights,
title and interest to and in the Aircraft and/or under this
Agreement, are thereby materially and adversely affected; or
(e) CROSS DEFAULT:
(i) any Financial Indebtedness of the Lessee or any of
its Affiliates that exceeds $500,000 is not paid when
due and any applicable grace period shall have
expired;
(ii) the security for any such Financial Indebtedness is
enforced; or
(iii) any lease, conditional sale, installment sale or
forward purchase agreement of the Lessee or any of
its Affiliates in respect of an aircraft is
terminated as a consequence of an event of default or
termination event (however described);
provided always, in any such case, it shall not constitute an
Event of Default under this Agreement:
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(1) if the relevant Financial Indebtedness constitutes
non-recourse borrowing or financing; or
(2) if the non-payment, acceleration, termination or
event in question is being contested by the Lessee in
good faith and on reasonable grounds and any
declaration of default, termination of agreement or
enforcement of security has been stayed by a court of
competent jurisdiction; or
(3) if the non-payment, acceleration, termination or
event in question is being discussed by the Lessee
with its creditors in good faith and on reasonable
grounds and there has been no declaration of default,
termination of agreement or enforcement of security;
(f) APPROVALS: any consent, authorization, licence, certificate or
approval of or registration with or declaration to any
Government Entity in connection with this Agreement,
including:
(i) any authorization required by the Lessee of, or in
connection with, the execution, delivery, validity,
enforceability or admissibility in evidence of this
Agreement or the performance by the Lessee of its
obligations under this Agreement; or
(ii) any airline licence, air transport licence,
franchise, concession, permit, certificate, right or
privilege required by the Lessee for the conduct of
its business,
is modified, withheld, revoked, suspended, canceled,
withdrawn, terminated or not renewed, or otherwise ceases to
be in full force and is not reissued, reinstated or renewed
within 30 days, PROVIDED HOWEVER that any such modification,
withholding, revocation, suspension, cancellation, withdrawal,
termination or non-renewal shall only constitute an Event of
Default if it has a material adverse effect on the Lessee's
ability to perform its obligations under this Agreement or the
Lessor's rights, title and interest to and in the Aircraft or
under this Agreement; or
(g) INSOLVENCY:
(i) the Lessee or any of its Affiliates is, or is deemed
for the purposes of any relevant law to be, unable to
pay its debts as they fall due or to be insolvent, or
admits inability to pay its debts as they fall due;
or
(ii) the Lessee or any of its Affiliates suspends making
payments on all or any class of its debts or
announces an intention to do so, or a moratorium is
declared in respect of any of its indebtedness; or
(h) BANKRUPTCY AND SIMILAR PROCEEDINGS
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(i) Lessee shall consent to the appointment of a
receiver, trustee or liquidator for itself or for a
substantial part of its property; or
(ii) Lessee shall admit in writing its inability to pay
its debts generally as they become due, or Lessee
shall make a general assignment for the benefit of
creditors; or
(iii) Lessee shall file a voluntary petition in bankruptcy
or a voluntary petition or answer seeking
reorganization in a proceeding under the 11 U.S.C.
Sections 101 ET SEQ. or under any other laws dealing
with bankruptcy, insolvency, moratorium or creditors'
rights generally (any or all of which are hereinafter
referred to as "BANKRUPTCY LAWS"), or an answer
admitting the material allegations of a petition
filed against Lessee in any such proceeding, or
Lessee shall by voluntary petition, answer or consent
to or seek relief under the provisions of any
Bankruptcy Laws; or
(iv) any order, judgment or decree is entered by a court
of competent jurisdiction appointing a receiver,
trustee or liquidator of Lessee or a substantial part
of its property, or ordering a substantial part of
Lessee's property is to be sequestered, and
instituted or done with the consent of Lessee or, if
instituted by another person, the order, judgment or
decree is not dismissed, remedied or relinquished
within 60 days; or
(v) a petition against Lessee in a proceeding under any
Bankruptcy Laws shall be filed and shall not be
withdrawn or dismissed within 60 days thereafter, or
if, under the provisions of any Bankruptcy Laws that
may apply to Lessee, any court of competent
jurisdiction shall assume jurisdiction, custody or
control of Lessee or of any substantial part of its
property; or
(vi) any step (including petition, proposal or convening a
meeting) is taken with a view to a composition,
assignment or arrangement with any creditors of, or
the reorganization, rehabilitation, administration,
liquidation, or dissolution of, the Lessee or any of
its Affiliates or any other insolvency proceedings
involving the Lessee or any of its Affiliates; or
(i) OTHER JURISDICTION: there occurs in relation to the Lessee or
any of its Affiliates any event anywhere which, in the
reasonable opinion of the Lessor, corresponds with any of
those mentioned in Clause 13.1 (h); or
(j) UNLAWFUL: it becomes unlawful for the Lessee to perform any of
its material obligations under this Agreement or this
Agreement becomes wholly or partly invalid or unenforceable,
provided that any such partial invalidity or unenforceability
shall only constitute an Event of Default if it has a material
adverse effect on the Lessee's ability
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to perform its obligations under this Agreement or the
Lessor's rights, title and interest in and to the Aircraft or
under this Agreement; or
(k) SUSPENSION OF BUSINESS: the Lessee or any of its Affiliates
suspends or ceases to carry on all or a substantial part of
its business; or
(l) DISPOSAL: the Lessee or any of its Affiliates disposes or
threatens to dispose of all or a material part of its assets,
whether by one or a series of transactions, related or not,
other than pursuant to a merger or consolidation as referred
to in, and subject to, Clause 8.8(b) or for the purpose of any
other reorganization or amalgamation the terms of which have
received the previous consent in writing of the Lessor; or
(m) RIGHTS: the existence, validity, enforceability or priority of
the rights of the Lessor as owner and lessor in respect of the
Aircraft or the rights of the Lender as mortgagee of the
Aircraft and assignee of this Agreement are challenged by the
Lessee or any other person claiming by or through the Lessee;
or
(n) CHANGE OF OWNERSHIP: any single person or group of persons
acquire control, directly or indirectly, of the Lessee without
the previous consent in writing of the Lessor (which consent
shall not be withheld unless the Lessor is of the reasonable
opinion that such acquisition of control will have a
materially adverse effect on the Lessee's ability to perform
its obligations under this Agreement or the Lessor's rights,
title and interest in and to the Aircraft or under this
Agreement), not including (i) persons that are currently in
control of Lessee, (ii) spouses of such persons, (iii) any
lineal ancestor or descendant of such persons, (iii) any
spouse of any person covered by clause (iii), or (v) a
partnership or trust set up for the benefit of persons
identified in clauses (i) through (iv); or
(o) DELIVERY: the Lessee fails to accept delivery of the Aircraft
when validly tendered pursuant to this Agreement by the Lessor
(provided that the Lessor shall have satisfied the conditions
precedent set out in Clause 3.4); or
(p) ADVERSE CHANGE: any event or series of events occurs which, in
the reasonable opinion of the Lessor, could be expected to
have a material adverse effect on the financial condition or
operations of the Lessee and its Affiliates or on the ability
of the Lessee to comply with its obligations under this
Agreement; or
(q) LETTER OF CREDIT: if the Lessee has elected to deliver the
Letter of Credit in lieu of the Security Deposit pursuant to
Clause 5.1(b), the Letter of Credit ceases for any reason to
be in full force and effect or is not renewed or replaced
before its expiration in accordance with Clause 5.1 (b) and
the Lessee does not immediately provide the Lessor with cash
in an amount equal to the Security Deposit.
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13.2 RIGHTS
If an Event of Default occurs, and for as long as it shall continue,
the Lessor may at its option (and without prejudice to any of its other
rights under this Agreement), at any time thereafter:
(a) treat such event as a repudiation by the Lessee of its
obligations under this Agreement and by notice to the Lessee
with immediate effect terminate the leasing of the Aircraft
(but without prejudice to the continuing obligations of the
Lessee under this Agreement), whereupon all rights of the
Lessee under this Agreement shall cease; and/or
(b) proceed by appropriate court action or actions to enforce
performance of this Agreement or to recover damages for the
breach of this Agreement; and/or
(c) either:
(i) take possession of the Aircraft, for which purpose
the Lessor may enter any premises belonging to,
occupied by or under the control of the Lessee (for
which purpose the Lessee hereby grants to the Lessor
an irrevocable licence to the extent permitted by
applicable law) where the Aircraft may be located, or
cause the Aircraft to be redelivered to the Lessor at
the Redelivery Location (or such other location as
the Lessor may require), and the Lessor is hereby
irrevocably authorized and empowered, to the extent
permitted by applicable law, to direct pilots of the
Lessee or other pilots to fly the Aircraft to that
airport and will have all the powers and
authorizations necessary for taking such action; or
(ii) by serving notice, require the Lessee to redeliver
the Aircraft to the Lessor at the Redelivery Location
(or such other location as the Lessor may require).
13.3 EXPORT
If an Event of Default occurs, and for as long as it shall continue,
the Lessor may sell or otherwise deal with the Aircraft as if this
Agreement had never been made and the Lessee will, at the request of
the Lessor, take all steps necessary to export the Aircraft from the
country where the Aircraft is for the time being situated and any other
steps necessary to enable the Aircraft to be redelivered to the Lessor
in accordance with this Agreement. The Lessee hereby irrevocably and by
way of security for its obligations under this Agreement authorizes and
empowers the Lessor as its attorney to execute and deliver any
documentation and to do any act or thing required in connection with
the foregoing.
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13.4 DEFAULT PAYMENTS
If a Default occurs, the Lessee will indemnify the Lessor on demand
against any loss, damage, expense, cost or liability which the Lessor
may sustain or incur directly or indirectly as a result, including:
(a) any loss of profit (calculated on an after-tax basis) suffered
by the Lessor because of the Lessor's inability to place the
Aircraft on lease with another Lessee on terms as favorable to
the Lessor as this Agreement or because whatever use, if any,
to which the Lessor is able to put the Aircraft upon its
return to the Lessor, is not as profitable (calculated on an
after-tax basis) to the Lessor as this Agreement would have
been but for such Default or non-delivery;
(b) in the event that the Aircraft is sold as a consequence of the
Lessor's inability to enter into a satisfactory lease within a
reasonable period, the amount (if any) by which (i) the
aggregate of (1) the net sale proceeds (calculated by
deducting the costs of sale together with the cost of
preparing the Aircraft for sale and the repayment of any
outstanding indebtedness in relation to the financing of the
Aircraft) plus (2) the present value of the anticipated
after-tax net income to be derived from such net sale proceeds
up to the scheduled Expiry Date, discounted on a monthly basis
using 9.5% PER ANNUM as the discount rate, are less than (ii)
the aggregate of (1) the anticipated net sale proceeds
(computed on the same basis as the net sale proceeds referred
to in (i)(1) above), assuming that the Aircraft would have
been sold as soon as reasonably practicable following the
scheduled Expiry Date plus (2) the present value of the income
that would have been derived from the future Basic Rent
payable until the scheduled Expiry Date, discounted on a
monthly basis using 9.5% PER ANNUM as the discount rate;
(c) any amount of principal, interest, fees or other sums
whatsoever paid or payable on account of funds borrowed in
order to carry any amount unpaid by the Lessee;
(d) any loss, premium, penalty or expense that may be incurred in
repaying funds raised to finance the Aircraft or in unwinding
any swap, forward interest rate agreement or other financial
instrument relating in whole or in part to the Lessor's
financing of the Aircraft; and
(e) any loss, cost, expense or liability sustained or incurred by
the Lessor owing to the Lessee's failure to redeliver the
Aircraft on the date, at the place and in the condition
required by this Agreement.
For the avoidance of doubt, the provisions of Clause 5.8(a) will apply
to any sums payable by the Lessee pursuant to this Clause 13.4.
14. ASSIGNMENT AND TRANSFER
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14.1 NO ASSIGNMENT BY LESSEE
The Lessee will not assign or create or permit to exist any Security
Interest over any of its rights under this Agreement.
14.2 LESSOR ASSIGNMENT
The Lessor may sell, assign or transfer all or any of its rights under
this Agreement and in the Aircraft (a "TRANSFER") and the Lessor will,
other than in the case of an assignment for security purposes, have no
further obligation under this Agreement following a Transfer but,
notwithstanding any Transfer, will remain entitled to the benefit of
each indemnity under this Agreement.
(a) In connection with any Transfer, the following conditions
shall apply:
(i) Lessor shall give Lessee written notice of such
Transfer at least 10 Business Days before the date of
such Transfer, specifying the name and address of the
proposed purchaser, assignee or transferee (the
"Transferee");
(ii) the Transferee will be a person reasonably
experienced in aircraft leasing (or the Transferee's
rights and powers under this Agreement shall be
exercised on its behalf pursuant to an appropriate
management agreement by a person having such
experience);
(iii) the Transfer will not adversely affect the Lessee's
rights and interests in the Aircraft and/or this
Agreement, nor subject the Lessee to any Tax or Claim
or any other obligation or liability to which it
would not have been subject had such assignment or
transfer not taken place.
(iv) the Transferee will be a "citizen of the United
States" within the meaning of Section 40102(a)(15) of
the Federal Aviation Law and have full corporate
power and authority to enter into and perform the
transactions contemplated by this Agreement on the
part of "Lessor";
(v) on the Transfer date the Lessor and the Transferee
shall enter into an agreement or agreements in which
the Transferee confirms that it shall be deemed a
party to this Agreement and agrees to be bound by all
the terms of, and to undertake all of the obligations
of, the Lessor contained in this Agreement;
(vi) such Transfer shall not violate any applicable law
including the Federal Aviation Law, the Federal
Aviation Regulations and the Securities Act of 1933,
as amended; and
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(vii) the Transferee shall provide to Lessee an opinion of
its regular independent counsel as to the matters set
forth in sub-clause (iv), as to the legality,
validity, binding effect and enforceability of the
agreement or agreements between Lessor and Transferee
referred to in sub-clause (v) and as to such other
matters as were contained in the opinion of Lessor's
counsel delivered on the Delivery Date.
