EXHIBIT 10.57
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LEASE AGREEMENT
dated as of February 22, 2000
between
XXXXXX LEASE FINANCE CORPORATION,
Lessor
and
ALOHA ISLANDAIR, INC.
Lessee
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Covering One (1) de Havilland
Dash 8-102 Aircraft
Manufacturer's Serial Number 026
U.S. Registration No. N812PH,
Two (2) Xxxxx & Whitney
Model PW 120 Engines
Manufacturer's Serial
Numbers 120107 and 120142
and
Two (2) Xxxxxxxx Standard
14 SF-7 Propellers,
Manufacturer's Serial
Numbers 851114 and 890711
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THIS LEASE AGREEMENT HAS BEEN EXECUTED IN COUNTERPARTS. TO THE EXTENT 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 THEREFOR EXECUTED BY THE LESSOR ON THE SIGNATURE PAGE
THEREOF.
TABLE OF CONTENTS
Page
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LEASE AGREEMENT ......................................................... 1
SECTION 1. DEFINITIONS ................................................ 1
SECTION 2. AGREEMENT TO LEASE: TERM ................................... 7
2.01 LEASING OF AIRCRAFT ........................................ 7
2.02 ACCEPTANCE ................................................. 7
2.03 DELIVERY OF AIRCRAFT ....................................... 8
2.04 TERM ....................................................... 8
SECTION 3. CONDITIONS PRECEDENT ....................................... 8
3.01 CONDITIONS PRECEDENT TO LESSOR'S OBLIGATIONS ............... 8
3.02 CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS ............... 10
SECTION 4. LESSEE'S REPRESENTATIONS AND WARRANTIES .................... 11
4.01 DUE ORGANIZATION, STANDING ETC. ............................ 11
4.02 OPERATIVE DOCUMENTS ........................................ 11
4.03 NO CONFLICT; CONSENT ....................................... 12
4.04 GOVERNMENTAL CONSENTS ...................................... 12
4.05 NO ADVERSE AGREEMENTS ...................................... 12
4.06 NO DEFAULTS OR VIOLATIONS .................................. 12
4.07 LITIGATION ................................................. 12
4.08 NO EVENT OF DEFAULT ........................................ 13
4.09 FINANCIAL STATEMENTS ....................................... 13
4.10 CHIEF EXECUTIVE OFFICE ..................................... 13
4.11 FILINGS MADE ............................................... 13
4.12 CERTIFICATE ................................................ 13
SECTION 5. LESSOR'S REPRESENTATIONS AND WARRANTIES .................... 13
5.01 DUE ORGANIZATION, STANDING ETC. ............................ 14
5.02 OPERATIVE DOCUMENTS ........................................ 14
SECTION 6. COVENANTS OF LESSEE ........................................ 14
6.01 AIR OPERATOR'S CERTIFICATE ................................. 14
6.02 FINANCIAL AND OTHER INFORMATION TO BE SUPPLIED ............. 14
6.03 EXISTENCE .................................................. 15
6.04 INSPECTION RIGHTS; RECORDS ................................. 15
6.05 PAYMENT OF TAXES AND CLAIMS ................................ 16
6.06 NOTICE OF LITIGATION ....................................... 16
6.07 MERGER ..................................................... 16
6.08 CHIEF EXECUTIVE OFFICE ..................................... 16
6.09 CERTIFICATE ................................................ 17
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SECTION 7. PAYMENTS ................................................... 17
7.01 RENT ....................................................... 17
7.02 NET LEASE; NO SET-OFF OR DEDUCTIONS ........................ 17
7.03 IMMEDIATELY AVAILABLE FUNDS ................................ 18
7.04 SUPPLEMENTAL RENT; OVERDUE RENT ............................ 18
7.05 RESERVED ................................................... 18
7.06 GROSS UP ................................................... 18
SECTION 8. LIMITATION OF LESSOR'S LIABILITY ........................... 18
SECTION 9. USE, OPERATION AND MAINTENANCE ............................. 19
9.01 GENERAL .................................................... 19
9.02 OPERATION AND USE .......................................... 19
9.03 MAINTENANCE IN GENERAL ..................................... 20
9.04 SPECIFIC ITEMS OF MAINTENANCE .............................. 21
9.05 PARTS ...................................................... 22
9.06 AIRWORTHINESS DIRECTIVES ................................... 23
9.07 SERVICE BULLETINS: NONDISCRIMINATION ....................... 23
9.08 CORROSION CONTROL .......................................... 24
9.09 MODIFICATIONS .............................................. 24
9.10 POSSESSION; SUBLEASING; EQUIPMENT SUBSTITUTION ............. 24
9.11 REPAIRS .................................................... 26
9.12 AIRCRAFT RECORDS ........................................... 26
9.13 WARRANTIES ................................................. 26
9.14 AIRPORT CHANGE ............................................. 27
9.15 RIGHT TO INSPECT ........................................... 27
9.16 REPORTING .................................................. 27
SECTION 10. RETURN OF AIRCRAFT ......................................... 27
10.01 RETURN ..................................................... 27
10.02 CONDITION OF AIRCRAFT ...................................... 27
10.03 BOROSCOPE INSPECTION ....................................... 27
10.04 HISTORICAL RECORDS; TREND MONITORING DATA .................. 28
10.05 INSPECTION ................................................. 28
10.06 OPERATIONAL GROUND CHECK ................................... 28
10.07 OPERATION CHECK FLIGHT ..................................... 29
10.08 ACCEPTANCE ................................................. 29
10.09 DEFERRED DISCREPANCY CORRECTION ............................ 29
10.10 FLIGHT COST ................................................ 30
10.11 INDEMNIFICATION ............................................ 30
10.12 INSURANCE .................................................. 30
10.13 MANUALS AND TECHNICAL RECORDS .............................. 30
10.14 SERVICE BULLETIN KITS ...................................... 31
10.15 LESSEE'S SPECIAL EXTERIOR MARKINGS . ....................... 31
10.16 OWNERSHIP .................................................. 31
10.17 STORAGE UPON RETURN ........................................ 31
SECTION 11. TITLE; REGISTRATION; LIENS . ............................... 31
11.01 TITLE ...................................................... 31
11.02 REGISTRATION; FILINGS; REGISTRATION ........................ 32
11.03 LIENS ...................................................... 32
11.04 NOTICE OF OWNERSHIP ........................................ 32
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SECTION 12. INSURANCE .................................................. 33
12.01 ALL-RISK INSURANCE ......................................... 33
12.02 WAR RISK INSURANCE ......................................... 33
12.03 LIABILITY INSURANCE ........................................ 34
12.04 ELECTRONIC DATE RECOGNITION INSURANCE ...................... 34
12.05 DEDUCTIBLES AND SELF INSURANCE ............................. 34
12.06 ADDITIONAL REQUIREMENTS; LOSS PAYMENT ...................... 34
12.07 NO SET-OFF ................................................. 35
12.08 NOTICE OF MATERIAL ALTERATION OR CANCELLATION .............. 35
12.09 APPLICATION OF CERTAIN INSURANCE PROCEEDS .................. 35
12.10 INSURANCE FOR OWN ACCOUNT .................................. 36
12.11 CERTIFICATES AND REPORT .................................... 36
SECTION 13. LOSS, DAMAGE OR REQUISITION ................................ 36
13.01 AN EVENT OF LOSS OF AIRFRAME ............................... 36
13.02 ENGINE OR PROPELLER LOSS ................................... 37
13.03 PAYMENTS FROM GOVERNMENTAL AUTHORITIES FOR REQUISITION
OF TITLE OR USE ............................................ 38
13.04 APPLICATION OF PAYMENTS DURING EXISTENCE OF EVENT
OF DEFAULT ................................................. 38
SECTION 14. EVENT OF DEFAULT ........................................... 39
14.01 FAILURE TO MAKE PAYMENTS ................................... 39
14.02 FAILURE TO OBTAIN OR MAINTAIN INSURANCE .................... 39
14.03 FAILURE TO PERFORM OTHER OBLIGATIONS ....................... 39
14.04 REPRESENTATIONS AND WARRANTIES UNTRUE ...................... 39
14.05 INSOLVENCY OR BANKRUPTCY ................................... 39
14.06 LOSS OF REGISTRATION OR PROTECTION ......................... 40
14.07 LOSS OF LICENSE ............................................ 40
14.08 OTHER LEASE ................................................ 40
14.09 FINAL JUDGMENT ............................................. 40
14.10 OTHER DEFAULT .............................................. 40
14.11 CONTEST .................................................... 40
14.12 FAILURE TO MAINTAIN LETTER OF CREDIT ....................... 40
14.13 FAILURE TO MAINTAIN THE GUARANTY ........................... 41
SECTION 15. REMEDIES ................................................... 41
SECTION 16. INDEMNITIES AND EXPENSES ................................... 43
16.01 GENERAL INDEMNIFICATION AND WAIVER OF CERTAIN CLAIMS ....... 43
16.02 GENERAL TAX INDEMNITY ...................................... 44
16.03 AFTER-TAX BASIS; SURVIVAL .................................. 49
16.04 EXPENSES ................................................... 50
SECTION 18. ASSIGNMENT ................................................. 50
SECTION 19. NOTICES .................................................... 51
SECTION 20. LESSOR'S RIGHT TO PERFORM FOR LESSEE ....................... 51
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SECTION 21. LEASE; SECTION 1110 ........................................ 51
21.01 LEASE ...................................................... 51
21.02 SECTION 1110 ............................................... 52
SECTION 22. MISCELLANEOUS .............................................. 52
22.01 WAIVERS, HEADINGS .......................................... 52
22.02 COUNTERPARTS ............................................... 52
22.03 GOVERNING LAW .............................................. 52
22.04 BENEFIT AND BINDING EFFECT ................................. 52
22.05 FURTHER ASSURANCES ......................................... 53
22.07 USURY LAWS ................................................. 53
22.08 ENTIRE AGREEMENT ........................................... 54
Exhibit A Description of Aircraft
Schedule 1 to Exhibit A - Delivery Conditions
Exhibit B Rent and Other Financial Matters
Schedule 1 to Exhibit B - Letter of Credit
Exhibit C Acceptance Certificate
Exhibit D Schedule of Manuals and Technical Records
Exhibit E Return Acceptance Certificate
Exhibit F General Return Conditions of the Aircraft
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LEASE AGREEMENT
THIS LEASE AGREEMENT, dated as of February 22, 2000 ("Lease"), is
between XXXXXX LEASE FINANCE CORPORATION ("Lessor"), a Delaware corporation
having its principal place of business at 0000 Xxxxxxxxx Xxx, Xxxxxxxxx, XX
00000 and ALOHA ISLANDAIR, INC. ("Lessee"), a Delaware corporation having its
principal place of business at 00 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxx 00000.