(b) Upon any Transfer, the Transferee shall be deemed Lessor for
all purposes of this Agreement, each reference in this
Agreement to the "Lessor" shall thereafter be deemed for all
purposes to refer to the Transferee, and the transferor shall
be relieved of all obligations of the "Lessor" under this
Agreement arising after the time of such Transfer except to
the extent attributable to acts or events occurring prior to
the time of such Transfer.
(c) Upon compliance by Lessor and a Transferee with the terms and
conditions of Clause 14.2(a), Lessee shall at the time of
Transfer, at the specific written request of Lessor and with
Lessor paying all of Lessee's out-of-pocket costs and
expenses:
(i) execute and deliver to Lessor and to such Transferee
an agreement, in form and substance satisfactory to
Lessor, Lessee and such Transferee, dated the date of
such transfer, consenting to such transfer, agreeing
to pay all or such portion of the Basic Rent and
other payments under this Agreement to such
Transferee or its designee as such Transferee shall
direct, and agreeing that such Transferee shall be
entitled to rely on all representations and
warranties made by Lessee in this Agreement or in any
certificate or document furnished by Lessee in
connection with this Agreement as though such
Transferee was the original "Lessor";
(ii) execute and deliver to Lessor or such Transferee, as
the case may be, precautionary Uniform Commercial
Code financing statements or amendments reflecting
the interests of such Transferee in the Aircraft and
this Agreement;
(iii) deliver to Lessor and to such Transferee a
certificate, signed by a duly authorized officer or
Lessee, dated the date of such transfer, to the
effect that no Event of Default has occurred and is
continuing or, if one is then continuing, describing
such Event of Default;
(iv) cause to be delivered to Lessor and such Transferee
certificates of insurance and broker's letter of
undertaking substantially in the form set out in
Parts 2 and 3 of Schedule 4, detailing the coverage
and confirming the insurers' agreement to the
specified insurance requirements of this Agreement
and listing the Lessor and Transferee as additional
insureds and the Transferee as sole loss payee
(subject to other direction by the Lender);
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(v) deliver to Lessor and to such Transferee an opinion
of Lessee's counsel (which may be Lessee's General
Counsel), addressed to Lessor and such Transferee to
the effect that the agreement referred to in
sub-clause (i) has been duly authorized and executed
by Lessee and constitutes the legal, valid and
binding obligation of Lessee, enforceable against
Lessee in accordance with its terms (subject to
customary exceptions), and to the effect that such
Transferee may rely on the opinion delivered by such
counsel or its predecessor counsel in connection with
this Agreement on the Delivery Date with the same
force and effect as if such Transferee was an
original addressee of such opinion when given;
(vi) deliver to Lessor and such Transferee information on
the location of the Airframe and Engines at all times
requested by Lessor in order to permit the Transfer
to take place at a time and on a date so as to
eliminate or minimize any Taxes applicable to the
Transfer; and
(vii) such other documents as Lessor or such Transferee may
reasonable request, so long as such documents do not
adversely affect the rights or obligations of Lessee
under this Lease or otherwise adversely effect
Lessee.
14.3 GRANTS OF SECURITY INTERESTS
The Lessor shall be entitled at any time after Delivery to grant a
security interest in the Aircraft or its right, title and interest in
this Agreement (each, an "ADDITIONAL MORTGAGE") in favor of any person
(each, an "ADDITIONAL MORTGAGEE"). Any Additional Mortgage may be a
successor mortgage to the Security Interest granted to the Lender, or
may be in addition to the Lender's Security Interest and previous
Additional Mortgages and with a priority senior, equal or subordinate
to the Lender's Security Interest and previous Additional Mortgages as
the Lender and previous Additional Mortgagees may permit. In the case
of any such grant by Lessor of an Additional Mortgage to an Additional
Mortgagee in all or any portion of Lessor's rights, title and interest
in and to the Aircraft and this Agreement, Lessee shall promptly, at
the specific written request of Lessor and with Lessor paying all of
Lessee's out-of-pocket costs and expenses:
(a) execute and delivery to Lessor and to such Additional
Mortgagee an agreement, in form and substance satisfactory to
Lessor, such Additional Mortgagee and Lessee, dated the date
of the grant of such Additional Mortgage, (i) consenting to
such Additional Mortgage and to any assignment of Lessor's
rights, title and interest in and to this Agreement to such
Additional Mortgagee for security purposes, (ii) if requested
by Lessor and consented to by the previous payee, agreeing
that Lessee will pay the Basic Rent and other payments under
this Agreement to such Additional Mortgagee, and (iii)
agreeing that such Additional Mortgagee shall be entitled to
rely on all representations and warranties made by Lessee in
this Agreement or in any certificate
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or document furnished by Lessee in connection with this
Agreement Documents as though such Additional Mortgagee was
originally the "Lessor" or "Lender";
(b) execute and deliver to Lessor and such Additional Mortgagee
such agreements as the Lessor may reasonably require for the
purposes of effecting all necessary amendments to this
Agreement (including Clauses 8, 9 and 10 and Schedule 4);
(c) execute and deliver to Lessor or such Additional Mortgagee, as
the case may be, precautionary Uniform Commercial Code
financing statements or amendments reflecting the assignment
of Lessor's interests to such Additional Mortgagee;
(d) deliver to Lessor and such Additional Mortgagee a certificate,
signed by a duly authorized officer of Lessee, dated the date
of the grant of the Additional Mortgage, to the effect that no
Event of Default has occurred and is continuing or, if one is
then continuing, describing such Event of Default;
(e) cause to be delivered to Lessor and such Additional Mortgagee
certificates of insurance and broker's letter of undertaking
substantially in the form set out in Parts 2 and 3 of Schedule
4, detailing the coverage and confirming the insurers'
agreement to the specified insurance requirements of this
Agreement, adding such Additional Mortgagee as an additional
insured and, if requested by Lessor and consented to by the
previous loss payee, listing such Additional Mortgagee as sole
loss payee;
(f) deliver to Lessor and such Additional Mortgagee an opinion of
Lessee's counsel (which may be Lessee's General Counsel),
addressed to Lessor and such Additional Mortgagee (i) to the
effect that the agreements referred to in sub-clauses (a) and
(b) have been duly authorized and executed by Lessee and
constitute the legal, valid and binding obligations of Lessee,
enforceable against Lessee in accordance with their terms
(subject to customary exceptions), and (ii) to the effect that
such Additional Mortgagee may rely on the opinion delivered by
such counsel or its predecessor counsel in connection with
this Agreement on the Delivery Date with the same force and
effect as if such Additional Mortgagee was an original
addressee of such opinion when given; and
(g) such other documents as Lessor or such Additional Mortgagee
may reasonably request so long as such documents do not
adversely affect the rights or obligations of Lessee under
this Lease or otherwise adversely affect Lessee.
14.4 SALE AND LEASEBACK BY LESSOR
In addition to the Transfers and grants of security interests permitted
by Clauses 14.2 and 14.3, Lessor shall be entitled to transfer its
right, title and interests in and to the Aircraft to any person and
lease the Aircraft from such person (a "HEAD LESSOR"), and in such
event
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Lessor shall retain its rights and obligations as the "Lessor" under
this Agreement. In the event of such a sale and lease-back by Lessor,
(a) the Head Lessor shall meet the requirements for a "Transferee" as
defined in Clause 14.2(a)(ii) above, (b) the Lessor shall be entitled
to assign its rights in this Agreement to such Head Lessor as security
for its obligations under the head lease, (c) the Head Lessor shall be
entitled to grant to one or more purchase money lenders, or to an
indenture trustee on behalf of such lenders, an Additional Mortgage
covering the Aircraft and this Agreement, (d) Lessee shall execute and
deliver to Lessor, such Head Lessor, such Additional Mortgagee and any
trustees on their behalf, as appropriate, the documents specified in
Clauses 14.2(c)(i) through (vii) and Clauses 14.3 (a) through (g)
above, and Lessee shall cooperate with Lessor to make such other
changes to this Lease, such as including such Head Lessor, such
Additional Mortgagee and the trustees on their behalf as additional
insureds and "Indemnitees", as Lessor may reasonably request so long as
such changes do not adversely affect the rights or obligations of
Lessee under this Lease or otherwise adversely affect Lessee and with
Lessor paying all of Lessee's out-of-pocket costs and expenses.
14.5 FURTHER ACKNOWLEDGMENTS
Lessee further acknowledges that any Transferee or Additional Mortgagee
shall in turn have the rights of, and be subject to the conditions to,
transfer and grants of security interests set forth above in this
Clause 14.
14.6 CERTAIN PROTECTIONS FOR LESSEE'S BENEFIT
The rights of Lessee under this Agreement shall be superior to the
rights of any Additional Mortgagee or Head Lessor, and the Lessor shall
require each Additional Mortgagee and Head Lessor to agree in writing
with the Lessee that such Additional Mortgagee's and Head Lessor's
rights in and to the Aircraft shall be subject to the terms of this
Agreement, including to the Lessee's rights to the quiet use,
possession and enjoyment provisions contained in this Agreement. Except
as expressly set forth in this Agreement, no Additional Mortgage or
Head Lease shall increase the responsibilities, obligations or
liabilities of the Lessee or deprive the Lessee of any of its rights or
privileges under this Agreement. The Lessor's obligations to perform
the terms and conditions of this Lease shall remain in full force and
effect notwithstanding the creation of any Additional Mortgage or Head
Lease. Lessor shall not create any Additional Mortgage or enter into
any Head Lease that violates the terms of this Clause 14.6.
15. MISCELLANEOUS
15.1 WAIVERS. REMEDIES CUMULATIVE
The rights of either party under this Agreement:
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(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of that party's rights under
any law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver
of that right.
15.2 DELEGATION
The Lessor or the Lender may delegate to any person or persons all or
any of the trusts, powers or discretions vested in it by this Agreement
and any such delegation may be made upon such terms and conditions and
subject to such regulations (including power to sub-delegate) as the
Lessor or the Lender, respectively, in its absolute discretion thinks
fit.
15.3 APPROPRIATION
If any sum paid or recovered in respect of the liabilities of the
Lessee under this Agreement is less than the amount then due, the
Lessor may apply that sum to amounts due under this Agreement in such
proportions and order and generally in such manner as the Lessor may
determine.
15.4 CURRENCY INDEMNITY
(a) If the Lessor receives an amount in respect of the Lessee's
liability under this Agreement or if such liability is
converted into a claim, proof, judgment or order in a currency
other than the currency (the "CONTRACTUAL CURRENCY") in which
the amount is expressed to be payable under this Agreement:
(i) the Lessee will indemnify the Lessor, as an
independent obligation, against any loss arising out
of or as a result of such conversion;
(ii) if the amount received by the Lessor, when converted
into the contractual currency (at the market rate at
which the Lessor is able on the relevant date to
purchase the contractual currency in
New York City
with that other currency) is less than the amount
owed in the contractual currency, the Lessee will,
forthwith on demand, pay to the Lessor an amount in
the contractual currency equal to the deficit; and
(iii) the Lessee will pay to the Lessor on demand any
exchange costs and Taxes payable in connection with
the conversion.
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(b) The Lessee waives, to the extent permitted by applicable law,
any right it may have in any jurisdiction to pay any amount
under this Agreement in a currency other than that in which it
is expressed to be payable.
15.5 PAYMENT BY THE LESSOR
The Lessor will not be obliged to pay any amounts to the Lessee under
this Agreement so long as any sums which are then due from the Lessee
under this Agreement remain unpaid and any such amounts which would
otherwise be due will fall due only if and when the Lessee has paid all
such sums.
15.6 SEVERABILITY
If a provision of this Agreement is or becomes illegal, invalid or
unenforceable in any jurisdiction, that will not affect:
(a) the legality, validity or enforceability in that jurisdiction
of any other provision of this Agreement; or
(b) the legality, validity or enforceability in any other
jurisdiction of that or any other provision of this Agreement.
15.7 REMEDY
If the Lessee fails to comply with any provision of this Agreement, the
Lessor may, without being in any way obliged to do so or responsible
for so doing and without prejudice to the ability of the Lessor to
treat the non-compliance as a Default, effect compliance on behalf of
the Lessee, whereupon the Lessee shall become liable to pay immediately
any sums expended by the Lessor together with all costs and expenses
(including reasonable legal costs) necessarily incurred in connection
therewith.
15.8 EXPENSES
(a) The Lessor and the Lessee shall each bear their respective
expenses (including legal, professional and out-of-pocket
expenses) incurred or payable in connection with the
negotiation, preparation and execution of this Agreement, and
shall share equally the fees and expenses of special FAA
counsel in connection with the transactions contemplated by
this Agreement.
(b) The Lessee shall pay to the Lessor on demand all expenses
(including legal, professional and out-of-pocket expenses)
incurred or payable by the Lessor in connection with the
granting of any waiver or consent under this Agreement.
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(c) The Lessee will pay to the Lessor on demand all expenses
(including legal, survey and other costs) payable or incurred
by the Lessor in contemplation of, or otherwise in connection
with, the enforcement of or preservation of any of the
Lessor's rights under this Agreement, or in respect of the
repossession of the Aircraft.
(d) The Lessor will pay to the Lessee on demand all expenses
(including legal costs) payable or incurred by the Lessee in
contemplation of, or otherwise in connection with, the
enforcement of or preservation of any of the Lessee's rights
under this Agreement.
15.9 TIME OF ESSENCE
The time stipulated in this Agreement for all payments payable by the
Lessee to the Lessor and for the performance of the Lessee's other
obligations under this Agreement will be of the essence of this
Agreement (subject always to any applicable grace period).
15.10 NOTICES
(a) All notices and other communications given under or in
connection with this Agreement shall be in writing (including
telefax) and shall be deemed to have been received as follows:
(i) If sent by telefax, at the time of receipt by the
sender of a transmission report indicating that all
pages of the telefax transmission were properly
transmitted (unless the recipient notifies the sender
promptly, or if received after 5:30 p.m. local time,
by no later than 10:00 am. local time the following
Business Day, that the transmission was incomplete or
illegible, in which case the telefax shall be deemed
to have been received at the time of receipt by the
sender of a further clear transmission report on
retransmitting the telefax), provided the relevant
telefax transmission (or retransmission, as the case
may be) was transmitted to the receiver between 9:00
a.m. and 5:30 p.m. local time. If it was transmitted
later, then it shall be deemed to have been received
at 9:00 a.m. local time on the succeeding Business
Day.
(ii) In any other case, when delivered to the address
specified in clause 15.10(b).
(b) All such notices, requests, demands and other communications
shall be sent:
(i) if to the Lessor, to it at:
c/o Aviation Capital Group Corp.
Three Stamford Landing
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx XX. 00000
Attention: Managing Director
Telefax No.: 000-000-0000
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with a copy to the Lender at:
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Vice President-Law--Transportation
Finance
Telefax No.: 000-000-0000
-and-
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Vice President-Operations Management-
-Transportation Finance
Telefax No.: 000-000-0000
(ii) if to the Lessee, to it at:
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Senior Vice President, Finance and
Planning, and Chief Financial
Officer
Telefax No.: 1-808-833-3100
or to such other address or telefax number as shall have
been notified by one party to the other in the manner set
out in this Clause 15.10.
15.11 LAW AND JURISDICTION
(a) THIS AGREEMENT SHALL, IN ALL RESPECTS, INCLUDING ALL MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK
APPLICABLE TO CONTRACTS ENTERED INTO IN THE STATE OF
NEW YORK
BY RESIDENTS OF SUCH STATE AND TO BE PERFORMED ENTIRELY WITHIN
SUCH STATE.
(b) The Lessor and the Lessee hereby irrevocably agree to submit
to the non-exclusive jurisdiction of the United States
District Court for the Southern District of
New York and the
Supreme Court of the State of New York located in the Borough
of Manhattan, County of New York (the "AGREED COURTS") in the
event of any claims or disputes arising under this Agreement.
Such submission to jurisdiction shall not be construed so as
to limit the right of either party to take proceedings against
the other in whatsoever jurisdiction shall to it seem fit nor
shall the taking of proceedings in any one or more
jurisdictions preclude the taking of proceedings in any other
jurisdiction, whether concurrently or not. Final judgment
against Lessor or Lessee in any such suit shall be conclusive
and may be enforced in any other jurisdiction by suit on the
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judgment or as otherwise permitted by applicable law, a
certified or true copy of which shall be conclusive
evidence of the facts and of the amount of any indebtedness
or liability of Lessor or Lessee. Each of Lessor and Lessee
hereby irrevocably waives any objection which it may now or
hereafter have to the laying of venue in any suit, action
or proceeding brought in any Agreed Court, and irrevocably
waives any claim that any such suit, action or proceeding
brought in any Agreed Court has been brought in an
inconvenient forum.
(c) THE LESSEE AND THE LESSOR HEREBY WAIVE TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING TO WHICH THEY ARE PARTIES INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATING
TO THIS AGREEMENT.
(d) Without prejudice to any other mode of service, each of the
Lessor and the Lessee consents to the service of process
relating to any proceedings involving, directly or indirectly,
any matter arising out of or relating to this Agreement by
U.S. Postal Service registered mail (prepaid, return receipt
requested) of a copy of the process to the Lessee's address
identified in Clause 15.10(b).
15.12 SOLE AND ENTIRE AGREEMENT
This Agreement is the sole and entire agreement between the Lessor and
the Lessee in relation to the leasing of the Aircraft, and supersedes
all previous agreements in relation to that leasing. The terms and
conditions of this Agreement can only be varied by an instrument in
writing executed by both parties or by their duly authorized
representatives.
15.13 INDEMNITIES
All rights expressed to be granted to each Indemnitee under this
Agreement (other than the Lender) are given to the Lessor as agent for
and on behalf of that Indemnitee.
15.14 COUNTERPARTS
This Agreement may be executed in counterparts each of which will
constitute one and the same document.
15.15 CONFIDENTIALITY
Neither the Lessor nor the Lessee shall, without the other's prior
written consent, communicate or disclose the terms of this Agreement or
any information or documents furnished pursuant to this Agreement
(except to the extent that the same are within the public domain) to
any third party (other than the Lender, any prospective Transferee, any
material investor in the Parent or creditor in Lessee, Additional
Mortgagees or Head Lessors, the
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respective external legal advisers, auditors, insurance brokers or
underwriters of Lessor, Lessee and such parties, and the Airframe and
Engine manufacturers); provided however that disclosure will be
permitted, to the extent required:
(a) pursuant to an order of any court of competent jurisdiction;
or
(b) pursuant to any procedure for discovery of documents in any
proceedings before any such court; or
(c) pursuant to any law or regulation having the force of law; or
(d) pursuant to a lawful requirement of any authority with whose
requirements the disclosing party is legally obliged to
comply; or
(e) in order to perfect any assignment of any assignable
warranties.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF Lessor and Lessee have executed this Lease Agreement 804 on
the date shown at the beginning of this Agreement.
SIGNED on behalf of
ACG ACQUISITION VIII LLC
By: /s/ R. Xxxxxxx Xxxxxxx
------------------------------
Name: R. Xxxxxxx Xxxxxxx
Title: Manager
SIGNED on behalf of
ALOHA AIRLINES, INC.
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
IN WITNESS WHEREOF Lessor and Lessee have executed this Lease Agreement 804
on the date shown at the beginning of this Agreement.
SIGNED on behalf of
ACG ACQUISITION VIII LLC
By:____________________________________
Name:
Title:
SIGNED on behalf of
ALOHA AIRLINES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: SR. VICE PRESIDENT FINANCE &
PLANNING AND CFO
By: /s/ Xxxx Xxxxxxxx
-----------------------------------
Name: XXXX XXXXXXXX
Title: STAFF VICE PRESIDENT - FINANCE
& CONTROLLER
SCHEDULE 1
PART 1
AIRCRAFT SPECIFICATION
IDENTIFICATION:
Aircraft Type B737-2Q9
Registration N804AL
Serial Number 21719
Date of Manufacture. 1/79
WEIGHT DATA:
Maximum Taxi Weight 120,000 lbs.
Maximum Takeoff Weight 119,500 lbs.
Maximum Landing Weight 105,000 lbs.
Maximum Zero Fuel Weight 95,000 lbs.
Fuel Capacity 5168.7 U.S. gal.
AIRFRAMIE AND INTERIOR EQUIPMENT:
Galleys 2 Locations: G-1 forward and G-4 aft
Lavatories 2 Locations: 1 forward and 1 aft
Air Stairs 1 Locations: 1 forward and _ aft
Passenger Seats 126 Locations/Types: 8 first class and 118 economy class
Overhead bins Standard 60" Carry-All type
Cargo Door None
ENGINES:
Position No.1 No.2
Type JT8D-9A JT8D-9A
Serial No. P687772B P674389B
APU:
Model: GTCP 85-129CKB
Serial No. P35144
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LANDING GEAR:
Position Nose Left Main Right Main
Type 00-00000-00 00-00000-00 00-00000-00
Serial No. R7642P639 [MR01158P617] [MRO1184P630]
MAJOR AVIONICS EQUIPMENT:
DESCRIPTION MANUFACTURER PART NO. QUANTITY
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PART 2
AIRCRAFT DOCUMENTS
MANUALS
DESCRIPTION QUANTITY MEDIA
Maintenance Manual 3 Microfilm
Wiring Diagrams 3 Microfilm
Illustrated Parts Catalog 3 Microfilm
Systems Schematics 3 Microfilm
Weight & Balance Manual 1 Hard Copy
Operations Manual 1 Hard Copy
Flight Manual 1 Hard Copy
Structural Repair Manual 1 Microfilm
Rigging Document 1 Hard Copy
TECHNICAL RECORDS
Certificate of Airworthiness
Maintenance Certificate
Weight & Balance Report
Maintenance Time Control Report
Major Incident/Accident Statement
Summary of AD Status for the engines, components and the airframe
Summary of Service Bulletin Status for the engine, components and the airframe
Component Listing including life status
Service Tags
Airframe log books
Flight Logs
Readiness Log
Full records for previous 'A', 'B', 'C' and 'D' Checks
Engine Shop Visit history including disk sheets
Emergency Equipment Listing including location
Cabin Layout Drawing
-81-
RECORDS FOR:
Last Compass Swing
Last Altimeters Calibration
Last ATC Transponder Calibration
-82-
SCHEDULE 2
CERTIFICATE OF ACCEPTANCE 804
This Certificate of Acceptance 804 is delivered on the date set forth
in paragraph 1 below by Aloha Airlines, Inc. (the "LESSEE") to ACG
Acquisition VIII LLC (the "LESSOR") pursuant to Lease Agreement 804,
dated January , 1997, between the Lessor and the Lessee (the
"AGREEMENT"). Capitalized terms used but not defined in this
Certificate of Acceptance 804 shall have the meaning given to such
terms in the Agreement.
1. DETAILS OF ACCEPTANCE
The Lessee hereby confirms to the Lessor that the Lessee has at : .m
H.S.T. on this day of January, 1997, at , accepted
the following, in accordance with the provisions of the Agreement and
the Annex:
(a) Airframe: Boeing 737-2Q9 airframe, Manufacturer's Serial No.
21719 and FAA Registration No. N804AL;
(b) Engines: two Xxxxx & Xxxxxxx JT8D-9A Engines, bearing
Manufacturer's Serial Nos. and , each having 750 or
more rated take-off horsepower;
(c) All Parts installed on, attached to or appurtenant to the
Airframe and Engines; and
(d) Aircraft Documents as specified in Schedule 1 - Part 2 of the
Agreement.
2. LESSEE'S CONFIRMATION. The Lessee confirms to the Lessor that as at the
time indicated above, being the time of Delivery:
(a) the Lessee's representations and warranties contained in
Clauses 2.1 and 2.2 of the Agreement are hereby repeated;
(b) the Aircraft is insured as required by the Agreement; and
(c) the Lessee confirms that there have been affixed to the
Aircraft and the Engines the fireproof notices required by the
Agreement.
3. LESSOR'S CONFIRMATION The Lessor confirms to the Lessee that, as at the
time indicated above, being the time of Delivery, the Lessor's
representations and warranties contained in Clause 2.4 of the Agreement
are hereby repeated.
-83-
IN WITNESS WHEREOF Lessor and Lessee have executed this Certificate of
Acceptance 804 on the date shown at the beginning of this Agreement.
SIGNED on behalf of
ACG ACQUISITION VIII LLC
By:
---------------------------
Name:
Title:
SIGNED on behalf of
ALOHA AIRLINES, INC.
By:
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
-00-
XXXXX 0
XXXXXXXXXXX XXXXXX AT DELIVERY
DATE: JANUARY 21,1997
AIRFRAME TIME:
Total Flight Hours 40,053:51
Total Cycles 52,697
AIRFRAME LIMITS:
Type of Check: "C" Check
Check Interval: 3,600.0H
Time Since Last Check: 1,218:09
ENGINE DATA:
Position Xx.0 Xx.0
Xxxx XX0X-0X XX0X-0X
Serial Number 674389 687778
Total Flight Hours: 40,930:30 31,776:0
Total Cycles: 80,691 62,196
Flight Hours Since Last Shop Visit: 3,610:30 2,499:0
Cycles Since Last Shop Visit: 8,170 5,627
Flight Hours to Next Hard Limit: 7,997:30 24,088:0
Cycles to Next Hard Limit: 719 6,486
APU:
Type: CK B
Serial Number: P35144
Total Flight Hours: 18,716:17 APU Hours
Total Cycles:
Flight Hours Since Last HSI Inspection: 3,466:17 APU Hours
Cycles Since Last HSI Inspection:
Flight Hours Remaining on Turbine and Compressor LLPs: 718:17 APU Hours
Cycles Remaining on Turbine and Compressor LLPs:
Flight time x 1.9 = APU Hours
-85-
LANDING GEAR LIMITS:
Position: Nose Left Right
Overhaul Interval: 15,000 H 15,000 H 15,000 H
Time Since Overhaul: 1,315:51 H 5,754:51 H 4,975:51 H
Time to Next Overhaul: 13,684:09 H 9,245:09 H 10,024:09 H
-86-
SCHEDULE 3
OPERATING CONDITION AT REDELIVERY
On the Expiry Date the Aircraft, subject to fair wear and tear generally,
will be in the condition set out below.