W I T N E S S E T H :
WHEREAS, Lessee desires to lease the Aircraft from Lessor, and
Lessor desires to lease the Aircraft to Lessee, pursuant to the terms and
conditions of this Lease;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
The following terms shall have the following respective meanings
(such meanings to be equally applicable to both the singular and plural forms
of the terms defined). All definitions of documents shall refer to such
documents as they may now or hereafter be amended or supplemented. All
definitions of parties hereto shall include the successors and permitted
assigns of such parties.
"ACCEPTANCE CERTIFICATE" means a certificate in substantially the
form of Exhibit C, to be signed by Lessee on the Delivery Date as required
under Section 2.02 hereof.
"AERONAUTICAL AUTHORITY" means as of any time of determination, the
FAA or other governmental airworthiness authority having jurisdiction over
the Aircraft under the laws of the country in which the Aircraft is then
registered.
"AFFILIATE" with respect to a specified Person, means any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person. For the purposes of this
definition, "control" when used with respect to any specified Person, means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"AIRCRAFT" means (A) the Airframe and Engines and Propellers (or any
engine or propeller substituted for any of said Engines or Propellers
pursuant to Section 13.02 of this Lease), whether or not any of such Engines
or Propellers or engines or propellers may from time to time be installed on
such Airframe or may be installed on any other airframe or on any other
aircraft; and (B) where the context permits, the Manuals and Technical Records.
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"AIRFRAME" means (i) the aircraft (except the Engines or engines and
Propellers or propellers from time to time installed thereon) identified and
described in Exhibit A hereto and (ii) any and all Parts so long as the same
shall be incorporated or installed in or attached to the Airframe, or so long
as title thereto shall remain vested in Lessor in accordance with the terms
of Section 9.05 of this Lease, after removal from the Airframe.
"AIR OPERATOR'S CERTIFICATE" means, the certificate, license or
permit required by the Aeronautical Authority or any other governmental
authority having jurisdiction required for the Lessee to carry passengers in
common carriage as it then does in its operations.
"AIRWORTHINESS DIRECTIVE(S)" has the meaning given in Section 9.06
hereof.
"APPLICABLE LAW" means all applicable laws, treaties, judgments,
decrees, injunctions, writs and orders of any court, governmental agency or
authority and rules, regulations, orders, directives, licenses and permits of
any governmental body, instrumentality, agency or authority and all
interpretations, implementation and enforcement of any of the foregoing,
whether or not enforceable as a matter of law, by any court, government body,
instrumentality, agency or authority.
"BASIC RENT" means the rent payable throughout the Term for the
Aircraft pursuant to Section 7.01 of the Lease in the amount and as set forth
in Exhibit B hereto.
"BUSINESS DAY(S)" means any day other than a Saturday, a Sunday or a
day on which banks are permitted. or required to close in San Francisco,
California or Honolulu, Hawaii.
"CERTIFICATE OF AIRWORTHINESS" means, at any time that the FAA is
the Aeronautical Authority, a Standard Certificate of Airworthiness issued by
the FAA and, at any time that the FAA is not the Aeronautical Authority, any
analogous certificate, document or approval required by the Aeronautical
Authority for operation of the Aircraft in the manner that it will be
operated by Lessee.
"CERTIFICATED AIR CARRIER" means any U.S. air carrier holding an air
carrier operating certificate issued by the Secretary of Transportation
pursuant to Chapter 447 of Title 49 of the United States Code.
"CONTRIBUTION AMOUNT" has the meaning given in Exhibit B hereto.
"CYCLE" means one takeoff and landing of an aircraft.
"DEFAULT" means any event or condition which, with the lapse of time
or the giving of notice or both, would constitute an Event of Default.
"DELIVERY DATE" means the date on which the Acceptance Certificate
is delivered by the Lessee pursuant to Section 2.02 hereof.
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"DOLLARS" or "dollars" or the symbol "$" means dollars in lawful
currency of the United States of America.
"ENGINE" means: (i) any or all of the engines identified and
described in Exhibit A, whether or not from time to time installed on the
Airframe or installed on any other airframe; (ii) any engine that may from
time to time be substituted, pursuant to Section 9.10 or 13.02 of this Lease,
for such Engine and (iii) any and all Parts incorporated or installed in or
attached thereto or any and all Parts removed therefrom so long as title
thereto shall remain vested in Lessor in accordance with the terms of Section
9.05 of this Lease after removal from such Engine. Each such engine is 750 or
more rated takeoff horsepower or the equivalent thereof.
"EVENT OF DEFAULT" has the meaning given in Section 14 hereof.
"EVENT OF LOSS" with respect to the Aircraft, Airframe or any Engine
or Propeller means any of the following events with respect to such property:
(i) loss of such property or the use thereof due to theft or disappearance
for more than 30 days; (ii) loss of such property or the use thereof due to
destruction, damage beyond repair or rendition of such property permanently
unfit for normal use; (iii) any event which should or does result in the
receipt of insurance proceeds with respect to such property on the basis of a
total loss, arranged total loss or constructive total loss; (iv)(A) the
taking, confiscation or seizure of title to the Aircraft or Airframe or (B)
the condemnation, taking, confiscation or seizure of the use of the Aircraft
or Airframe for a period in excess of 30 days by any government or agency or
instrumentality thereof; or (v) with respect to any Engine or Propeller, the
taking of title or requisition for use by any government and any divestiture
of title deemed an Event of Loss pursuant to Section 9.10 of this Lease. An
Event of Loss with respect to the Aircraft shall be deemed to occur if an
Event of Loss occurs with respect to the Airframe.
"FAA" means the United States Federal Aviation Administration, the
Administrator thereof and any agency or instrumentality of the United States
government succeeding to their functions.
"FLIGHT HOUR" means (i) with respect to the Airframe, any hour,
including calculating by aggregating fractions of an hour, occurring on any
flight, measured from the time the wheels of the Airframe leave the ground
until the wheels next touch the ground, or (ii) with respect to any Engine or
Propeller, any hour, including calculating by aggregating fractions of an
hour, occurring on any flight, measured from the time the wheels of any
airframe, including the Airframe, on which such Engine or Propeller is
installed leave the ground until the wheels next touch the ground.
"GUARANTOR" means Aloha Airgroup, Inc., a Hawaii corporation.
"GUARANTY" means the Guaranty, dated the date hereof, from the
Guarantor in favor of the Lessor.
"IMPOSITION" has the meaning given in Section 16.02 hereto.
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"INDEMNITEE" means the Lessor, its Affiliates, any permitted
assignee of the Lessor (whether such assignment is for security or other
reasons and, if such assignment is to an owner trustee, agent, indenture
trustee or other Person acting in a fiduciary or similar capacity for other
Persons, such other Persons shall also be Indemnitees), and each agent,
director, employee, representative and successor thereof.
"INSURED PARTY" means the Lessor, its Affiliates, any permitted
assignee of the Lessor (whether such assignment is for security or other
reasons and, if such assignment is to an owner trustee, agent, indenture
trustee or other Person acting in a fiduciary or similar capacity for other
Persons, such other Persons shall also be Insured Parties), including without
limitation Lender, and any successor thereof.
"LEASE" has the meaning given in the Introductory Statement hereof
and includes all Exhibits and Schedules hereto.
"LENDER" means any bank or other financial institution providing
debt financing to the Lessor.
"LESSEE" means the Lessee (as defined in the Introductory Statement
hereof) and its successors and permitted assigns.
"LESSOR" means the Lessor (as defined in the Introductory Statement
hereof) and its successors and permitted assigns.
"LESSOR'S LIENS" means any Lien arising as a result of (i) claims
against Lessor or its Affiliates not related to the transactions contemplated
by the Lease, (ii) any act or omission of Lessor or its Affiliates which is
not related to the transactions contemplated by the Lease or is in violation
of any of the terms of the Lease, (iii) claims against Lessor or its
Affiliates with respect to Taxes against which Lessee is not required to
indemnify Lessor, (iv) claims against the Aircraft arising out of events
occurring prior to the commencement of the Term or after the expiration or
termination of the Term and the redelivery of the Aircraft in accordance with
this Lease and (v) claims against the Lessor or its Affiliates for any acts
or omissions of Lessor or its Affiliates related to the transactions
contemplated by this Lease; provided that the same are not the direct or
indirect result of any Default or Event of Default hereunder and provided
that the same are not covered by the Lessee's indemnity obligations hereunder.
"LETTER OF CREDIT" has the meaning given in Exhibit B hereto.
"LIFE LIMITED PART" means a part having a designated finite number
of Flight Hours, Cycles or days the Part can be used before being permanently
removed from use.