1. GENERAL CONDITION
The Aircraft will:
(a) be clean by United States airline standards;
(b) have installed the full complement of engines and other equipment,
parts and accessories and loose equipment required under the Agreed
Maintenance Program and usually installed in the other Boeing
737-200 aircraft operated by Lessee (together with any additions
and improvements thereto, or replacements thereof, effected
pursuant to and in accordance with this Agreement) and be in a
condition suitable for immediate operation in commercial service;
(c) be airworthy, conform to type design and be in a condition for safe
operation with all equipment, components and systems operating in
accordance with their intended use and within limits established by
the manufacturer and approved by the Aviation Authority, and all
pilot discrepancies and deferred maintenance items cleared on a
terminating action basis;
(d) have a U.S. Standard Transport Category Certificate of
Airworthiness issued by the FAA in accordance with FAR Part 21 (or
if required by the Lessor, a valid export certificate of
airworthiness with respect to the Aircraft issued by the Aviation
Authority) and unconditionally meet all FAA requirements for
immediate operations under FAR Part 121, subject to the special
exemptions permitted Lessee regarding compliance with the Airport
Noise and Capacity Act of 1990, as amended, and the regulations
promulgated by the FAA thereunder;
(e) comply with the manufacturer's original specification to the extent
that it so complied on the date of this Agreement and subject to
any alterations made pursuant to and in accordance with this
Agreement after such date;
(f) have undergone, immediately prior to redelivery, a "C" Check in
accordance with the Agreed Maintenance Program so that all Airframe
inspections falling due within the next
-87-
following 3,000 Flight Hours of operation in accordance with the
Agreed Maintenance Program have been accomplished;
(g) the Airframe shall have at least 50% of the Flight Hours, Cycles
and calendar time (whichever is applicable and, if more than one
are applicable, most limiting) remaining until the next block "D"
check (or equivalent heavy maintenance check) under the Agreed
Maintenance Program, and if the Flight Hours, Cycles or calendar
time of the Airframe are less than 50% of the interval between "D"
checks then the Lessee shall pay to the Lessor an amount equal to
the product of (i) the number of Flight Hours, Cycles or calendar
days (whichever is applicable and most limiting) by which the
Airframe is less than 50% of the interval between "D" checks,
multiplied by (ii) a fraction (1) the numerator of which is the
average cost of a "D" check (including routine and non-routine
items) for an airframe similar to the Airframe determined in
accordance with the Appraisal Procedure and (2) the denominator of
which is the number of Flight Hours, Cycles or calendar days
(whichever is applicable and most limiting) between "D" checks;
(h) have had accomplished all outstanding airworthiness directives and
mandatory orders affecting that model of Aircraft issued by the FAA
that are due during the Term on a terminating action basis;
airworthiness directives and mandatory orders that do not have a
terminating action will be accomplished at the highest level of
inspection or modification permitted;
(i) no special or unique manufacturer inspection or check requirements
specific to the Aircraft will exist unless there is no terminating
action available from any source;
(j) have installed all applicable vendor's and manufacturer's service
bulletin kits received free of charge by the Lessee that are
appropriate for the Aircraft and, to the extent not installed,
those kits retained by Lessee will be furnished free of charge to
the Lessor;
(k) be free of any system-related leaks;
(1) all fluid reservoirs (including fuel, oil, oxygen, hydraulic and
water) will be full, and the waste tank serviced in accordance with
the manufacturer's instructions;
(m) all fuel tanks will have recently undergone an
anti-fungus/biological growth contamination laboratory evaluation,
and any excessive levels of contamination corrected;
(n) have an FAA-approved aging aircraft program in operation and
up-to-date; and
(o) have all signs and decals clean, secure and legible.
-88-
2. PARTS
(a) Each life limited or hard time controlled Part, excluding Engine
Parts, shall have not less than 50% of the number of Flight Hours
or Cycles (whichever is the more limiting factor) remaining to the
next scheduled removal in accordance with the Agreed Maintenance
Program;
(b) Each calendar limited Part (including hard time controlled Parts
with calendar limits) will have 50% of its life or time between
removals, as the case may be (but not less than 12 months),
remaining to its next scheduled removal in accordance with the
Agreed Maintenance Program; and
(c) Each "on-condition" and "condition monitored" Part will be
serviceable in accordance with the Aviation Authority prescribed
parameters.
3. ENGINES
Each engine installed on the Aircraft shall be an Engine and (if not the
engine installed at Delivery) shall, to the extent not previously
provided to the Lessor, be accompanied by all documentation the Lessor
may require to evidence that title thereto is properly vested in the
Lessor in accordance with Clause 8.17(a) and will:
(a) have not more than 4,000 Flight Hours since the last removal under
the Agreed Maintenance Program, and if an Engine has more than
3,500 Flight Hours since the last removal then the Lessee shall pay
to the Lessor an amount equal to the product of (i) the number of
Flight Hours since the last removal in excess of 3,500, multiplied
by (ii) a fraction (1) the numerator of which is the average cost
of the next scheduled removal and overhaul (including routine and
non-routine items) for an engine similar to such Engine determined
in accordance with the Appraisal Procedure and (2) the denominator
of which is the number of Flight Hours between such scheduled
removals under the Agreed Maintenance Program;
(b) have no defect that reduces the Flight Hours of remaining life
pursuant to manufacturer's or airworthiness requirements until
overhaul to less than 3,000; and
(c) be in a condition that can operate at maximum rated take-off power
at sea level at a temperature of 28 deg. C.
4. FUSELAGE, WINDOWS AND DOORS
(a) the fuselage will not contain any dents, corrosion or abrasions
that exceed the prescribed parameters under the SRM and shall be
free of scab patches and loose, pulled or missing rivets;
-89-
(b) the windows will not contain any delamination, blemishes or crazing
that exceed the prescribed parameters under the
Manufacturer's maintenance manual and will be properly sealed; and
(c) the doors will be free moving, correctly rigged and fitted with
serviceable seals;
5. WINGS AND EMPENNAGE
(a) leading edges will not contain any damage that exceeds the
prescribed parameters under the SRM;
(b) unpainted cowlings and fairings will be polished; and
(c) wings will be free of fuel leaks.
6. INTERIOR
(a) the interior will be fully serviceable and in the configuration as
at the date of this Agreement;
(b) emergency equipment having a calendar life will have a minimum of 1
year or 100% of its total approved life remaining, whichever is
less; and
(c) curtains, carpets, seat covers and seat cushions will be clean and
free from stains and worn out (threadbare) areas and will conform
to FAR fire resistance regulations as applicable to an FAR Part 121
operator.
7. COCKPIT
(a) fairing panels shall be free of stains and cracks, clean, secure
and repainted as necessary;
(b) floor coverings will be clean and effectively sealed;
(c) seat covers will be in good condition, clean and free of stains and
will conform to FAR fire resistance regulations as applicable to an
FAR Part 121 operator; and
(d) seats will be serviceable, in good condition and repainted as
necessary.
8. CARGO COMPARTMENTS
(a) panels will be in good condition and effectively sealed;
-90-
(b) nets will be in good condition; and
(c) the compartments will comply with FAR fire resistance and
containment regulations as applicable to an FAR Part 121 operator.
9. LANDING GEAR
(a) The installed main and nose landing gear components and their
associated actuators and parts will be cleared of all inspections
for not less than 12 months, 3,000 Flight Hours or 3,000 Cycles of
operation (whichever is more limiting).
(b) The installed main and nose landing gear will have at least 50% of
the full allotment of Flight Hours, Cycles or calendar time
(whichever is most limiting) remaining until the next scheduled
removal for inspection or overhaul under the Agreed Maintenance
Program, and if the Flight Hours, Cycles or calendar time of any
Landing Gear is less than 50% of the interval between scheduled
removals then the Lessee shall pay to the Lessor an amount equal to
the product of (i) the number of Flight Hours, Cycles or calendar
days (whichever is most limiting) by which such Landing Gear is
less than 50% of the interval between scheduled removals,
multiplied by (ii) $4.50 in the case of the main Landing Gear and
$2.50 in the case of the nose Landing Gear.
(c) The tires and brakes will have 50% of the wear, as specified by the
manufacturer as serviceable limits, remaining until next removal.
(d) The landing gear and wheel xxxxx will be clean, free of leaks and
repaired as necessary.
10. APU
(a) The APU shall be serviceable in accordance with the Approved
Maintenance Program parameters.
(b) The APU shall have not more than 1,500 Flight Hours of operation
since its last hot section inspection.
11. CORROSION
(a) The Aircraft will be in compliance with the CPCP and will have been
inspected and treated with respect to corrosion as required by the
CPCP; and
(b) Fuel tanks will be free from contamination and corrosion and a tank
treatment program will be in operation and up-to-date.
-91-
SCHEDULE 4
PART I
(INSURANCE REQUIREMENTS)
1. The Insurances required to be maintained are as follows:
(a) HULL "ALL RISKS" of Loss or Damage while flying and on the ground
with respect to the Aircraft for the Agreed Value and with a
deductible not exceeding $500,000.
(b) HULL WAR AND ALLIED PERILS, covering those war risks excluded from
the Hull "All Risks" Policy to the extent such coverage is
available from the leading international insurance markets,
including confiscation and requisition by the State of
Registration, for the Agreed Value;
(c) "ALL RISKS" PROPERTY INSURANCE (INCLUDING WAR AND ALLIED RISK
except when on the ground or in transit other than by air or sea)
on all Engines and Parts when not installed on the Aircraft (to the
extent not covered under the Aircraft hull insurances described in
paragraphs (a) and (b) above), including Engine test and running
risks, in an amount equal to replacement value in the case of the
Engines;
(d) AIRCRAFT THIRD PARTY, BODILY INJURY/PROPERTY DAMAGE, PASSENGER,
BAGGAGE, CARGO AND MAIL AND. AIRLINE GENERAL THIRD PARTY (INCLUDING
PRODUCTS) LEGAL LIABILITY for a combined single limit (Bodily
Injury/Property Damage) of an amount not less than the Minimum
Liability Coverage for the time being in respect of any one
occurrence (but, in respect of products liability, this limit may
be an aggregate limit for any and all losses occurring during the
currency of the policy, and in respect of liability arising out of
certain offences, the limit (within the said combined single limit)
may be $25,000,000 in respect of any one offence and in the
aggregate, and cargo and mail legal liability may be subject to a
limit of $ 1,000,000 any one occurrence); War and Allied Risks are
also to be covered under the Policy to the extent available from
the leading international insurance markets. The Minimum Liability
Coverage may be adjusted upwards from time to time to such an
amount as the Lessor may be advised by its insurance brokers
constitutes the standard Minimum Liability Coverage applicable to
Boeing 737-200 series aircraft operating in North America by an
airline similarly situated as Lessee. If the Lessee disputes any
such adjustment, the matter shall be referred to a reputable
independent insurance broker in the United States of America
appointed by the Lessor, whose decision, acting as expert, shall be
conclusive and binding on the Lessee.
2. All required hull and spares insurance (specified in (1)(a), (b) and (c)
above), so far as it relates to the Aircraft, will:
-92-
(a) provide that any loss will be settled with the Lessee (who
undertakes to consult with the Lessor and the Lender in regard
thereto), and any claim that becomes payable on the basis of a
Total Loss shall be paid in Dollars to the Lender as sole loss
payee up to the Agreed Value, and loss proceeds in excess of the
Agreed Value shall be payable to Lessee, with any other claim being
payable as may be necessary for the repair of the damage to which
it relates;
(b) if separate Hull "All Risks" and "War Risks" insurances are
arranged, include a 50/50 provision in the terms of Lloyd's
endorsement AVS 103 or its equivalent; and
(c) confirm that the Insurers are not entitled to replace the Aircraft
in the event of a Total Loss.
3. All required liability insurances (specified in (1)(d) above) will:
(a) include the Lessor, the Lender, their respective successors and
assigns and their respective shareholders, Affiliates,
subsidiaries, directors, officers, agents, employees and
indemnitees as additional assureds for their respective rights and
interests, warranted (each as to itself only) no operational
interest; but the coverage provided will not include claims arising
out of their legal liability as manufacturer, repairer or servicing
agent of the aircraft or any part thereof;
(b) include a severability of interest clause;
(c) contain a provision confirming that the policy is primary without
right of contribution and that the liability of the insurers will
not be affected by any other insurance of which the Lessor, the
Lender or the Lessee have the benefit; and
(d) accept and insure the indemnity provisions of this Agreement to the
extent of the risks covered by the relevant policy or policies.
4. All Insurances will:
(a) be in accordance with normal industry practice of persons operating
similar aircraft in similar circumstances;
(b) provide coverage on a worldwide basis subject to those territorial
exclusions which are usual and customary for carriers similarly
situated with Lessee in the case of War Risks and Allied Perils
coverage which are advised to and approved by Lessor, such approval
not to be unreasonably withheld;
-93-
(c) acknowledge that the insurers are aware that the Aircraft is owned
by the Lessor and is subject to this Agreement;
(d) provide that, in relation to the interests of each of the
additional assureds, the Insurances will not be invalidated by any
act or omission of the Insured which results in a breach of any
terms, conditions or warranty of the policies;
(e) provide that the Insurers will waive any rights of recourse and/or
subrogation against each additional assured to the same extent that
Lessee has waived or has no rights of recovery against such
additional assured in the Lease;
(f) provide that the additional assureds will have no obligation or
responsibility for the payment of any premiums (but reserve the
right to pay the same should any of them elect to do so) and that
the Insurers will waive any right of offset or counterclaim against
the respective additional assureds other than for outstanding
premiums in respect of the Aircraft, any Engine or Part;
(g) provide that, except in the case of any provision for cancellation
or automatic termination specified in the policies or endorsements
thereof, the Insurance can only be canceled or materially altered
in a manner adverse to the additional assureds by giving at least
30 days' written notice to the Lessor and the Lender, except in the
case of war risks (or radioactive contamination), for which seven
days' written notice (or such lesser period as is or may be
customarily available in respect thereof) will be given; and
(h) include a services of suit clause.
-94-
SCHEDULE 4, PART 2
[LOGO]
Sedgwick
No. AQ-T.B.A.
DATE: January __, 1996
TO: FINOVA Capital Corporation ("Lender")
0000 X. Xxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, XXXXXXX 00000-0000
and
ACG Acquisition VIII LLC ("Owner"/"Lessor")
Three Stamford Landing
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Re: Broker's Report Lease Agreement N804AL dated as of January 1997
between ACG Acquisition VIII LLC ("Owner"/"Lessor"), FINOVA Capital
Corporation ("Lender") and Aloha Airlines, Inc. ("Lessee") (to the
"Lease") regarding One (1) B737-2Q9 Aircraft, Registration Number
N804AL, Serial Number 21719 including two (2) Xxxxx 0 Xxxxxxx
XX0X-0X engines, Serial Numbers 697772 and 674389 (the "Engines")
(hereinafter the "Aircraft*)
To Whom It May Concern:
We hereby certify that as the independent aviation insurance brokers duly
appointed by Lessee, and acting on their behalf that, as of this date, the
insurance described in the attached Certificate of Insurance (No. AQ-T.B.A.)
complies with the requirements of the Lease as far as said requirements
relate to the insurance described in said Certificate and that said
insurance is in full force and effect on the Aircraft and that all premiums
due as of this date (per the accounting procedures arranged between; Lessee
and ourselves) have been paid.
We also confirm that, as of this date, all such policies of insurance as
described in said Certficate as are carried by Lessee are in such amounts and
cover such perils and are placed with insurers of recognized reputation
responsibility in the worldwide aviation insurance marketplace so that
protection afforded thereby is not less than that which would customarily be
maintained for aircraft of a similar character by corporations engaged in the
same or similar business, similarly situated with Lessee.
The perils, limits of liability, and insurers relating to the above mentioned
insurance policies are more fully described in the attached Certficate of
Insurance, No. AQ-T.B.A.
[LOGO]
Sedgwick
It is our opinion that only an Insured (i.e., the Named insured and/or the
Additional Insureds) can breach or violate any warranty, condition or
declaration of the policy.
We undertake to advise you
1. promptly of any cancellation or adverse material changes
notified to us which are proposed to be made in the terms of
the insurance;
2. upon written application from you not later than thirty (30)
days prior to the expiration date of said insurance to notify
you within seven (7) days of the receipt of said application
if we have not received renewal instructions from Lessee and
in the event of our receiving instructions to renew, to advise
you promptly thereof,
3. promptly if premiums are not paid to us by the. due date as
per the accounting procedures between Lessee and ourselves;
4. promptly if our appointment as Insurance Broker by Lessee is
terminated or not timely renewed.
The above is given subject to:
1. our continuing appointment for the time being as Insurance
Brokers to Aloha Airlines, Inc.
2. our lieu, if any, on the policies referred to in our
Certificate of Insurance for premiums due under such policies
in respect of the Aircraft
3. Insurers' right of cancellation on default in payment of
premiums
4. all hull claims proceeds and all premiums are to be
collected through ourselves as the Insurance Broker for
Aloha Airlines, Inc.
This letter shall be governed and construed in a respect in accordance with the
laws of United States of America.
Sincerely,
Xxxx X. Xxxxxxxx
Director
SCHEDULE 4, PART 3
[LOGO]
Sedgwick
CERTIFICATE OF INSURANCE No. AQ-T.B.A.
This is to certify to: FINOVA Capital Corporation ("Lender")
0000 X. Xxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
and
ACG Acquisition VIII LLC ("Owner"/"Lessor")
Three Stamford Landing
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
that the insurers/underwriters/companies listed below, each for their own part
AND NOT ONE FOR THE OTHER, are providing the following insurance:
NAMED INSURED: Aloha Airlines, Inc.
NAMED INSURED'S Honolulu International Airport
ADDRESS: X.X. Xxx 00000
Xxxxxxxx, XX 00000
INSURANCE COVERAGES: A) All Risks (Ground and Flight) Aircraft Hull
Insurance (including All Risks Aircraft
Spare Parts Insurance)
B) War Risks Aircraft Hull Insurance (including
War Risks Spare Parts Insurance) (Coverage
amended to include coverage for confiscation
by government of registry)
C) Comprehensive Airline Liability Insurance
(including, but not limited to:
Comprehensive General Liability, Public
Liability, Passenger Liability, Personal
Injury Liability, Contractual Liability,
Passengers' Checked and Unchecked Baggage
Liability, Premises, Products, and Completed
Operations Liabilities, Ground Hangarkeepers
Liability, Cargo Legal including Mail Legal
Liability) and the AAU equivalent of AV.52C
(War Risks Liability Clause.)
[LOGO]
Sedgwick
POLICY PERIOD: November 1, 1996 to November 1, 1997 on both
dates at 12:01 A.M. Local Standard Time at the
address of the Named Insured.
GEOGRAPHICAL LIMITS: Worldwide*
LIMITS OF LIABILITY: A) As respects Aircraft Hulls: Agreed Value as
stated below. Subject to a deductible of
US$500,000.00 each and every loss
(Deductibles not applicable in the event of
Total Loss/Constructive Total Loss/Arranged
Total Loss.)
NOTE: AGGREGATE As respects Aircraft Spare Parts:
LIMITS WAY BE US$60,000,000.00 any one loss/any one
REDUCED DUE TO location, US$25,000,000.00 any one transit,
PAID CLAIMS subject to a deductible of US$10,000.00 any
one loss but the applicable aircraft hull
deductible stated above shall apply in
respect of spare engine running or testing
losses.
B) As respects Aircraft Hulls: Agreed Value as
stated below. As respects Aircraft Spares
Parts: US$60,000,000.00 any one loss/any one
location, US$25,000,000.00 any one transit.
Subject to an annual aggregate of
US$125,000,000.00. Subject to nil
deductibles.
C) Combined Single Limit Bodily Injury
(including passengers), Property Damage and
Personal Injury (Passengers only):
US$300,000,000.00 any one
occurrence/offense, in the aggregate
annually as respects Products, Completed
Operations and Personal Lnjury Liabilities.
However, the following sublimits apply as
part of and not in addition to the limit
stated above.
As respects Personal Injury to third parties
other than passengers: US$25,000,000.00 any
one occurrence, any one offense, in the
aggregate annually. As respects Cargo Legal
Liability: US$1,000,000.00 each occurrence
[LOGO]
Sedgwick
AIRCRAFT INSURED: One (1) B737-2Q9 aircraft, Registration
Number: N804AL, Manufacturer's Serial Number
21719, Agreed Value: US$6,000,000 inclusive
of two (2) Xxxxx & Xxxxxxx JT8D-9A Engines,
Manufacturers Serial Numbers 687772 and
674389 (the "Engines") while attached to the
Aircraft or removed from the Aircraft, but
not replaced (hereinafter, the "Aircraft").
* As respects Coverage B - War Risks Aircraft Hull insurance, the Geographical
Limits of the policy are:
Worldwide but excluding Africa, Columbia, Peru, Iraq, Afghanistan, Former
Republics of the U.S.S.R. and Yugoslavia.
[LOGO]
Sedgwick
SECURITY
As Respects Coverages A and C
QUOTA SHARE POLICY
INSURERS PARTICIPATION NUMBER
(Part of 100%)
One or More Member Companies
of Associated Aviation Underwriters T.B.A. T.B.A.
Certain Underwriters at Lloyds, London
through Sedgwick Aviation Limited T.B.A. T.B.A.
Certain U.K. Insurance Companies and
Others through Sedgwick Aviation Limited T.B.A. T.B.A.
La Reunion Aerienne through
La Concorde T.B.A. T.B.A.
Insurance Company of North America T.B.A. T.B.A.
Navigators Insurance Company through
Somerset Aviation T.B.A. T.B.A
Assurance France Aviation T.B.A. T.B.A.
Mutual Xxxxxx Office T.B.A. T.B.A.
American Home Assurance Company
Through AIG Aviation T.B.A. T.B.A.
SEVERAL LIABILITY NOTICE
The subscribing insurers' obligations under contracts of insurance to which
they subscribe are several and not joint and are limited solely to the extent
of their individual subscriptions. The subscribing insurers are not responsible
for the subscription of any co-subscribing insurer who for any reason does not
satisfy all or part of its obligations.
LSW 1001 (Insurance)
[LOGO]
Sedgwick
SECURITY
As Respects Coverage B
QUOTA SHARE POLICY
INSURERS PARTICIPATION NUMBER
(Part of 100%)
Certain Underwriters at Lloyds,
London through Sedgwick Aviation
Limited T.B.A. T.B.A.
Certain U.K. Insurance Companies
and Others through Sedgwick Aviation
Limited T.B.A. T.B.A.
Navigators Insurance Company
through Somerset Aviation T.B.A. T.B.A
Assurance France, Aviation T.B.A. T.B.A.
La Reunion Aerienne through
La Concorde T.B.A. T.B.A.
Mutual Marine Office T.B.A. T.B.A.
SERVERAL LIABILITY NOTICE
The subscribing Insurer's obligations under contracts of insurance to which they
subscribe are several and not joint and are limited solely to the extent of
their individual subscriptions. The subscribing insurers are not responsible
for the subscription of any co-subscribing insurer who for any reason does not
satisfy all or part of its obligations.
LSW 1001 (Insurance)
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Sedgwick
SPECIAL PROVISIONS
Solely as respects coverages A, B and C and solely as respects Lease Agreement
N804AL dated as of January _, 1997 between ACG Acquisition VIII LLC ("Owner"/
"Lessor"), FINOVA Capital Corporation ("Lender") and Aloha Airlines, Inc.
("Lessee") (the "Lease") regarding the Aircraft, subject to policy terms,
conditions, limitations, deductibles, warranties and exclusions the following
provisions apply:
1. SOLELY AS RESPECTS COVERAGES A AND B:
1. All losses will be adjusted with Lessee. In the event of a
Total Loss of the Aircraft, Lender is named as Sole Loss
Payee for all insurance proceeds up to the Agreed Value (as
defined in the Lease). With respect to damage or loss not
constituting a Total Loss of the Aircraft, Lender is named
as Sole Loss Payee in respect of all insurance proceeds
where such insurance proceeds exceed US$500,000.00. Such
insurance proceeds which are not in excess of US$500,000.00
shall be payable solely to Lessee; provided that upon
receipt by Insurers and the Insurance Broker of written
notice from Lender or Owner/Lessor that an Event of
Default on the part of Lessee has occurred and is
continuing, all payments up to the Agreed Value will be
made to, Lender. In all cases, any insurance proceeds in
excess of the Agreed Value will be payable solely to
Lessee.
2. Hull All Risks insurers and Hull War Risks and Allied Perils
insurers agree to a 5O/50 claims settlement provision per the
terms of AVS103 (or its equivalent),
3. Underwriters are not entitled to replace the Aircraft in the
event of a Total Loss of the Aircraft.
II. SOLELY IS RESPECT COVERAGE C:
1. Lender, Owner/Lessor and their respective successors and
assigns and their respective shareholders, affiliates,
subsidiaries, directors, officers, employees, agents and
indemnitees are included as Additional Insureds ("the
Additional Insureds") as their respective interests may
appear, warranted no operational interest. However, no party
shall be included as an Additional Insured as respects its
legal liability as manufacturer, repairer, supplier or
servicing agent of the Aircraft or any part thereof.
[LOGO]
Sedgwick
2. This insurance is primary without right of contribution from
any other insurance as may be carried by an Additional
Insured.
3. Such as is afforded the Lessee under the policy applies to
liability assumed by the Lessee under the Lease, specifically
Article 10-INDEMNITY of the Lease, but only. to the extent of
the coverage otherwise afforded under the policy.
4. Each of Additional Insureds shall have the same protection as
would have been available had this policy been issued
individually to each of them except that this fact shall not
in any event increase the Insurers' total liability beyond the
limits set forth in the policy.
III. SOLELY AS RESPECTS COVERAGES A, B AND C:
1. Insurers waive their rights to any set-off or counter claim or
any other deduction, whether by attachment or otherwise, in
respect of any liability to the Additional Insureds (save in
respect of unpaid premiums in respect of the Aircraft only).
2. The Additional Insureds have no responsibility for premiums,
commissions, assessments or calls (save as is provided for in
Special Provision III. 1).
3. Insurers waive their rights of subrogation against the
Additional Insureds but only to the same extent that Lessee
has waived its rights of recovery against the Additional
Insureds in the Lease.
4. In respect of the interests of each Additional Insured, the
insurance shall not be invalidated by any act or omission
by Lessee or any other insured. The Additional Insureds are
held covered for their respective interests notwithstanding
any breach or violation of any warranty, condition or
declaration of the policy by Lessee or any other insured.
However, such protection as is afforded an Additional
Insured under this clause will not apply in the event such
Additional Insured breaches or violates any warranty,
condition or declaration of the policy, nor does this
clause apply in the event of exhaustion of policy limits or
to losses/claims arising from perils specifically excluded
from coverage under the policies.
[LOGO]
Sedgwick
5. In the event of cancellation or material change of the
policies by Insurers, which would adversely affect the
interests of the Additional Insureds, Insurers agree that such
cancellation or change shall not be effective as to the
Additional Insureds until thirty (30) days (seven (7) days or
such shorter period as may be customary in the case of War
Risks insurance) after issuance of notice thereof to Lender
and Owner/Lessor.
6. Insurers Note the existence of the Lease and acknowledge ACG
Acquisition VIII LLC as Owner of the Aircraft.
THE undersigned has been authorized by the above insurers to issue this
certificate on their behalf. The undersigned is not an insurer and has no
liability of any sort under the above policies nor as a result of this
certification. This certificate does not alter, extend or amend any policy
terms, conditions, limitations, deductibles, warranties or exclusions.
DATE OF ISSUE SEDGWICK AVIATION, NORTH AMERICA
______________ ________________________________
AUTHORIZED REPRESENTATIVE
XXXX
XXXXXXXX SCHEDULE 5
ISHII
& XXX
--------------------
ATTORNEYS AT LAW
__________________, 1997
ACG Acquisition VIII LLC
c/o Aviation Capital Group Corp.
Three Stamford Landing
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
FINOVA CAPITAL CORPORATION
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Re: LEASE AGREEMENT 804 dated as of ___________________________, 1997 between
ACG ACQUISITION VIII LLC ("Lessor") and ALOHA AIRLINES, INC. ("Lessee") with
respect to one (1) The Boeing Company Model 737-2Q9 Aircraft, bearing
manufacturer's serial no. 21719 and U.S. registration no. N804AL, together with
two (2) Xxxxx & Whitney Model JT8D-9A engines bearing engine manufacturer's
serial nos. 687772 and 674389 (the "Aircraft").
Gentlemen:
We are counsel to Aloha Airlines, Inc. in regard to the above-referenced
transaction.
You have asked us to render an opinion in connection with the transactions
governed by the following documents:
1. Lease Agreement 804 (as described above) dated as of
________________, 1997 by and between Lessor and Lessee ("Lease
Agreement");
2. Acceptance Certificate dated as of ________________, 1997 executed
by Lessee ("Acceptance Certificate"); and
3. Acknowledgment and Consent dated as of __________________________
1997 relating to Lessor's assignment of Lease Agreement to FINOVA
Capital Corporation, as Lender ("Acknowledgment").
The documents listed above collectively referred to as the "Operative
Documents." Except as otherwise expressly stated herein, words and expressions
used herein shall bear the same meanings as defined in the Operative Documents.