"LIEN" means any mortgage, pledge, lien, charge or encumbrance,
lease,
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financing statement, claim, exercise of rights or security interest.
"MAINTENANCE PROGRAM" has the meaning given in Section 9.03 hereof.
"MANUALS AND TECHNICAL RECORDS" means all such manuals, technical
data, log books and other records pertaining to the Aircraft (including,
without limitation, the technical manuals and aircraft records listed in
Exhibit D hereto) to be maintained by Lessee or as shall be required to
comply with the requirements of the Aeronautical Authority from time to time
in force. All such manuals, technical data, logbooks and other records shall
be maintained in English or with English translations.
"MANUFACTURER" means, with respect to the Airframe, de Havilland,
with respect to the Engines, Xxxxx & Whitney Canada, and, with respect to the
Propellers, Xxxxxxxx Standard.
"MODIFICATIONS" means Optional Modifications and Required
Modifications.
"OFFICER'S CERTIFICATE" means as to any company a certificate signed
by a duly authorized officer of the company.
"OPERATIVE DOCUMENTS" means this Lease, the Acceptance Certificate
and the Guaranty.
"OPTIONAL MODIFICATIONS" has the meaning given in Section 9.09(b)
hereof.
"OTHER LEASE" means the Lease Agreement, between the Lessor and
Lessee with respect to the Other Aircraft.
"OTHER AIRCRAFT" means that certain de Havilland Dash 8-102
aircraft, manufacturer's serial number 023, as further identified in the
Other Lease.
"OVERDUE RATE" has the meaning given in Exhibit B hereto.
"PARTS" means all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of whatever
nature (other than Engines or engines or Propellers or propellers) which may
from time to time be incorporated or installed in or attached to the Airframe
or any Engine or Propeller or so long as title thereto shall remain vested in
Lessor in accordance with Section 9.05 after removal therefrom.
"PERMITTED LIENS" means (i) Lessor's Liens; (ii) the respective
rights of Lessor and Lessee as provided herein; (iii) the rights of others
under agreements or arrangements to the extent expressly permitted in Section
9.10 hereof; (iv) Liens for Taxes either not yet due or being contested in
good faith (and for the payment of which adequate reserves have been
provided) by appropriate proceedings conducted in due diligence, so long as
such proceedings do not involve any material danger of the sale, forfeiture
or loss of the Airframe or any Engine or Propeller; (v) material suppliers',
mechanics', workers', repairers', employees' or other like liens arising in
the ordinary
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course of business and for amounts the payment of which is either not yet
delinquent or is being contested in good faith (and for the payment of which
adequate reserves have been provided) by appropriate proceedings conducted in
due diligence, so long as such proceedings do not involve any material danger
of the sale, forfeiture or loss of the Airframe or any Engine or Propeller;
and (vi) Liens arising out of judgments or awards against Lessee with respect
to which at the time an appeal or proceeding for review is being prosecuted
in good faith (and for the payment of which adequate reserves have been
provided) and there shall have been secured a stay of execution pending such
appeal or proceeding for review.
"PERSON" means any natural person, corporation, partnership, joint
venture, firm, association, trust, unincorporated organization,
government or governmental agency or political subdivision or any other
entity, whether acting in an individual, fiduciary or other capacity.
"PROPELLER" means (i) any or all of the propellers identified and
described in Exhibit A, whether or not from time to time installed on an
Engine or any other engine; (ii) any propeller that may from time to time be
substituted, pursuant to Section 9.10 or 13.02 of this Lease, for such
Propeller; and (iii) any and all Parts incorporated or installed in or
attached thereto or any and all Parts removed therefrom so long as such title
thereto shall remain vested in Lessor in accordance with the terms of Section
9.05 of this Lease after removal from such propeller. Each such propeller is
capable of absorbing 750 or more rated takeoff shaft horsepower or the
equivalent thereof.
"REGISTRY" means, at any time that the FAA is the Aeronautical
Authority, the FAA and, at any time that the FAA is not the Aeronautical
Authority, the registry maintained in the country of registration of the
Aircraft during the Term to register and record ownership of and other
interests in aircraft.
"RENT" means Basic Rent and Supplemental Rent.
"RENT PAYMENT DATE" means each day on which an installment of Basic
Rent is due throughout the Term as set forth in Exhibit B hereto.
"REPLACEMENT ENGINE" means an engine of the same or an improved
model (and manufactured by the same manufacturer) as an Engine being replaced
pursuant to Section 13.02 hereof, which is suitable for installation and use
on the Airframe without materially impairing the value or utility of the
Airframe and having a modification status, value (giving consideration to
maintenance status and time remaining to any scheduled or required
replacement of any Life Limited Part), condition and utility at least equal
to the Engine it is replacing (assuming such Engine was in the time status,
modification status, condition and repair required by the terms hereof
immediately prior to being replaced).
"REPLACEMENT PROPELLER" means a propeller of the same or an improved
model (and manufactured by the same manufacturer) as a Propeller being
replaced pursuant to Section 13.02 hereof, which is suitable for installation
and use on an Engine
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and the Airframe and having a time status, modification status, value,
condition and utility at least equal to the Propeller that it is replacing
(assuming such Propeller was in the time and Cycle status, modification
status, value, condition and repair required by the terms hereof immediately
prior to being replaced).
"REQUIRED MODIFICATION" has the meaning given in Section 9.09(a)
hereof.
"RETURN LOCATION" has the meaning given in Section 10.01 hereof.
"SERVICE BULLETINS" means service bulletins issued by the
Manufacturer or any other manufacturer or vendor setting forth Alert and
other service procedures applicable to the Aircraft or any Engine or
Propeller.
"STANDARD CERTIFICATE OF AIRWORTHINESS" means the certificate of
airworthiness issued by the Aeronautical Authority.
"STIPULATED LOSS VALUE" has the meaning given in Exhibit B hereto.
"SUPPLEMENTAL RENT" means all monetary amounts, liabilities and
obligations (other than Basic Rent) that Lessee assumes or agrees to pay or
requires any other person to pay under any Operative Documents to Lessor or
others, including, without limitation, indemnity payments, requisition
proceeds and Stipulated Loss Value.
"TAX" means all license, documentation and registration fees and all
taxes, levies, imposts, duties, charges, assessments or withholdings of any
nature whatsoever together with any penalties, additions to tax, fines or
interest thereon, (including, without limitation, income, gross receipts,
rental, turnover, occupation, sales, use, excise, value added, personal
property (tangible and intangible) and other taxes imposed by any federal,
state or local or governmental taxing authority in the United States or any
foreign government or taxing authority.
"TERM" has the meaning given in Exhibit B hereto.
SECTION 2. AGREEMENT TO LEASE: TERM.
2.01 LEASING OF AIRCRAFT.
Subject to the terms and conditions hereof, Lessor agrees to lease
the Aircraft to Lessee hereunder on the Delivery Date, such leasing to be
evidenced by Lessee executing and delivering the Acceptance Certificate
hereunder, and (to the extent that it has not already done so) executing and
delivering all documents or certificates and taking such other actions as are
required by Lessor to be executed and delivered or taken on or before the
Delivery Date pursuant to the terms of any Operative Document.
2.02 ACCEPTANCE.
Subject to the terms and conditions hereof and of the other Operative
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Documents to which Lessee or Guarantor is a party, Lessee hereby agrees to
lease the Aircraft from Lessor hereunder on the Delivery Date, and (to the
extent that it has not already done so) taking the following action:
(a) Execute and deliver to Lessor the Acceptance Certificate; and
(b) Execute and deliver all other documents and certificates, and
take all other actions as are required to be executed and delivered or taken
by Lessee on or before the Delivery Date pursuant to the terms of any
Operative Document to which Lessee or Guarantor is a party.
2.03 DELIVERY OF AIRCRAFT.
The Aircraft shall be delivered for purposes of this Lease at
Wichita, Kansas, or at a mutually agreed location, which shall be in a
jurisdiction that is intended to avoid any sales, use, transfer and other
similar taxes payable upon the purchase and lease of the Aircraft. The Lessee
shall be obligated to accept delivery of the Aircraft pursuant to this Lease,
at the time and place and in the condition, AS IS, WHERE IS. The execution
and delivery of the Acceptance Certificate shall, as between Lessor and
Lessee, constitute conclusive evidence that the Aircraft satisfies such
conditions without prejudice, however, to any claim Lessor or Lessee may
have against any Manufacturer.
2.04 TERM.
Except as otherwise provided herein, the Aircraft shall be
leased for the Term, which shall commence on the Delivery Date.
SECTION 3. CONDITIONS PRECEDENT.
3.01 CONDITIONS PRECEDENT TO LESSOR'S OBLIGATIONS.
The Lessor's obligation to Lease the Aircraft to Lessee hereunder is
subject to the prior satisfaction, as determined by Lessor, of the following
conditions precedent, including the determination by Lessor that each
document, certificate, opinion or other writing referred to below is in form
and substance satisfactory to Lessor:
(a) RESERVED.
(b) the Letter of Credit shall have been established and delivered
to Lessor.
(c) Lessor shall have received the following:
(i) the Chattel Paper counterpart of the Lease, duly executed by
Lessee;
(ii) the Acceptance Certificate, duly executed by Lessee;
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(iii) original copies of the other Operative Documents, each duly
executed by each of the parties thereto;
(iv) evidence that the Lease has been duly filed for recordation
with the FAA;
(v) evidence that "precautionary" or other financing statements
or other instruments covering the Lease and Aircraft have been duly filed in
a form acceptable to Lessor under the Uniform Commercial Code or other
applicable law of all jurisdictions in which Lessor reasonably deems it
necessary or desirable in order to perfect and protect its interest in the
Aircraft;
(vi) copies of the resolutions of the boards of directors of Lessee
and of the Guarantor approving the execution, delivery and performance by the
Lessee and the Guarantor of the Lease and other Operative Documents to which
either is a party, certified by the Lessee's and Guarantor's secretaries,
together with such other evidence of corporate action as Lessor shall
reasonably request;
(vii) certificates of the Lessee's and Guarantor's secretaries
certifying as to the incumbency and signatures of the persons authorized to
execute and deliver the Lease and other Operative Documents;
(viii) copies, certified by the Lessee's and Guarantor's
secretaries, of Lessee's and Guarantors charter documents and bylaws;
(ix) a certificate signed by an officer of Lessee to the effect that
no default or event which, with notice or the lapse of time, or both, would
constitute a default has occurred and is continuing or will exist under any
of the Operative Documents to which Lessee or Guarantor is a party upon
delivery of the Aircraft to the Lessee hereunder and that the
representations and warranties of Lessee in this Agreement are true and
correct with the same force and effect as if made on and as of the Delivery
Date;
(x) certificates of corporate good standing for Lessee and Guarantor;
(xi) an insurance report of an independent insurance broker and
certificates of insurance as to Lessee's due compliance with the terms of
Section 12 of this Lease;
(xii) opinions from Xxxx Xxxxxxxx Xxxxx Xxx & Xxxxx, counsel for
Lessee and Guarantor, addressed to Lessor and covering such matters incident
to the transactions hereto as Lessor may reasonably request;
(xiii) an opinion of McAfee & Xxxx, special FAA counsel, addressed
to Lessor and covering such matters incident to the transactions hereto as
Lessor may reasonably request;
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(xiv) a letter from CT Corporation Systems accepting appointment as
Lessee's and Guarantor's agent for service of process in California;
(xv) a copy of Lessee's Air Operator Certificate; and
(xvi) a copy of the Summary of Lessee's Aeronautical Authority
approved Maintenance Program.
(d) No material adverse change in Lessee's or Guarantor's
financial or operational condition or its ability to meet its obligations under
the Operative Documents shall have occurred, as determined by Lessor, since
September 30, 1999.
(e) No change shall have occurred in Applicable Law after the date
of this Agreement that in the opinion of Lessor would make it illegal or
inadvisable to consummate the transactions contemplated hereunder.
(f) Lessee shall have paid the fees and expenses of Lessor's FAA
counsel as to which invoices have been presented to Lessee and any other
expenses payable by Lessee pursuant to this Lease as to which invoices have
been presented to Lessee, which invoices are then due and owing.
(g) Lessee and Guarantor shall have taken such other actions, or
delivered such other documents, as may be reasonably requested by Lessor in
connection with the transactions contemplated herein.
3.02 CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS.
The Lessee's obligations to Lessor hereunder are subject to the
prior satisfaction of the following conditions precedent:
(a) Lessee shall have received copies of the following:
(i) original copies of the Operative Documents, each duly executed
by the parties thereto;
(ii) copies of the resolutions of the Board of Directors of Lessor
approving the execution, delivery and performance by the Lessor of this Lease
and any other Operative Documents to which the Lessor is a party, certified
by the Lessor's secretary, together with such other evidence of corporate
action as Lessee may reasonably request; and
(iii) a certificate of the Lessor's Secretary certifying as to the
incumbency and signatures of the persons authorized to execute and deliver
the Lease and any other Operative Documents to which the Lessor is a party.
(b) The Aircraft shall be registered in the name of Lessor with the
FAA.
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(c) The Aircraft shall have a Standard Certificate of Airworthiness.
(d) Lessee shall have viewed and approved the video borescope that
was performed on the Engines after last flight of the Aircraft operated by
the previous operator.
(e) The Engines shall have undergone a power assurance run at model
121 engine settings.
(f) The Engines shall have undergone and passed a power assurance at
model 120A settings and all discrepancies shall have been corrected.
(g) The Aircraft shall be in substantially the same condition as
when inspected by Lessee in the week of January 24, 2000; and any Part that
has been replaced since such inspection shall be replaced by a part having a
modification status, value, condition and utility and remaining life, hour or
cycle status and overhaul status (whichever is applicable) at least equal to
the Part it is replacing;
provided, however, that in the event the conditions set forth in Section
3.02(e) or (f) are not satisfied and all other conditions of this Section
3.02 are satisfied, then Lessee's obligations under this Lease shall be
effective, subject to the adjustment in the date of the first Rent Payment
Date set forth in Section 4(b) of Exhibit B hereto.
SECTION 4. LESSEE'S REPRESENTATIONS AND WARRANTIES.
Lessee represents and warrants to Lessor on the date hereof and on
the Delivery Date as follows:
4.01 DUE ORGANIZATION, STANDING ETC.
Each of Lessee and Guarantor is a corporation duly organized and
validly existing in good standing under the laws of its jurisdiction of
incorporation and has the power and authority to enter into and to perform
its obligations under the Operative Documents to which either is a party.
Each of Lessee and Guarantor is duly qualified and in good standing in all of
the jurisdictions in which the character of the properties owned or it or the
business conducted by it makes such qualification necessary and the failure
to so qualify would adversely effect Lessee's or Guarantor's ability to
perform its obligations under the Operative Documents to which it is a party.
4.02 OPERATIVE DOCUMENTS.
The Operative Documents to which each is a party have been duly
authorized, executed and delivered by Lessee and Guarantor, and, assuming
due authorization, execution and delivery by the other parties thereto, are
legal, valid and binding agreements of Lessee and Guarantor, enforceable in
accordance with their resive terms.
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4.03 NO CONFLICT; CONSENT.
The execution and delivery by Lessee and Guarantor of the Operative
Documents to which either is a party are not, and the performance by Lessee
and Guarantor of their respective obligations under each will not be,
inconsistent with its charter or bylaws or other organizational documents, do
not and will not contravene any law, governmental rule or regulation,
judgment or order applicable to it, and do not and will not contravene the
provisions of, or constitute a default or result in the creation of any Lien
upon any property of Lessee or Guarantor under any indenture, mortgage,
contract, agreement or other instrument to which either is a party or by
which either is bound or require the consent or approval of, the giving of
notice to, the registration with or the taking of any action in respect of or
under any federal, state or local governmental authority or agency in the
United States or any foreign country, except such as has been obtained, given
or accomplished.
4.04 GOVERNMENTAL CONSENTS.
Neither the execution and delivery of any of the Operative Documents
to which Lessee or Guarantor is a party nor performance of any of the
transactions contemplated thereby by either Lessee or Guarantor, or, to the
knowledge of Lessee, Lessor, requires the consent or approval of, the giving
of notice to, the registration with, or the taking of any other action with
respect to the Aeronautical Authority or any other governmental authority or
agency, including any judicial body, in the United States or any other
country, except for the filings for recording and registration with the
Registry referred to in Section 3.01(c)(iv) and (v) hereof and the other
filings and consents, referred to in Section 3.01 (c)(vi) and (xvi) hereof.
4.05 NO ADVERSE AGREEMENTS.
Neither Lessee nor Guarantor is a party to any agreement or
instrument or subject to any charter or any corporate restriction which, if
performed in accordance with its terms, would materially and adversely affect
Lessee's or Guarantor's financial condition, business or operations or the
ability of Lessee or Guarantor to perform its obligations under any of the
Operative Documents to which it is a party.
4.06 NO DEFAULTS OR VIOLATIONS.
Neither Lessee nor Guarantor is in default under any mortgage, deed
of trust, indenture or other instrument or agreement to which it is a party
or by which it or any of its properties or assets may be bound, or in
violation of any Applicable Law, which default or violation would have a
material adverse effect on the financial condition, business or operations of
Lessee or Guarantor or its ability to perform any of its obligations under
any of the Operative Documents to which it is a party.
4.07 LITIGATION.
Except as the Lessee has otherwise disclosed to the Lessor in
writing on
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or before the date hereof there are no pending or threatened actions,
proceedings or investigations (or any basis therefore known to Lessee) that
would either individually or in the aggregate materially and adversely affect
the financial condition, business or operations of Lessee or Guarantor or the
ability of Lessee or Guarantor to perform its obligations under any of the
Operative Documents to which it is a party.
4.08 NO EVENT OF DEFAULT.
No event exists attributable to Lessee's or Guarantor's acts or
omissions which, upon delivery and leasing of the Aircraft hereunder, would
be an Event of Default or Default.
4.09 FINANCIAL STATEMENTS.
The consolidated audited financial statements of the Guarantor and
its Affiliates delivered to Lessor, each prepared in accordance with
generally accepted accounting principles and practices, fairly present the
financial position of the Guarantor and its Affiliates as of the dates
covered thereby. Since the date of such financials there has been no material
adverse change in the overall financial condition, business or operations of
the Guarantor and its Affiliates.
4.10 CHIEF EXECUTIVE OFFICE.
The chief executive office of Lessee and its records with respect to
the Aircraft are located at 00 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxx, 00000.
4.11 FILINGS MADE.
Except for the filing and recording of the Lease with the Registry,
the "precautionary" UCC Financing Statement in Hawaii and Delaware and the
filings referred to in the opinion required by Section 3.01(c)(xiv) hereof,
no further action (including filing any financing statement in respect
thereof under the Uniform Commercial Code of any applicable jurisdiction) is
necessary in order to establish and perfect Lessor's interest in the Aircraft
and Lease in any jurisdiction in the United States or elsewhere.
4.12 CERTIFICATE.
Lessee holds an air carrier operating certificate issued by the U.S.
Secretary of Transportation pursuant to Chapter 447 of Title 49 of the United
States Code.