A LAW CORPORATION Suite 850, Davies Pacific Center, 000 Xxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxx 00000 - (000) 000-0000 - Facsimile: (000) 000-0000
XXXX
XXXXXXXX
ISHII
& XXX
--------------------
ATTORNEYS AT LAW
ACG ACQUISITION VIII LLC
FINOVA CAPITAL CORPORATION
__________________, 1996
Page 2
In rendering the opinions expressed below, we have examined the (a) the
Operative Documents, (b) the Articles of Association and By-Laws of Lessee, (c)
certain certificates executed by officers of Borrower and (d) other documents,
in our judgment and to our knowledge, necessary or appropriate to examine to
enable us to give the opinions expressed below.
Having reviewed the foregoing described documents, and having regard to the
relevant laws of the State of Hawaii and the United States of America, it is our
opinion that:
A. Lessee (i) is a corporation duly formed, validly existing and in
good standing under the laws of the State of Hawaii, (ii) is
qualified to do business in all jurisdictions in which the nature
of its business or its properties requires it to be qualified,
(iii) presently maintains its principal place of business and chief
executive office in Honolulu, Hawaii, (iv) has full power to carry
on its business as it is now being conducted and to enter into,
legally bind itself by, and perform its obligations under the
Operative Documents and (v) to our knowledge and without any
inquiry except review of a certification as to the following
provided by Lessee, has complied with all material statutory and
other requirements relative to its businesses;
B. To our knowledge and without any inquiry except review of a
certification as to the following provided by Lessee, (i) all
consents, resolutions and authorizations necessary or advisable in
order for Lessee to enter into the Operative Documents and to lease
the Aircraft in accordance with the terms and conditions of the
Operative Documents have been obtained, and (ii) no further
consents or authorizations are necessary for the lease of the
Aircraft by Lessee pursuant to the provisions of the Operative
Documents and for the performance by Lessee of all of its
obligations pursuant to the provisions of the Operative Documents;
C. The Operative Documents (i) constitute valid and binding
obligations of Lessee, enforceable in accordance with their
respective terms, (ii) are in
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--------------------
ATTORNEYS AT LAW
ACG ACQUISITION VIII LLC
FINOVA CAPITAL CORPORATION
_________________, 1996
Page 3
full force and effect, and (iii) the provisions of the Operative
Documents with respect to choice of substantive law to govern the
interpretation and enforcement of such Operative Documents and
consent to jurisdiction and choice of forum in connection with such
interpretation and enforcement are legal, valid and binding;
however, the state and federal courts in the State of Hawaii may
not apply the procedural law, including without limitation, law
relating to remedies or provisional remedies, of a non-forum state,
such as, without limitation, New York and Arizona;
D. To our knowledge and without any inquiry except review of a
certification as to the following provided by Lessee, (i) the
execution and delivery of and the performance of the provisions of
the Operative Documents and of the transactions contemplated
thereby and hereby do not contravene in any material respect any
applicable law, regulation, decree, order, permit or contractual or
other restriction now existing and binding on Lessee or on any of
the properties of Lessee, and (ii) the performance of the
provisions of the Operative Documents in effect on this date, and
of the transactions contemplated thereby will not contravene in any
material respect any applicable law, regulation, decree, order or
permit currently in effect or contractual or other restriction now
existing and binding on Lessee or on any of the properties of
Lessee;
E. To our knowledge and without inquiry except review of a
certification as to the following provided by Lessee, (i) there are
no outstanding judgments against Lessee and (ii) no action, claim,
suit or proceeding pending or threatened (including, but not
limited to, tax liens or tax actions) against or affecting Lessee
or any of the property of Lessee before any court, board of
arbitration or administrative agency which would likely result in
any material adverse change in the business or condition (financial
or otherwise) of Lessee;
F. To our knowledge and without inquiry except review of a
certification as to the following provided by Lessee, Lessee is not
in default under any agreement to which
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ISHII
& XXX
--------------------
ATTORNEYS AT LAW
ACG ACQUISITION VIII LLC
FINOVA CAPITAL CORPORATION
______________________, 1996
Page 4
it is a party or by which it may be bound, nor in default of any
kind in respect of any financial commitment or obligation
(including obligations under guarantees) which could have a
material adverse effect on the ability of Lessee to perform its
obligations under the Operative Documents nor is there any fact
which by giving of notice or by lapse of time or otherwise might
constitute such default by Lessee;
G. None of the Operative Documents or any other document executed in
connection with the Operative Documents or contemplated thereby nor
any filing required or permitted thereunder is subject to any
registration tax, any stamp duty or similar tax;
H. To our knowledge and without inquiry except for review of a
certification as to the following provided by Lessee, Lessee has
furnished Lessor with consolidated financial statements of Aloha
Airgroup, Inc., the corporate parent of Lessee, reflecting the
financial results of Aloha Airgroup, Inc. and its subsidiaries
(including Lessee) as of __________________________, 199_.
I. Lessee is (i) a "United States citizen" as that term is used and
defined in the Federal Aviation Act of 1958, as amended and
recodified as Title 49 of the United States Code, and (ii) a duly
certified United States Air Carrier pursuant to the provisions of
14 C.F.R. 121;
J. To our knowledge and without inquiry except for review of a
certification as to the following provided by Lessee, no written
information given by Lessee in relation to the Operative Documents
contains any misstatement of fact or omits to state a fact which
would be adverse to the interest of Lessor or which would be
necessary to make any statement or representation or warranty
contained herein or therein not misleading;
K. To our knowledge and without inquiry except for review of a
certification as to the following provided by Lessee, there has
occurred no event which, with the giving of notice or lapse of time
or both, would
A LAW CORPORATION
XXXX
XXXXXXXX
ISHII
& XXX
--------------------
ATTORNEYS AT LAW
ACG ACQUISITION VIII LLC
FINOVA CAPITAL CORPORATION
_________________, 1996
Page 5
constitute an Event of Default or Default under the Operative
Documents;
L. To our knowledge and without inquiry except for review of a
certification as to the following provided by Lessee, Lessee
does not do business under any assumed or trade names;
M. Except for the filing of appropriate financing statements (UCC-1s)
with the Bureau of Conveyances, State of Hawaii and the filing of
the Lease Agreement with the Federal Aviation Administration, no
further actions are necessary to record or perfect Lessor's
interest in the Lease in the United States or in the State of
Hawaii;
N. The Operative Documents do not violate any law relating to the
charging, contracting for or payment or collection of interest or
the like; and
0. In the event that Lessee files a petition for relief under Chapter
11 of the United States Bankruptcy Code, as amended, or has such a
petition filed against it, Lessor will be entitled to the rights
provided to a "lessor" under the provisions of section 1110(a) (1)
of Title 11 of the United States Code.
The opinion expressed above is qualified to the extent that:
1. We are members of the Bar of the State of Hawaii and do not hold
ourselves out as being conversant with, and express no opinion as
to, the laws of any jurisdiction other than those of the State of
Hawaii and the United States of America.
2. The opinions expressed herein are solely for your benefit and may
not be relied upon in any manner or for any purpose by any other
person.
3. In conducting our examination, we have assumed the genuineness of
all signatures (other than the signatures of Lessee), the
correctness of all certificates, the authenticity of all documents
submitted to us as originals, the conformity to
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XXXX
XXXXXXXX
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--------------------
ATTORNEYS AT LAW
ACG ACQUISITION VIII LLC
FINOVA CAPITAL CORPORATION
___________________, 1996
Page 6
original documents of all documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such
copies, and the accuracy and completeness of all records made
available to us by Lessee. In making our examination of documents
and instruments, we have assumed that each party to such documents
and instruments (other than Lessee and its affiliates) has: (i) the
power and capacity to enter into and perform all its obligations
under such documents and instruments, (ii) duly authorized all
requisite action with respect to such documents and instruments,
and (iii) duly executed and delivered such documents and
instruments.
4. The opinions expressed above are qualified to the extent that (i)
enforceability of the Operative Documents and transactions
contemplated thereby may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application
from time to time affecting the rights of creditors, lessors and
secured parties generally and providing relief for debtors; and
(ii) a particular court may refuse to grant certain equitable or
legal remedies, including without limiting the generality of the
foregoing, specific performance or foreclosure, with respect to the
enforcement of any provisions of the Operative Documents.
5. This opinion letter is limited to the matters stated herein and no
opinion may be implied or inferred beyond the matters expressly
stated herein.
6. The opinions given herein are as of the date hereof and we assume
no obligation to update or supplement such opinions to reflect any
facts or circumstances which
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XXXXX
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--------------------
ATTORNEYS AT LAW
ACG ACQUISITION VIII LLC
FINOVA CAPITAL CORPORATION
___________________, 1996
Page 7
may hereafter come to our attention or any changes in law which may
hereafter occur.
Very truly yours,
XXXX XXXXXXXX ISHII & XXX
Xxxxxxxxx Xxx Xxxxx
Xxxx Xxxxxxx Banbury
CC: Xx. Xxxxxx X. Xxxxxxxxx
Xx. Xxxxx X. Xxxx
Xx. Xxxxxxx Xx
A LAW CORPORATION
SCHEDULE 6
IRREVOCABLE STANDBY LETTER OF CREDIT
Beneficiary:
ACG Acquisition VIII LLC
c/o Aviation Capital Group Corp.
Three Stamford Landing
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Gentlemen:
We hereby establish our irrevocable Standby Letter of Credit
No. S/B _______. in your favor, effective 19___, available by your draft(s)
on First Hawaiian Bank, International Banking, Honolulu, a, sight for the
account of Aloha Airlines, Inc., P. 0. Xxx 00000, Xxxxxxxx, Xxxxxx 00000, up
to an aggregate amount of U.S. $220,000 (two hundred twenty thousand United
States Dollars), accompanied by:
A statement purportedly signed by a duly authorized officer of ACG
Acquisition VIII LLC , certifying that an "Event of Default" has
occurred and is continuing under that certain Lease Agreement 804
by and between Aloha Airlines, Inc. and ACG Acquisition VIII LLC.
Payment of amounts drawn under this Letter of Credit shall be made in
full, without any offset or counterclaim whatsoever and free and clear of any
deductions or withholdings. Until all amounts which may be or become payable to
the Lessor or the Lender by the Lessee have been irrevocable paid in full we
shall not by virtue of this Letter of Credit be subrogated to any of the
Lessors or the Lender's rights or claim in competition with the Lessor or the
Lender against the Lessee.
It is a condition of this Letter of Credit that it shall be deemed
automatically extended without amendment for an additional period of one (1)
year each from the present or each future expiration date unless at least
thirty (30) days prior to any such expiry date we shall notify you in writing
by certified mail at the above address, that we elect not to consider this
Letter of Credit renewed for such additional period. Upon receipt of such
notice, you may draw hereunder by means of your draft on us as sight
accompanied by this Letter of Credit and your written certification stating
that "FINOVA Capital Corporation has received a notice of non-renewal from
First Hawaiian Bank to its Letter of Credit No. S/B________".
Partial drawings permitted.
All drafts must beer the clause "Drawn under Credit No. S/B _____ of
First Hawaiian Bank, Honolulu, Hawaii dated ____________, 19__.
This Letter of Credit is transferable only by Beneficiary. Notice of
such Transfer, if any, must be mailed immediately to First Hawaiian Bank,
International Banking, at X.X. Xxx 0000, Xxxxxxxx, Xxxxxx 00000
All bank charges relating to this Letter of Credit are for the account
of applicant.
Alternatively, drawings may be sent via fax to our International
Banking at Fax No. (000) 000-0000, originals to follow by mail. Drawings by fax
or by presentment of original documents must be received by First Hawaiian Bank,
International Banking on or before 3:00 P.M. Hawaii Standard Time on
_______________, 19__, the expiration date or any automatically extended date.
Except as otherwise expressly stated, this Credit Is subject to the
"Uniform Customs mid Practice for Documentary Credits" (1993 Revision)
International Chamber of Commerce Publication No. 500.
We hereby engage with you that all drafts drawn under and in
compliance with the terms of this Credit shall be duly honored upon
presentation if drawn on or before _________________, 19__, the expiration
date, at our international Banking counters In Honolulu, Hawaii.
Sincerely,
FIRST HAWAIIAN BANK
-------------------------------- -----------------------------------
Authorized Signature Authorized Signature
SCHEDULE 7
FORM OF SEMI-ANNUAL STATUS REPORT
AIRCRAFT TYPE REG. XXXX SERIAL NO. MONTH ENDING
------------- --------- ---------- ------------
Boeing 737-2Q9 N804AL 21719 -------------
1. AIRCRAFT UTILIZATION:
(a) Airframe Total Flight Hours ..................................................
(b) Airframe Total Cycles ..................................................
(c) Airframe Flight Hours for Month ..................................................
(d) Airframe Flight Cycles for Month ..................................................
2. POWERPLANT STATUS: No.1 No.2
(a) Serial Nos. of Delivered Engines ............ .............
(b) Serial Nos. of Replacement Engines ............ .............
(if applicable)
(c) Serial Nos. of Installed Engines ............ .............
(if different from (a) or (b) above)
(d) Current Location of Delivered or ............ .............
Replacement Engines (as applicable)
(if not installed on Airframe)
(e) Total Time Since New of Delivered ............ .............
or Replacement Engines (as applicable)
(f) Total Cycles Since New of Delivered ............ .............
or Replacement Engines (as applicable)
-99-
(g) Total Flight Hours for the Month for ............ .............
each Delivered or Replacement Engine
(as applicable)
(h) Total Cycles for the Month for each ............ .............
Delivered or Replacement Engine
(as applicable)
(i) Serial No. of Delivered APU ............
(j) Serial No. of Replacement APU ............
(if applicable)
(k) Serial No. of Installed APU ............
(if different from (a) or (b) above)
(l) Current Location of Delivered or ............
Replacement APU (as applicable)
(if not installed on Airframe)
(m) Total Time Since New of Delivered ............
or Replacement APU (as applicable)
(n) Total Cycles Since New of Delivered ............
or Replacement APU (as applicable)
(o) Total Hours for the Month for ............
Delivered or Replacement APU
(as applicable)
(p) Total Cycles for the Month for ............