SECTION 5. LESSOR'S REPRESENTATIONS AND WARRANTIES.
Lessor represents and warrants to Lessee on the date hereof and on
the Delivery Date as follows:
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5.01 DUE ORGANIZATION, STANDING ETC.
Lessor is a corporation duly organized and validly existing in good
standing under the laws of its jurisdiction of incorporation and has the
power and authority to enter into and to perform its obligations under the
Operative Documents to which it is a party. Lessor is duly qualified and in
good standing in all of the jurisdictions in which the character of the
properties owned or leased by it or the business conducted by it makes such
qualification necessary and the failure to so qualify would adversely effect
Lessor's ability to perform its obligations under the Operative Documents to
which it is a party.
5.02 OPERATIVE DOCUMENTS.
The Operative Documents to which Lessor is a party have been duly
authorized, executed and delivered by Lessor, and, assuming due
authorization, execution and delivery by the other parties thereto, are
legal, valid and binding agreements of Lessor, enforceable in accordance with
their respective terms.
SECTION 6. COVENANTS OF LESSEE.
From the Delivery Date and until the return of the Aircraft pursuant to
Section 10 hereof, Lessee covenants to Lessor that Lessee shall:
6.01 AIR OPERATOR'S CERTIFICATE.
Maintain its Air Operators Certificate and any other required licenses
and permits from the Aeronautical Authority and any other governmental
authority having jurisdiction required to enable Lessee to carry passengers
in common carriage.
6.02 FINANCIAL AND OTHER INFORMATION TO BE SUPPLIED.
Furnish to Lessor:
(a) as soon as possible and in any event within 10 days after the
occurrence of an Event of Default, an Officer's Certificate setting forth in
detail the nature of such Event of Default and the action which Lessee
proposes to take with respect thereto;
(b) as soon as available, and. in any event within 60 days after
the end of each of the first three fiscal quarters in each fiscal year of
Guarantor, consolidated balance sheets of Guarantor and its Affiliates as of
the end of such quarter and related statements of income and shareholders'
equity and changes in financial condition of Guarantor and its Affiliates for
the period commencing at the end of the previous fiscal year and ending with
the end of such quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period in such other preceding
fiscal year, all in reasonable detail and duly certified (subject to year-end
audit adjustments) by a financial officer of Guarantor as having been
prepared in accordance with generally accepted accounting principles and
practices, together
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with detailed information regarding any Event of Default as may have occurred
in the relevant period and the action taken or proposed to be taken with
respect thereto;
(c) as soon as available, and in any event within 90 days after the
end of each fiscal year of Guarantor, a copy of the annual report for such
year for Guarantor and the affiliated group of which Guarantor is a member on
a consolidated basis, including therein consolidated balance sheets of
Guarantor as of the end of such fiscal year and related statement of income,
shareholders' equity and changes in financial condition of Guarantor and its
Affiliates for such fiscal year, in comparative form with the preceding
fiscal year, in each case certified by independent certified public
accountants of national standing as having been prepared in accordance with
generally accepted accounting principles and practices consistently applied
(except as noted therein; PROVIDED that any changes in accounting principle
or practices must be disclosed by such accountants), together with detailed
information regarding any Event of Default as may have occurred in the
relevant period and the action taken or proposed to be taken with respect
thereto;
(d) from time to time, such other information relating to its
financial, operational or business affairs or conditions as Lessor may
reasonably request by written notice including, but not limited to,
correspondence with any Manufacturer and with Lessee's insurance carriers or
brokers.
6.03 EXISTENCE.
At all times maintain its corporate existence and do or cause to be done
all things necessary to preserve and keep in full force and effect its
corporate rights, powers, privileges and franchises except for any corporate
right, power, privilege or franchise that it determines is no longer
necessary or desirable in the conduct of its business as a common carrier for
the commercial transport of passengers and the loss of which will not
materially adversely affect or diminish the rights of Lessor under the
Operative Documents.
6.04 INSPECTION RIGHTS: RECORDS.
(a) Permit any duly authorized representative or designee of Lessor
(which may be a manufacturer's representative, an outside consultant or
representative of Lessor or of a lender secured by the Aircraft) to inspect
the Aircraft, to examine Lessee's technical books and Aircraft records, to
take memoranda and extracts therefrom and to make copies thereof, and to
discuss the affairs, finances and accounts of Lessee. Such inspections shall
be at Lessor's expense unless an Event of Default exists, in which case
inspections shall be at Lessee's expense. Unless an Event of Default exists,
such inspections may only take place at any reasonable time. Lessee shall
notify Lessor in writing when "C" and "D" Checks, if Lessee shall no longer
be utilizing the de Havilland Equalized Maintenance Program, are scheduled to
take place and if Lessee shall be utilizing the de Havilland Equalized
Maintenance Program, when structural inspections required by the Maintenance
Program and not included in the de Havilland Equalized Maintenance Program
are scheduled to take place and if Lessor
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advises Lessee in writing that it or its designee will be inspecting during
such check, the parties will use reasonable efforts to coordinate regarding
the exact time and place thereof. Lessee shall also provide Lessor, quarterly,
with scheduling information regarding the performance of the various
segments of the de Havilland Equalized Maintenance Program required to be
performed or performed during each such quarter and if Lessor advises Lessee
in writing that it or its designee will be inspecting during such segments,
the parties will use reasonable efforts to coordinate regarding the exact
time and place thereof.
(b) Maintain or cause to be maintained at all times records
adequate to identify the Aircraft and to disclose its location, use and
maintenance.
6.05 PAYMENT OF TAXES AND CLAIMS.
Pay when due all Lessee's Taxes, assessments and other liabilities
except as contested in good faith and by appropriate proceedings, provided
that adequate reserves have been established with respect thereto to the
extent required by generally accepted accounting principles as established in
the United States.
6.06 NOTICE OF LITIGATION.
Give prompt written notice to Lessor of any litigation or governmental
proceeding pending or, to its knowledge, overtly threatened against Lessee or
Guarantor which, if determined adversely to Lessee, might materially
adversely affect the financial condition of Lessee or adversely affect the
ability of Lessee or Guarantor to perform its obligations under the Operative
Agreements to which either is a party.
6.07 MERGER.
Not, without prior written consent of Lessor, merge into or with any
Person, or be acquired by any Person, or sell or agree to sell all or
substantially all of its assets (whether directly or through a series of
transactions) unless (a) the successor to Lessee or purchaser in such
transaction enters into an agreement acceptable to Lessor to assume all
obligations of Lessee under the Operative Documents unless such successor or
purchaser succeeds to such obligations by operation of law and provides an
opinion of counsel acceptable to Lessor with respect thereto in form and
substance acceptable to Lessor and (b) such transaction shall not give rise
to a Default or Event of Default; provided, however, the written consent of
Lessor shall not be required if such successor or purchaser shall be an
Affiliate of Guarantor of which Guarantor is the owner of all of the
outstanding capital stock or other ownership interests and the consolidated
net worth of the Guarantor and its Affiliates after giving effect to such
transaction shall be equal to or greater than such net worth immediately
prior to giving effect to such transaction.
6.08 CHIEF EXECUTIVE OFFICE.
Lessee shall provide Lessor with not less than 30 days prior written
notice
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of any change in its chief executive office or office where records
pertaining to the Aircraft are kept, if moved, to any place or location
outside of the State of Hawaii and will file such financing statements or
other filings as may be reasonably requested by Lessor with respect to such
change.
6.09 CERTIFICATE.
Lessee shall maintain the certificate described in Section 4.12.
SECTION 7. PAYMENTS.
7.01 RENT.
During the Term, Lessee shall pay Basic Rent as follows:
(a) BASIC RENT. On each Rent Payment Date during the Term, Lessee shall
pay to Lessor Basic Rent with respect to the Aircraft in the amount and as
provided in Exhibit B hereto.
(b) REPORTS. At least quarterly during the Term and on the 10th day of
the first calendar month following termination of the Term, Lessee shall
deliver to Lessor internally generated reports setting forth the number of
Flight Hours and Cycles flown by the Airframe and each Engine during the
preceding calendar quarter.
7.02 NET LEASE; NO SET-OFF OR DEDUCTIONS.
This Lease is a net lease, and Lessee acknowledges and agrees that
Lessee's obligation to pay all Rent and the rights of Lessor in and to such
Rent shall be ABSOLUTE AND UNCONDITIONAL UNDER ALL CIRCUMSTANCES and shall
not be subject to any abatement, reduction, set-off, defense, counterclaim
or recoupment ("ABATEMENTS") for any reason whatsoever (other than
Impositions as defined in Section 16.02 with respect to which Lessee is not
required to indemnify Lessor or any Indemnitee under Section 16.02),
including without limitation, Abatements due to any present or future claims
of Lessee against Lessor under this Lease or otherwise or against the
Manufacturer or against any other Person for whatever reason. Except as
otherwise expressly provided herein, this Lease shall not terminate for any
cause, nor shall the obligations of Lessee be affected, by reason of any
invalidity of title or any defect in the title, condition, design,
merchantability or fitness for use of, or operation of the Aircraft or any
Engine or Propeller or Part thereof as a result of damage to, or any loss, or
destruction of the Aircraft or any Engine or Propeller or any Part thereof
from whatsoever cause, or the interference with the use thereof by Lessor or
any Person, the invalidity or unenforceability of this Lease or any other
Operative Document, the insolvency, bankruptcy or reorganization of any
Person, or for any other cause, whether similar or dissimilar to the
foregoing, any present or future law or regulation to the contrary
notwithstanding. Lessee hereby waives, to the extent permitted by Applicable
Law, any and all rights which it may now or hereafter have, by statute or
otherwise, to terminate, cancel, quit or surrender the Lease and the leasing
thereunder of the Aircraft,
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it being the express intention of Lessor and Lessee that all Rent payable by
Lessee hereunder shall be, and continue to be, payable in all events unless
the obligation to pay the same shall be terminated pursuant to the express
provisions of this Lease. Notwithstanding the foregoing, Lessee shall retain
separate rights of action with respect to any present or future claims
against Lessor under this Lease.
7.03 IMMEDIATELY AVAILABLE FUNDS.
All Rent shall be paid by wire transfer in immediately available funds
by 1:00 p.m. San Francisco, California time on the day in question to the
Lessor at the account listed on Exhibit B hereto or at such other account as
shall be designated in writing by Lessor to Lessee. Funds not received by
such time on such day shall be deemed to have been received on the next day
that the recipient bank is open for business. If any Rent is due on a day
which is not a Business Day, it shall be due on the next succeeding Business
Day. All payments hereunder shall be in United States Dollars.
7.04 SUPPLEMENTAL RENT; OVERDUE RENT.
Lessee also agrees to pay to Lessor or to whomsoever shall be entitled
thereto any and all Supplemental Rent when the same shall become due and
owing, and in the event of any failure on the part of Lessee to pay any
Supplemental Rent, Lessor shall have all rights, powers and remedies provided
for herein or by law or equity in the case of nonpayment of Basic Rent.
Without limitation of the foregoing, Lessee shall pay interest at the Overdue
Rate on any payment of Rent not paid when due hereunder for the period in
which such Rent remains overdue and not paid.
7.05 RESERVED.
7.06 GROSS UP.
All Rent shall be paid free and clear of, and without deduction for, any
taxes, levies, imposts, charges, duties, fees or withholdings of any nature
whatsoever now or hereafter imposed by or within any governmental authority
or pursuant to any governmental rule or regulation or any administrative
subdivision or taxing authority thereof or therein, respectively, unless
Lessee is compelled by law to deduct or withhold such taxes, levies, imposts,
charges, duties or fees, in which event Lessee shall pay such additional
amounts as shall result in the effective receipt by Lessor of the Rent due to
Lessor or any other Person had no such deduction or withholding been made.
SECTION 8. LIMITATION OF LESSOR'S LIABILITY.
LESSOR LEASES THE AIRCRAFT HEREUNDER "AS-IS", "WHERE-IS" AND LESSOR HAS
NOT MADE, AND SHALL NOT BE DEEMED TO HAVE MADE ANY REPRESENTATION OR
WARRANTY, EXPRESSED OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, CONDITION,
DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE OR PARTICULAR PURPOSE
OF THE
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AIRCRAFT, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE
AIRCRAFT, OR AS TO ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS
OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING, WITHOUT LIMITATION, ANY
LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT
LIABILITY, ANY IMPLIED WARRANTY FROM COURSE OF PERFORMANCE OR DEALING OR
USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER
CONSEQUENTIAL DAMAGES, except that on the Delivery Date, Lessor (a) warrants
that the Aircraft shall be free of Lessor's Liens and (b) agrees that it will
not directly or indirectly create, incur, assume or suffer to exist any
Lessors Lien on or with respect to the Airframe or any Engine or Propeller.
SECTION 9. USE, OPERATION AND MAINTENANCE.
9.01 GENERAL.
Lessee, at its own cost and expense shall (i) service, repair, maintain
and overhaul or cause the same to be done to the Airframe and each Engine and
Propeller under the Maintenance Program in the same manner and with the same
care as used by Lessee with similar aircraft and engines and propellers
operated by Lessee and so as to keep the Airframe and each Engine and
Propeller in as good operating condition as when delivered to the Lessee
hereunder, ordinary wear and tear excepted, and (ii) maintain the Manuals and
Technical Records in the English language in accordance with the Maintenance
Program.
9.02 OPERATION AND USE.
(a) Lessee agrees not to operate or locate the Airframe or any Engine or
Propeller, or suffer the Airframe or any Engine or Propeller to be operated
or located by any other Person, in any area (i) excluded from coverage by any
insurance policy required to be maintained hereunder with respect to the
Airframe or Engines or Propellers or (ii) in any recognized or threatened
area of hostilities. Lessee agrees not to operate the Airframe or any Engine
or Propeller, or suffer the Airframe or any Engine or Propeller to be
operated by any other Person (1) unless the Airframe and Engine and Propeller
are covered by insurance as required by the provisions of Section 12 hereof
or (2) contrary to the terms of such insurance as required by the provisions
of Section 12 hereof.
(b) Lessee agrees not to (i) operate the Airframe or any Engine or
Propeller except in a passenger configuration, in commercial operations for
which Lessee is duly authorized by the Aeronautical Authority or (ii) use the
Aircraft for a purpose for which the Aircraft is not designed or reasonably
suitable. Lessee will not maintain, use or operate the Aircraft in violation
of any Applicable Law, or contrary to any manufacturer's operating manuals
or instructions.
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9.03 MAINTENANCE IN GENERAL.
Lessee agrees that until the Aircraft is delivered to Lessor pursuant
to Section 10 (except as specified below), it has the sole obligation to,
and shall maintain and repair or to cause to be maintained and repaired the
Airframe and the Engines and Propellers under Lessee's Aeronautical
Authority approved maintenance program as in effect on the Delivery Date as
the same may be amended from time to time in accordance with the second
sentence of this paragraph with respect to the Airframe and the Engines
and Propellers (the "Maintenance Program") and so as to keep them in as
good a condition as on the Delivery Date, ordinary wear and tear excepted.
If any material changes (including without limitation, time limit
changes) shall be made to such Maintenance Program, including without
limitation, any change from the de Havilland Equalized Maintenance
Program, Lessee shall give Lessor not less than 30 days' advance written
notice thereof and no such changes shall be implemented until approved by
the Aeronautical Authority. Included within the obligation of maintenance and
repair is the obligation and affirmative undertaking by Lessee to replace
or cause to be replaced from time to time all unserviceable or defective
Parts, to the extent required to cause the Aircraft to be in an airworthy
condition in all respects, and covered by a valid Certificate of
Airworthiness at all times.
Notwithstanding the above, Lessor agrees, on a one time only basis, at its
sole cost and expense to:
(i) reimburse Lessee for the cost of the first major
refurbishment following the Delivery Date of Engines serial
numbers 120107 and 120142. Such costs, payable within 30 days
after invoices, satisfactory to the Lessor, are received, shall
be for the refurbishment of the Engines only. All other costs,
including but not limited to, removal and installation of the
Engines, transportation and/or substitute engine(s) are for
the account of the Lessee. Notwithstanding the foregoing, if
the refurbishment is performed due to foreign object damage
("FOD") or FOD is discovered during performance of the
refurbishment under this subsection 9.03(i), (A) Lessee will
use commercially reasonable best efforts to recover the maximum
damage amount recoverable from any and all insurance providers
with respect to the Aircraft and (B) Lessee shall contribute an
amount up to the full amount of any applicable insurance
deductible and the full amount of any recovery from any insurance
provider with respect to such damage toward the cost of the
refurbishment. For purposes of this subpart (i), refurbishment
shall include the replacement of all Life Limited Parts having
fewer than 10,000 cycles remaining.
(ii) either provide Lessee serviceable replacement flaps and carriages,
as necessary, modified to eliminate the repeat inspection
requirements of DHC-8 Maintenance Program task numbers 5750/09A
and 5750/10A through the term or reimburse Lessee for the cost of
replacing such flaps and carriages. Not less than 180 days prior
to the estimated date the flaps
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will accumulate 60,000 total Cycles, Lessor and Lessee will
commence cooperation with each other in locating such
replacement flaps and carriages. In the event Lessor replaces
such flaps and carriages, as necessary, Lessor shall furnish
such flaps and carriages to Lessee between 90 and 180 days prior
to the estimated date the flaps will accumulate 60,000 total
cycles. In the event Lessee replaces such flaps and carriages, as
necessary, and Lessor is to reimburse Lessee for the cost of
replacing such flaps and carriages, such cost, payable within 30
days after invoices satisfactory to the Lessor are received,
shall be for the Lessee's reasonable net cost of such flaps and
carriages only. Notification, in writing, from the Lessee to the
Lessor, shall be given no later than 12 months prior to the date
the Lessee estimates the flaps will have accumulated 60,000 total
Cycles.
(iii) reimburse Lessee for the reasonable cost of replacing landing gear
Life Limited Parts replaced because of expired life. Such cost,
payable within 30 days after invoices satisfactory to the Lessor
are received, shall be for the Lessee's reasonable net cost of the
part only.
(iv) reimburse Lessee the cost of modifying the Aircraft to a
model DHC-8-103 including the cost of converting the Engines to
P/W 121's. Such cost shall be payable within 30 days after
invoices satisfactory to the Lessor have been received.
(v) reimburse Lessee the cost of stripping the entire Aircraft and
painting the Lessee's livery up to a total aggregate amount of
$60,000 for the painting of Lessee's livery on the Aircraft and the
Other Aircraft.
9.04 SPECIFIC ITEMS OF MAINTENANCE.
Lessee agrees that maintenance and repairs shall include, but shall not
be limited to, the following specific items:
(a) to perform or have performed in accordance with the Maintenance
Program all routine maintenance work, including on-line maintenance on
the Aircraft, and to ensure that all such maintenance shall be in
accordance with the regulations and directives of the Aeronautical Authority.