Delivered or Replacement APU
(as applicable)
3. ROUTINE CHECKS / A.D. AND S.B. COMPLIANCE:
(a) Routine Checks (A and above) performed during Month:
(b) Airworthiness Directives complied with during Month:
-100-
(c) Service Bulletins complied with during Month:
4. AIRCRAFT DAMAGE OR ENGINE CHANGES:
Details of any repairs carried out to the Aircraft beyond SRM limits and
Engine hanges, giving reasons for repair or change:
5. UPCOMING MAINTENANCE CHECKS
(a) Maintenance Checks (C segment and above) scheduled or expected to be
performed on the Airframe during the next 12 months:
(b) Scheduled shop visits or heavy maintenance visits scheduled or expected
to be performed on the Engines during the next 12 months:
(c) Overhauls, or replacements scheduled or expected to be performed on the
APU or Landing Gear during the next 12 months:
Date: ____________________, ______ CERTIFIED FOR AND ON BEHALF OF
ALOHA AIRLINES, INC.
By:___________________________________
Name:
Title:
-101-
RECORDED
Federal Aviation Administration
Date 5-16-01 Time 3:13 pm
--------- --------
Conveyance Number BB 34833
------------
By /s/ [Illegible]
--------------------
Conveyances Examiner
LEASE AMENDMENT 804 NO. 1
This Lease Amendment 804 No. 1, dated April 30, 2001 (this "Amendment"), is
between ACG Acquisition VIII LLC ("Lessor") and Aloha Airlines, Inc. ("Lessee")
and relates to the lease documents for one Boeing Model 737-2Q9 aircraft bearing
manufacturer's serial number 21719 and U.S. registration xxxx N804AL, including
two Xxxxx & Whitney Model JT8D-9A engines bearing manufacturer's serial numbers
P687772B and P674389B, which engines have 750 or more rated takeoff horsepower
(the "Aircraft").
RECITALS:
---------
(1) Lessor is leasing the Aircraft to Lessee pursuant to Lease Agreement 804,
dated January 22, 1997 (the "Original Lease Agreement"), between Lessor and
Lessee, as supplemented by Certificate of Acceptance 804, dated January 22,
1997, between Lessor and Lessee (the "Acceptance Certificate"). The
Original Lease Agreement, as supplemented by the Acceptance Certificate, is
referred to in this Amendment as the Lease Agreement.
(2) The Original Lease Agreement and the Acceptance Certificate were recorded
by the FAA and were assigned conveyance numbers by the FAA as set forth on
the attached Schedule 1.
(3) Lessor and Lessee wish to amend the Lease Agreement to extend the term of
the Lease Agreement for one year, to amend the monthly rent during the
extended term, to grant Lessee a further one-year extension option and to
make certain other changes as set forth in this Amendment.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable
consideration the receipt and sufficiency of which are acknowledged, Lessor and
Lessee agree as follows:
1. DEFINITIONS.
Capitalized terms used but not defined in this Amendment shall have the
meanings ascribed to such terms in the Lease Agreement.
2. AMENDMENT OF LEASE AGREEMENT.
The Lease Agreement is amended as follows:
(a) The definition of "Expiry Date" in Clause 1.1 of the Lease Agreement
is amended and restated in its entirety as follows:
-1-
"September 25, 2002 or, if extended pursuant to Clause 4.1(b),
September 25, 2003 or, if earlier than either of those dates, as
applicable, the date on which:
(a) the Aircraft has been redelivered in accordance with this
Agreement and all obligations of Lessee have been satisfied; or
(b) the Lessor receives the Agreed Value following a Total Loss and
any other amounts then due and owing in accordance with this
Agreement."
(b) The definition of "Lender" in Clause 1.1 of the Lease Agreement is
amended to delete the words "FINOVA Capital Corporation, a Delaware
corporation, and".
(c) The definition of "Mortgage" in Clause 1.1 of the Lease Agreement and
all references to "Mortgage" in the Lease Agreement are deleted.
(d) The definition of "Security Deposit" in Clause 1.1 of the Lease
Agreement is amended and restated in its entirety as follows: "the
amount of $100,000".
(e) Clause 4.1(b) of the Lease Agreement is designated Clause 4.1(c),
and a new Clause 4.1(b) is added to the Lease Agreement as follows:
(b) By written notice delivered to Lessor on or before December 26,
2001, Lessee may elect to extend the scheduled "Expiry Date" by
one year, to September 25, 2003. Except as set forth in the
preceding sentence, there shall be no renewals or extensions of
the Term.
(f) Clause 5.3(b)(ii) of the Lease Agreement is amended and restated in
its entirety as follows:
"(ii) The Basic Rent payable in respect of each subsequent Rental
Period will be (1) for Rental Periods ending on or before
September 25, 2001, the amount of $110,000, and (2) for Rental
Periods beginning on or after September 26, 2001, the amount of
$80,000."
(g) Clause 5.4(a) of the Lease Agreement is amended and restated in its
entirety as follows:
"(a) All payments of Rent by the Lessee to the Lessor under this
Agreement will be made for value on the due date, for the full
amount due, in Dollars and in same day funds, settled through the
New York Clearing House System or such other funds as may for the
time being be customary for the settlement in New York City of
payments in
-2-
Dollars by telegraphic transfer to the account of the Lessor at
Chase Manhattan Bank, N.A., New York, New York, ABA No. 000000000,
Account No. 249-500-335-765."
(h) The text of the plates required pursuant to Clause 8.7(d) of the Lease
Agreement is amended and restated in its entirety as follows:
"This Aircraft/Engine is owned by ACG Acquisition VIII LLC and is
leased to Aloha Airlines, Inc. It may not be operated by any other
person without the prior written consent of ACG Acquisition VIII
LLC."
(i) Clause 15.10(b)(i) of the Lease Agreement is amended and restated in
its entirety as follows:
"(i) if to Lessor, to it at: c/o Aviation Capital Group Corp.
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Managing Director
Telefax No.: 000-000-0000
with a copy to: Aviation Capital Group Corp.
0 Xxxxxxxx Xxxxxxx, Xxxxx 000
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Managing Director
Telefax No.: 000-000-0000."
(j) Clause 1(g) of Schedule 3 of the Lease Agreement is deleted, and the
text "[Intentionally Omitted]" is substituted in its place.
(k) Clause 3(a) of Schedule 3 of the Lease Agreement is amended to add the
following text after the word "removal" in the first line: "(including
removal for a hot section inspection)".
(l) Clause 2(a) of Schedule 4, Part 1 of the Lease Agreement is amended to
delete the words "Lender as sole loss payee" in the third line and
substitute the words "Lessor as sole loss payee".
3. RATIFICATION.
Except as amended in Section 2 above, the Lease Agreement remains in full
force and effect in accordance with its terms.
-3-
4. LESSEE'S REPRESENTATIONS AND WARRANTIES.
Lessee represents and warrants to Lessor as follows:
(a) After giving effect to this Amendment, (i) each of the representations
and warranties set forth in Clauses 2.1 and 2.2 of the Lease Agreement
is true and correct in all respects as if made on the date of this
Amendment, and (ii) no Default or Event of Default exists under the
Lease Agreement.
(b) Lessee has the power to execute, deliver and perform, and has taken
all necessary corporate action to authorize the execution, delivery
and performance of, this Amendment and the other agreements,
instruments and documents to be executed by it in connection with this
Amendment. No consent or approval of any Person, no consent or
approval of any mortgagee, no waiver of any Lien or right of distraint
or other similar right and no consent, license, certificate of need,
approval, authorization or declaration of, or filing with, any
governmental authority, bureau or agency is or will be required in
connection with the execution, delivery or performance by Lessee, or
in connection with the validity or enforcement against Lessee, of this
Amendment and the other agreements, instruments and documents executed
in connection with this Amendment, except for the filing of this
Amendment for recordation with the aircraft registry of the FAA.
(c) The execution, delivery and performance by Lessee of this Amendment
and each of the agreements, instruments and documents executed in
connection with this Amendment to which it is a party will not (i)
violate any provision of law, (ii) conflict with or result in a breach
of any order, writ, injunction, ordinance, resolution, decree or other
similar document or instrument binding on Lessee of any court or
governmental authority, bureau or agency, domestic or foreign, (iii)
conflict with or result in a breach of the certificate of
incorporation or by-laws of Lessee, (iv) create (with or without the
giving of notice or lapse of time, or both) a default under or breach
of any agreement, bond, note or indenture to which Lessee is a party,
by which Lessee is bound or by which any of its properties or assets
is affected, or (v) result in the imposition of any Lien of any nature
whatsoever upon any of the properties or assets owned by or used in
connection with the business of Lessee.
(d) This Amendment and each of the other agreements, instruments and
documents executed in connection with this Amendment to which Lessee
is a party have been duly executed and delivered by Lessee and
constitute the valid and legally binding agreements of Lessee,
enforceable in accordance with their respective terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws, now or hereafter in
effect, relating to or affecting the enforcement of creditors' rights
generally and except that the
-4-
remedy of specific performance and other equitable remedies are
subject to judicial discretion.
5. LESSOR'S REPRESENTATIONS AND WARRANTIES.
Lessor represents and warrants to Lessee as follows:
(a) After giving effect to this Amendment, each of the representations and
warranties set forth in Clause 2.4 of the Lease Agreement is true and
correct in all respects as if made on the date of this Amendment.
(b) Lessor has the power to execute, deliver and perform, and has taken
all necessary limited liability company action to authorize the
execution, delivery and performance of, this Amendment and the other
agreements, instruments and documents to be executed by it in
connection with this Amendment. No consent or approval of any Person,
no consent or approval of any mortgagee, no waiver of any Lien or
right of distraint or other similar right and no consent, license,
certificate of need, approval, authorization or declaration of, or
filing with, any governmental authority, bureau or agency is or will
be required in connection with the execution, delivery or performance
by Lessor, or in connection with the validity or enforcement against
Lessor, of this Amendment and the other agreements, instruments and
documents executed in connection with this Amendment, except for the
filing of this Amendment for recordation with the aircraft registry of
the FAA.
(c) The execution, delivery and performance by Lessor of this Amendment
and each of the agreements, instruments and documents executed in
connection with this Amendment to which it is a party will not (i)
violate any provision of law, (ii) conflict with or result in a breach
of any order, writ, injunction, ordinance, resolution, decree or other
similar document or instrument binding on Lessor of any court or
governmental authority, bureau or agency, domestic or foreign, (iii)
conflict with or result in a breach of the certificate of formation or
operating agreement of Lessor, (iv) create (with or without the giving
of notice or lapse of time, or both) a default under or breach of any
agreement, bond, note or indenture to which Lessor is a party, by
which Lessor is bound or by which any of its properties or assets is
affected, or (v) result in the imposition of any Lien of any nature
whatsoever upon any of the properties or assets owned by or used in
connection with the business of Lessor, except the Lien of the
Security Trust Agreement.
(d) This Amendment and each of the other agreements, instruments and
documents executed in connection with this Amendment to which Lessor
is a party have been duly executed and delivered by Lessor and
constitute the valid and legally binding agreements of Lessor,
enforceable in accordance with their respective terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency,
-5-
reorganization, moratorium, or other similar laws, now or hereafter in
effect, relating to or affecting the enforcement of creditors' rights
generally and except that the remedy of specific performance and other
equitable remedies are subject to judicial discretion.
6. GOVERNING LAW.
This Amendment shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts executed in the State
of New York by residents of such State and to be performed entirely within
such State.
7. SUCCESSORS AND ASSIGNS.
This Amendment shall be binding upon, inure to the benefit of and be
enforceable by Lessor, Lessee, and their respective successors, transferees
and assigns. Neither Lessor nor Lessee shall assign or delegate its rights
and obligations under this Amendment except in accordance with an
assignment or delegation of its rights and obligations under, and in
accordance with the terms of, the Lease Agreement, and any other purported
assignment or delegation shall be null and void AB INITIO.
8. SEVERABLE PROVISIONS.
The provisions of this Amendment are severable, and if any section or
provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only
such section, provision or part in such jurisdiction and shall not in any
manner affect such section, provision or part in any other jurisdiction or
any other section or provision in this Amendment in any jurisdiction.
9. COUNTERPARTS.
This Amendment may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one
and the same Amendment.
10. EXPENSES.
Each of Lessor and Lessee shall bear its own expenses, including the legal
fees and expenses of its counsel, in connection with the negotiation,
execution and delivery of this Amendment and all other documents executed
and delivered in connection with this Agreement, and Lessor and Lessee
shall share equally the legal fees and expenses, including filing fees,
incurred by [Xxxxx, Xxxxx & Xxxxxx], special counsel for FAA matters.
-6-
11. CHATTEL PAPER COUNTERPART.
TO THE EXTENT, IF ANY, THAT THE LEASE AGREEMENT, AS AMENDED BY THIS
AMENDMENT, CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE
UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO
SECURITY INTEREST IN THE LEASE AGREEMENT AS AMENDED BY THIS AMENDMENT MAY
BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OF THIS
AMENDMENT OTHER THAN THE ORIGINAL COUNTERPART MARKED "CHATTEL PAPER
COUNTERPART".
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease Amendment
804 No. 1 on the date first above written.
ACG ACQUISITION VIII LLC, as Lessor
By: /s/ R. STEPHEN HANNAIB
-------------------------------
Name: R. STEPHEN HANNAIB
-------------------------------
Title: MANAGER
-------------------------------
ALOHA AIRLINES, INC., as Lessee
By: /s/ XXXXXX X. XXXXXXXXX
-------------------------------
Name: XXXXXX X. XXXXXXXXX
-------------------------------
Title: EXECUTIVE VICE PRESIDENT AND
-------------------------------
CHIEF FINANCIAL OFFICER
-------------------------------
By: /s/ XXXXX X. XXXXXX
-------------------------------
Name: Xxxxx X. Xxxxxx
-------------------------------
Title: President & CEO
-------------------------------
-7-
Schedule 1
to Lease Amendment 804 No. 1
Description of Lease
Lease Agreement 804 dated January 22, 1997, between ACG Acquisition VIII
LLC as lessor and Aloha Airlines, Inc. as lessee, as supplemented by Certificate
of Acceptance 804 dated January 22, 1997, recorded by the Federal Aviation
Administration on March 19, 1997, as Conveyance No. RR011675.
-8-
LEASE AMENDMENT 804 NO. 2
This Lease Amendment 804 No. 2, dated as of November 9, 2001 (this
"Amendment"), is between ACG Acquisition VIII LLC ("Lessor") and Aloha Airlines,
Inc. ("Lessee") and relates to the lease documents for one Boeing Model 737-2Q9
aircraft bearing manufacturer's serial number 21719 and U.S. registration xxxx
N804AL, including two Xxxxx & Whitney Model JT8D-9A engines bearing
manufacturer's serial numbers P687772B and P674389B, which engines have 750 or
more rated takeoff horsepower (the "Aircraft").
RECITALS:
---------
(1) Lessor is leasing the Aircraft to Lessee pursuant to Lease Agreement 804,
dated January 22, 1997 (the "Original Lease Agreement"), between Lessor and
Lessee, as supplemented by Certificate of Acceptance 804, dated January 22,
1997, between Lessor and Lessee (the "Acceptance Certificate") and as
amended by Lease Amendment 804 No. 1, dated April 30, 2001, between Lessor
and Lessee ("Amendment No. 1"). The Original Lease Agreement, as
supplemented by the Acceptance Certificate and amended by Amendment No. 1,
is referred to in this Amendment as the Lease Agreement.
(2) The Original Lease Agreement, the Acceptance Certificate and Amendment No.
1 were recorded by the FAA and were assigned conveyance numbers by the FAA
as set forth on the attached Schedule 1.
(3) Lessor and Lessee wish to amend the Lease Agreement to extend the term of
the Lease Agreement for approximately three months, to amend the monthly
rent during the remainder of the term and to make certain other changes as
set forth in this Amendment.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable
consideration the receipt and sufficiency of which are acknowledged, Lessor and
Lessee agree as follows:
1. DEFINITIONS.
Capitalized terms used but not defined in this Amendment shall have the
meanings ascribed to such terms in the Lease Agreement.
2. AMENDMENT OF LEASE AGREEMENT.
The Lease Agreement is amended as follows:
-1-
(a) The definition of "Agreed Value" in Clause 1.1 of the Lease Agreement
is amended to read "as set forth in Appendix 1".
(b) The definition of "Expiry Date" in Clause 1.1 of the Lease Agreement
is amended and restated in its entirety as follows:
"December 25, 2002 or, if extended pursuant to Clause 4.1(b),
December 25, 2003 or, if earlier than either of those dates, as
applicable, the date on which:
(a) the Aircraft has been redelivered in accordance with this
Agreement and all obligations of Lessee have been satisfied;
or
(b) the Lessor receives the Agreed Value following a Total Loss
and any other amounts then due and owing in accordance with
this Agreement."
(c) The definitions of "Letter of Credit" and "Security Deposit" in Clause
1.1 of the Lease Agreement are deleted in their entirety, and all
references in the Lease Agreement to such terms shall have no force or
effect.
(d) Clause 4.1(b) of the Lease Agreement is amended and restated in its
entirety as follows:
"(b) By written notice delivered to Lessor on or before June 26,
2002, Lessee may elect to extend the scheduled "Expiry Date"
by one year, to December 25, 2003. Except as set forth in
the preceding sentence, there shall be no renewals or
extensions of the Term."
(e) Clause 5.1 of the Lease Agreement is deleted in its entirety.
(f) Clause 5.3(b)(ii) of the Lease Agreement is amended and restated in
its entirety as follows:
"(ii) The Basic Rent payable in respect of each subsequent Rental
Period will be the Basic Rent Amount, as set forth in
Appendix l."
(g) The Lease Agreement is amended to add Appendix 1 in the form attached
to this Amendment as Schedule 2.
3. APPLICATION OF LETTER OF CREDIT.
Lessor is holding the Letter of Credit (as defined in the Lease Agreement,
without giving effect to Section 2(c) above). Lessor and Lessee agree that
Lessor shall be entitled to present
-2-
the Letter of Credit to the issuing bank, and that the resulting proceeds
paid to Lessor shall constitute payment in full for the Basic Rent due for
the Rental Periods beginning on or after September 26, 2001 and ending on
or before December 25, 2001 under the Lease Agreement, as amended by this
Amendment. Lessee further agrees (a) notwithstanding the effect of this
Amendment, Lessor may represent to the bank issuing the Letter of Credit
that an Event of Default has occurred and may make such other statements
and representations as are necessary for drawing the full amount under the
Letter of Credit, and (b) Lessee shall take all such actions and grant to
Lessor and the issuing bank all such waivers of the provisions of the Lease
Agreement and the Letter of Credit as are necessary for Lessor to draw the
full amount under the Letter of Credit.
4. RATIFICATION.
Except as amended in Section 2 above, the Lease Agreement remains in full
force and effect in accordance with its terms.
5. LESSEE'S REPRESENTATIONS AND WARRANTIES.
Lessee represents and warrants to Lessor as follows:
(a) After giving effect to this Amendment, (i) each of the representations
and warranties set forth in Clauses 2.1 and 2.2 of the Lease Agreement
is true and correct in all respects as if made on the date of this
Amendment, and (ii) no Default or Event of Default exists under the
Lease Agreement.
(b) Lessee has the power to execute, deliver and perform, and has taken
all necessary corporate action to authorize the execution, delivery
and performance of, this Amendment and the other agreements,
instruments and documents to be executed by it in connection with this
Amendment. No consent or approval of any Person, no consent or
approval of any mortgagee, no waiver of any Lien or right of distraint
or other similar right and no consent, license, certificate of need,
approval, authorization or declaration of, or filing with, any
governmental authority, bureau or agency is or will be required in
connection with the execution, delivery or performance by Lessee, or
in connection with the validity or enforcement against Lessee, of this
Amendment and the other agreements, instruments and documents executed
in connection with this Amendment, except for the filing of this
Amendment for recordation with the aircraft registry of the FAA.
(c) The execution, delivery and performance by Lessee of this Amendment
and each of the agreements, instruments and documents executed in
connection with this Amendment to which it is a party will not (i)
violate any provision of law, (ii) conflict with or result in a breach
of any order, writ, injunction, ordinance, resolution, decree or other
similar document or instrument binding on Lessee of any
-3-
court or governmental authority, bureau or agency, domestic or
foreign, (iii) conflict with or result in a breach of the certificate
of incorporation or by-laws of Lessee, (iv) create (with or, without
the giving of notice or lapse of time, or both) a default under or
breach of any agreement, bond, note or indenture to which Lessee is a
party, by which Lessee is bound or by which any of its properties or
assets is affected, or (v) result in the imposition of any Lien of any
nature whatsoever upon any of the properties or assets owned by or
used in connection with the business of Lessee.
(d) This Amendment and each of the other agreements, instruments and
documents executed in connection with this Amendment to which Lessee
is a party have been duly executed and delivered by Lessee and
constitute the valid and legally binding agreements of Lessee,
enforceable in accordance with their respective terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws, now or hereafter in
effect, relating to or affecting the enforcement of creditors' rights
generally and except that the remedy of specific performance and other
equitable remedies are subject to judicial discretion.
6. LESSOR'S REPRESENTATIONS AND WARRANTIES.
Lessor represents and warrants to Lessee as follows:
(a) After giving effect to this Amendment, each of the representations and
warranties set forth in Clause 2.4 of the Lease Agreement is true and
correct in all respects as if made on the date of this Amendment.
(b) Lessor has the power to execute, deliver and perform, and has taken
all necessary limited liability company action to authorize the
execution, delivery and performance of, this Amendment and the other
agreements, instruments and documents to be executed by it in
connection with this Amendment. No consent or approval of any Person,
no consent or approval of any mortgagee, no waiver of any Lien or
right of distraint or other similar right and no consent, license,
certificate of need, approval, authorization or declaration of, or
filing with, any governmental authority, bureau or agency is or will
be required in connection with the execution, delivery or performance
by Lessor, or in connection with the validity or enforcement against
Lessor, of this Amendment and the other agreements, instruments and
documents executed in connection with this Amendment, except for the
filing of this Amendment for recordation with the aircraft registry of
the FAA.
(c) The execution, delivery and performance by Lessor of this Amendment
and each of the agreements, instruments and documents executed in
connection with this Amendment to which it is a party will not (i)
violate any provision of law, (ii) conflict with or result in a breach
of any order, writ, injunction, ordinance,
-4-
resolution, decree or other similar document or instrument binding on
Lessor of any court or governmental authority, bureau or agency,
domestic or foreign, (iii) conflict with or result in a breach of the
certificate of formation or operating agreement of Lessor, (iv) create
(with or without the giving of notice or lapse of time, or both) a
default under or breach of any agreement, bond, note or indenture to
which Lessor is a party, by which Lessor is bound or by which any of
its properties or assets is affected, or (v) result in the imposition
of any Lien of any nature whatsoever upon any of the properties or
assets owned by or used in connection with the business of Lessor,
except the Lien of the Security Trust Agreement.
(d) This Amendment and each of the other agreements, instruments and
documents executed in connection with this Amendment to which Lessor
is a party have been duly executed and delivered by Lessor and
constitute the valid and legally binding agreements of Lessor,
enforceable in accordance with their respective terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws, now or hereafter in
effect, relating to or affecting the enforcement of creditors' rights
generally and except that the remedy of specific performance and other
equitable remedies are subject to judicial discretion.
7. GOVERNING LAW.
This Amendment shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts executed in the State
of New York by residents of such State and to be performed entirely within
such State.
8. SUCCESSORS AND ASSIGNS.
This Amendment shall be binding upon, inure to the benefit of and be
enforceable by Lessor, Lessee, and their respective successors, transferees
and assigns. Neither Lessor nor Lessee shall assign or delegate its rights
and obligations under this Amendment except in accordance with an
assignment or delegation of its rights and obligations under, and in
accordance with the terms of, the Lease Agreement, and any other purported
assignment or delegation shall be null and void AB INITIO.
9. SEVERABLE PROVISIONS.
The provisions of this Amendment are severable, and if any section or
provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only
such section, provision or part in such jurisdiction and shall not in any
manner affect such section, provision or part in any other jurisdiction or
any other section or provision in this Amendment in any jurisdiction.
-5-
10. COUNTERPARTS.
This Amendment may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one
and the same Amendment.
11. EXPENSES.
Each of Lessor and Lessee shall bear its own expenses, including the legal
fees and expenses of its counsel, in connection with the negotiation,
execution and delivery of this Amendment and all other documents executed
and delivered in connection with this Agreement, and Lessor and Lessee
shall share equally the legal fees and expenses, including filing fees,
incurred by Xxxxx, Xxxxx & Xxxxxx, special counsel for FAA matters.
12. CHATTEL PAPER COUNTERPART.
TO THE EXTENT, IF ANY, THAT THE LEASE AGREEMENT, AS AMENDED BY THIS
AMENDMENT, CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE
UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO
SECURITY INTEREST IN THE LEASE AGREEMENT AS AMENDED BY THIS AMENDMENT MAY
BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OF THIS
AMENDMENT OTHER THAN THE ORIGINAL COUNTERPART MARKED "CHATTEL PAPER
COUNTERPART".
[SIGNATURE PAGE FOLLOWS]
-6-
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease Amendment
804 No. 2 as of the date first above written.
ACG ACQUISITION VIII LLC, as Lessor
By: /s/ XXXXXXXX X. XXXX
-------------------------------
Name: XXXXXXXX X. XXXX
-------------------------------
Title: MANAGER
-------------------------------
ALOHA AIRLINES, INC., as Lessee
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
-7-
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease Amendment
804 No. 2 as of the date first above written.
ACG ACQUISITION VIII LLC, as Lessor
By:
-------------------------------
Name: XXXXXXXX X. XXXX
-------------------------------
Title: MANAGER
-------------------------------
ALOHA AIRLINES, INC., as Lessee
By: /s/ XXXXXX X. XXXXXXXXX
-------------------------------
Name: XXXXXX X. XXXXXXXXX
-------------------------------
Title: EXECUTIVE VICE PRESIDENT & CFO
-------------------------------
By: /s/ XXXXX X. XXXX
-------------------------------
Name: XXXXX X. XXXX
-------------------------------
Title: SENIOR VICE PRESIDENT PLANNING
-------------------------------
AND BUSINESS DEVELOPMENT
-------------------------------
-7-
Schedule 1
to Lease Amendment 804 No. 2
Description of Lease
Lease Agreement 804, dated January 22, 1997, between ACG Acquisition VIII
LLC as lessor and Aloha Airlines, Inc. as lessee, as supplemented by Certificate
of Acceptance 804 dated January 22, 1997, recorded by the Federal Aviation
Administration on March 19, 1997, as Conveyance No. RRO11675.
Lease Amendment 804 No. 1, dated April 30, 2001, between ACG Acquisition
VIII LLC as lessor and Aloha Airlines, Inc. as lessee, recorded by the Federal
Aviation Administration on May 16, 2001 as Conveyance No. BB34833.
-8-
Schedule 2
to Lease Amendment 804 No. 2
[INTENTIONALLY OMITTED AS CONTAINING CONFIDENTIAL INFORMATION](1)
APPENDIX 1 TO LEASE AGREEMENT 804
---------------------------------
ADDITIONAL DEFINITIONS
In addition to the definitions set forth in Clause 1.1, the following
expressions shall have the following respective meanings in this Agreement:
AGREED VALUE $5,000,000
BASIC RENT AMOUNT means (1) for Rental Periods ending on or before
September 25, 2001, the amount of $110,000, (2)
for Rental Periods beginning on or after September
26, 2001 and ending on or before December 25, 2001,
the amount of $33,333.33, and (3) for Rental
Periods beginning on or after December 26, 2001,
the amount of $90,000.
------------------------
(1) For inclusion on FAA filed copies of this Amendment in lieu of the
following information.
-9-