Lessee shall cause all maintenance and repairs to be performed at repair
facilities approved by the Aeronautical Authority;
(b) to maintain or cause to be maintained all Aircraft documentation,
including, without limitation, the Manuals and Technical Records, in
compliance with Aeronautical Authority regulations and in up-to-date status
(if necessary, through manufacturers' revision service) and to make these
available for review by Lessor on reasonable notice at Lessee's principal
maintenance base;
(c) if required by Aeronautical Authority regulations, to notify the
Manufacturer promptly (with a copy to Lessor) of any modifications
or configuration
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changes to the Airframe which would have a material effect on or be a
material change to the type design and/or the manuals relating to the
Airframe (such as flight, operations and maintenance); and
(d) on Lessor's request to furnish Lessor promptly with copies of any
written communications with manufacturers with respect to material defects
or malfunctions of the Aircraft.
9.05 PARTS.
(a) Lessee, at its own cost and expense, will promptly replace all
Parts that may from time to time become unserviceable, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
unfit for use for any reason whatsoever. In addition, in the ordinary
course of maintenance, service, repair, overhaul or testing, Lessee may
remove any Parts, whether or not unserviceable, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair or permanently rendered unfit for
use, provided that Lessee shall replace such Parts as promptly as practicable
with replacement parts. All replacement parts shall be made by the same
manufacturer and shall be of the same or an improved model number and
modification status or substitutes (whether or not the same manufacturer is
involved) approved by the Aeronautical Authority and normally used by
Lessee, shall be free and clear of all Liens except Permitted Liens and
shall be in as good operating condition as, and shall have a value,
utility and a remaining useful life at least equal to that of the Parts
replaced assuming such replaced Parts were in the condition and repair
required to be maintained by the terms hereof.
(b) Except as provided in Section 9.05(d), all Parts at any time
removed from the Airframe or any Engine or Propeller shall remain the
property of Lessor and subject to this Lease, no matter where located, until
such time as such Parts shall be replaced by parts that have been
incorporated or installed in or attached to such Airframe or Engine or
Propeller and that meet the requirements for replacement Parts specified in
clause (a) of this Section 9.05. Immediately upon any replacement part
becoming incorporated or installed in or attached to such Airframe or
Engine or Propeller as provided in clause (a) hereof, without further
act, (i) title to such replacement part shall thereupon vest in Lessor and it
shall become a Part for all purposes hereof to the same extent as the Part
originally incorporated or installed in or attached to such Airframe or
Engine or Propeller; and (ii) title to the replaced Part shall thereupon
vest in Lessee, free and clear of all rights of Lessor and free and clear
of Lessor Liens (other than Lessor Liens arising out of events occurring
after the transfer which are not attributable to actions of the Lessor
or omissions by the Lessor of actions which the Lessor is legally
obligated to take) and such replaced Part shall no longer be deemed a Part
hereunder.
(c) Title to all parts incorporated or installed in or attached or
added to the Airframe or any Engine or Propeller as the result of
any alteration, modification or addition effected by Lessee shall, without
further act, vest in Lessor and become subject to this Lease and such
part shall be deemed to be a Part for all purposes
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hereof.
(d) Lessee may remove Parts which Lessee determines in its reasonable
judgment to be obsolete or no longer suitable or appropriate for use by
Lessee on the Airframe or any Engine or Propeller ("Obsolete Parts"),
PROVIDED that (i) such removal is being applied by Lessee on a
fleet-wide basis and does not discriminate against the Aircraft and (ii)
removal of any such Part shall not diminish the fair market value, utility or
remaining useful life of the Airframe or such Engine or Propeller, or
materially impair the condition or impair the airworthiness thereof, below
the fair market value, utility, condition, airworthiness or remaining
useful life thereof immediately prior to such removal assuming the Airframe
or such Engine or Propeller was then of the fair market value and utility
and in the condition and airworthiness required to be maintained by
the terms of this Lease.
9.06 AIRWORTHINESS DIRECTIVES.
(a) Lessee agrees to carry out or cause to be carried out in accordance
with the requirements thereof on the Aircraft any airworthiness directive or
any other mandatory regulation or directive ("Airworthiness Directive")
which the Aeronautical Authority from time to time may issue and which
becomes due prior to the later of the end of the Term or return of the
Aircraft to the Lessor pursuant to Section 10, which shall include without
limitation, compliance with any terminating action with which compliance
must be met prior to the later of the end of the Term or the return of the
Aircraft to the Lessor pursuant to Section 10. All Airworthiness
Directives shall be timely accomplished in accordance with all
applicable bulletins and manuals published by the Manufacturer of
the Airframe or Engines or Propellers or Parts or data approved by the
Aeronautical Authority to the extent the same are incorporated in or by
reference into the Airworthiness Directive.
(b) Title to any parts installed on the Aircraft pursuant to an
Airworthiness Directive issued after the Delivery Date shall vest in Lessor
free and clear of any Liens except Permitted Liens and such parts shall be
deemed to be Parts for all purposes hereof.
(c) Lessee shall pay the cost of complying with all Airworthiness
Directives.
9.07 SERVICE BULLETINS: NONDISCRIMINATION.
Lessee agrees, at its sole cost and expense to incorporate Service
Bulletins into the Aircraft which Lessee has accomplished on 30% of
it's Aircraft fleet during the Term of this Lease. It is not the intent
of the parties that the Aircraft shall be discriminated from the rest of
the Lessee's Aircraft fleet in Service Bulletin compliance or other
maintenance, provided, however, the foregoing shall not be interpreted to
expand Lessee's obligations beyond the express requirements of Section 10 and
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Exhibit "F".
9.08 CORROSION CONTROL.
Lessee shall carry out such work as may be required for the control of
corrosion, including without limitation, periodic inspections by penetration
of fuel tanks, periodic inspection and clean-up under galleys, forward
and aft cargo pit areas and lavatories, periodic treatment of all mild
corrosion and correcting of all moderate and severe or exfoliation
corrosion in accordance with the Maintenance Program.
9.09 MODIFICATIONS.
(a) Lessee, at its own expense, shall make such alterations and
modifications in and additions to the Airframe or any Engine or Propeller as
may be required to be made from time to time by Applicable Law during
the Term regardless upon whom such requirements are, by their terms,
nominally imposed ("Required Modifications").
(b) Lessee shall not, without Lessor's prior written consent, make any
major modifications, alterations or additions (collectively,
"Optional Modifications") to the Aircraft, other than Required
Modifications, including, without limitation, Optional Modifications which
will result in changes to the Aircraft structure or performance, or which
could adversely affect spare parts, interchangeability or irreplaceability.
(c) NOTWITHSTANDING ANY OTHER PROVISION OF THIS LEASE, NO OPTIONAL
MODIFICATION SHALL BE MADE WHICH HAS THE EFFECT OF DECREASING THE UTILITY,
VALUE OR REMAINING USEFUL LIFE OF THE AIRCRAFT OR ADVERSELY
AFFECTING ITS AIRWORTHINESS OR USE FOR TRANSPORTING PASSENGERS OR CARGO IN
COMMERCIAL SERVICE.
(d) All Modifications shall be accomplished at Lessee's expense except
for modifications in (1) below which Lessee will make at Lessor's
expense provided the rent is adjusted per Exhibit B and only by a Person
approved by the FAA. Lessee shall provide copies of all drawings and data
to be used by Lessee in accomplishing such Optional Modifications for
Lessor's consent prior to such work.
(1) Lessor will reimburse Lessee for Optional
Modifications accomplished in accordance with Section
9.09(b)(c) and (d) above in an amount not to exceed the
Contribution Amount. Basic Rent will be increased for such
modifications per Exhibit B, 4(a) of the Lease.
9.10 POSSESSION; SUBLEASING; EQUIPMENT SUBSTITUTION.
Lessee shall not sublease the Aircraft or otherwise in any manner
deliver, relinquish or transfer possession of the Airframe or any Engine
or Propeller to any Person or install any Engine, or permit any Engine
to be installed, on any airframe other
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than the Airframe or install any Propeller, or permit any Propeller to
be installed, on any engine other than an Engine or permit any other Person
to do any of the foregoing during the Term, without the prior written
consent of Lessor, PROVIDED, HOWEVER, that so long as Lessee shall
comply with the provisions of Section 12 hereof, Lessee, without the
prior written consent of Lessor (except as specified below) may:
(a) deliver possession of the Airframe or an Engine or Propeller to the
Manufacturer thereof for testing or other similar purposes or to any
qualified organization for service, repair, maintenance or overhaul work on
such Airframe or such Engine or Propeller or for alterations or
modifications in or additions to such Airframe or such Engine or
Propeller, to the extent required or permitted by the terms of this Lease;
(b) with the prior consent of Lessor, subject any Engine or Propeller
to normal interchange or pooling agreements or arrangements, entered into
with any Certificated Air Carrier consented to in advance of such
arrangement in writing by the Lessor (a "Permitted Air Carrier"),
provided that (i) no such agreement or arrangement contemplates or requires
the transfer of title to such Engine or Propeller; and (ii) if Lessor's title
to any Engine or Propeller shall be divested under any such agreement or
arrangement, such divestiture shall be deemed to be Fan Event of Loss with
respect to such Engine or Propeller and Lessee shall comply with
Section 13 hereof in respect of such Engine or Propeller;
(c) install an Engine on an airframe owned by Lessee free and clear of
all Liens, except (i) Permitted Liens, and (ii) those which apply only to
the engines (other than Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment (other than
Parts) installed on such airframe (but not to the airframe as an entirety),
and (iii) those created by the rights of other Permitted Air Carriers
under normal interchange or pooling agreements or arrangements customary
in the airline industry which do not contemplate, permit or require the
transfer of title to such engines installed thereon; or
(d) install an Engine on an airframe leased to Lessee or owned by
Lessee subject to a conditional sale or other security agreement, PROVIDED
that (i) such airframe is free and clear of all Liens except (A) the
rights of the parties to the lease, conditional sale or other security
agreement and (B) Liens of the type permitted by clause (c) above, and (ii)
such lease, conditional sale or other security agreement effectively
provides that such Engine shall not become subject to the Lien of such
lease, conditional sale or other security agreement, notwithstanding the
installation thereof on such airframe in which particular connection, a
provision contained in such lease, conditional sale or other security
agreement substantially to the effect of clause (e) of this Section 9.10
shall be deemed to so effectively provide;
PROVIDED that the rights of a transferee who receives possession by reason
of a transfer permitted by this Section 9.10 shall be subject and
subordinate to all the terms of this Lease and the rights of the Lessor
hereunder to repossess such property and any such arrangement shall
expressly state it is so subordinate or contain a provision substantially
to the effect of clause (e) of this Section 9.10, and Lessee shall remain
-25-
primarily liable hereunder for the performance of all of the terms of this
Lease to the same extent as if such transfer had not occurred.
(e) 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 propeller (other than a Propeller) owned by the Lessee, any lessor of any
engine (other than an Engine) or propeller (other than a Propeller)
leased to the Lessee and any conditional vendor of any engine (other
than an Engine) or propeller (other than a Propeller) purchased by the
Lessee subject to a conditional sale agreement or any other security
agreement, that no right, title to or interest in any such engine or
propeller 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 propeller as a result of its
installation on the Airframe.
9.11 REPAIRS.
Any repair to the Aircraft accomplished prior to return of the Aircraft
to Lessor pursuant to Section 10 hereof shall be accomplished where
applicable pursuant to the appropriate Manufacturer's repair manual
instructions (if any) and the Maintenance Program. All such repairs,
inclusive of corrosion control repairs, are to be documented and mapped
identifying the location, dimensions and repair procedure.
9.12 AIRCRAFT RECORDS.
All records maintained by Lessee prior to return of the Aircraft
pursuant to Section 10 hereof relating to the location, service,
inspection, maintenance, modification, repair and overhaul of the
Airframe, Engines and Parts installed therein, will at all times be
maintained in accordance with all applicable requirements of the Aeronautical
Authority and any other governmental authority having jurisdiction with
respect thereto and shall be kept current, up to date, in English, accurate
and complete.
9.13 WARRANTIES.
Lessor agrees that during the Term, so long as no Default or Event of
Default has occurred and is continuing, Lessee shall have the right to
enforce all manufacturer and vendor warranties with respect to the
Aircraft, PROVIDED, HOWEVER, that (i) all such rights shall immediately
revert to the Lessor upon expiration of the Term or upon the occurrence and
continuance of a Default or Event of Default, (ii) Lessee shall not attempt
to enforce any such warranties by legal proceedings without Lessors
approval and (iii) Lessee shall indemnify Lessor and each other Indemnitee
against any Impositions with respect to any warranties or enforcement of
warranties pursuant to Section 16.01 hereof and (iv) Lessor makes no
warranties or representations whatever to Lessee as to the existence or
enforceability of any such warranties. Lessee agrees that it shall maintain
the Aircraft in such a manner so as not to knowingly void any available
warranties.
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9.14 AIRPORT CHARGES.
Lessee shall as the same become due, pay and discharge, or procure the
payment and discharge of any and all charges, fees, taxes, imposts and levies
of whatsoever nature which are incurred by Lessee or Lessee's sublessees
in the course of the operation of the Aircraft under this Lease or of
any other aircraft under the management or control of Lessee or
Lessee's sublessees, including without limitation all charges of
airport authorities (whether relating to landing fees, parking fees,
handling charges or otherwise), all charges imposed by air navigation
authorities whatsoever and all charges of aviation authorities whether
relating to navigation or otherwise and will upon written request therefore
by Lessor supply evidence of payment of any such charges.
9.15 RIGHT TO INSPECT.
The Lessor or its designee(s) shall have the right, but not the
obligation, after ten (10) Business Days written notice to the
Lessee, periodically to inspect the Aircraft, Technical Records and
Manuals, for condition and compliance with this Lease. Except as
otherwise provided in Section 6.04, such inspections shall be at the cost of
the Lessor.
9.16 REPORTING.
Lessee agrees to provide to the Lessor no less frequently than
quarterly such operational data as may be requested by the Lessor to
maintain a record of the Aircraft maintenance and parts status including
the Engines, Propellers and landing gear.
SECTION 10. RETURN OF AIRCRAFT.
10.01 RETURN.
At the end of the Term or upon termination of this Lease pursuant to
Section 15 hereof, Lessee, at Lessee's expense, shall return the Aircraft
to Lessor at an airport located in the western continental United States
selected by Lessor (the "Return Location"). The Aircraft at the time of its
return shall be free and clear of all Liens other than Lessor's Liens. At
the time of return of the Aircraft to Lessor, Lessor shall execute a return
acceptance certificate (the "Return Acceptance Certificate") in the form
attached hereto as Exhibit E.
10.02 CONDITION OF AIRCRAFT.
The Aircraft at the time of its return to Lessor shall have been
maintained and repaired in accordance with the Maintenance Program and
this Lease, and shall meet the requirements set forth in Exhibit F hereof.
10.03 BOROSCOPE INSPECTION.
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A boroscope inspection shall be performed by Lessor at Lessee's expense
at the time of the Aircraft's return to Lessor and Lessee shall provide
evidence satisfactory to Lessor reflecting the correction of any
discrepancies found during such inspection and determined not to have been
in compliance with the Maintenance Program.
10.04 HISTORICAL RECORDS: TREND MONITORING DATA.
If the Engine historical and maintenance records or trend monitoring
data indicate a rate of acceleration in performance deterioration of any
Engine which is outside of the parameters permitted by the Xxxxx & Xxxxxxx
maintenance manual, Lessee shall, prior to the Aircraft's return, correct
or cause to be corrected such conditions which are determined to have
caused such increased deterioration, such correction to be made in compliance
with the Xxxxx & Whitney maintenance manual.
10.05 INSPECTION.
(a) During the last twelve (12) months of the Term, Lessor, from time
to time, may wish to make the Aircraft available for inspection to
designated representatives or technical teams evaluating the Aircraft for
use after the Term. Lessor agrees to give Lessee not less than 10
Business Days' advance written notice of such inspection and Lessee
agrees to cooperate fully with Lessor's requests in making the Aircraft and
the Manuals and Technical Records available to such authorized technical
teams and Lessor agrees that such requests will be reasonable and
will be coordinated with Lessee so as to minimize disturbance to
Lessee's operations and its personnel, provided, however, the parties
agree that such inspections shall be scheduled in such manner that
scheduled flights shall not be delayed or cancelled.
(b) The Aircraft (including the Manuals and Technical Records to be
returned therewith as set forth in this Section 10 and Exhibit F) shall be
made available to Lessor or its designee for ground inspection by
Lessor or its designee at Lessee's facilities or where the heavy
maintenance check or its equivalent, if required by Exhibit F hereto, is
being performed, while such heavy maintenance check or its equivalent
is being performed. Lessee shall remove the Aircraft from scheduled service
and open the areas of the Aircraft as required by the Maintenance Program
for such heavy maintenance check, and shall allow Lessor or its designee to
accomplish its inspection in order to determine that the Aircraft
(including the Manuals and Technical Records) is in the condition
required by the provisions of this Section 10 and Exhibit F hereto. Lessee
shall promptly correct any discrepancies from the condition required by the
provisions of this Section 10 and Exhibit F hereto which are observed during
such inspection.
10.06 OPERATIONAL GROUND CHECK.
Promptly after completion of any corrections required under Section
10.05(b) above, Lessee shall conduct an operational ground check in
accordance with the requirements of the Maintenance Program and shall
correct any discrepancies
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disclosed by such check.
10.07 OPERATIONAL CHECK FLIGHT.
Promptly after completion of all corrections required under Section
10.05 and 10.06 above, the Aircraft shall be check flown by Lessee at
Lessee's risk and expense, using qualified flight personnel, for not more
than two (2) hours on a noncommercial flight, for the purpose of
demonstrating to Lessor the satisfactory operation of the Aircraft and its
equipment and systems. If no major discrepancy is found, the Aircraft
may proceed to the Return Location. Lessor's representatives may
participate in such flight as observers. Lessee's pilot shall be in command
of the Aircraft. Such flight shall be flown using de Havilland's
operational check flight procedures sufficient to demonstrate the proper
operation of all systems for normal passenger use. Upon completion of such
operational check flight, the representatives of Lessee and Lessor
participating in such flight shall agree in writing upon any discrepancies
in such Aircraft required to be corrected by Lessee in order to comply
with the provisions of this Section 10 and Exhibit F hereto and Lessee
shall promptly correct or cause to be corrected at Lessee's expense any such
discrepancies. If any of the discrepancies referred to in Sections
10.05 and 10.06 or 10.07 continue to persist, Lessor may (but shall not be
obligated to) accept delivery of the Aircraft and apply the procedure set
forth in Section 10.9 for such discrepancies.
10.08 ACCEPTANCE.
Unless otherwise mutually agreed, the operational check flight shall
take place at the location in the United States where the final maintenance
to put the Aircraft into the required return condition is being
performed ("Maintenance Location"). Upon completion of the operational
check flight or after Lessee has corrected the discrepancies as required
to comply with this Section, the Aircraft shall be technically accepted at
the Maintenance Location and be ferried by Lessee at its risk and expense,
including accumulation of Basic Rent, to the Return Location. To the
extent possible, the operational check flight will be combined with the
ferry flight to the Return Location. Lessee shall remedy or correct
any defects or deficiencies that may be discovered during such flight.
10.09 DEFERRED DISCREPANCY CORRECTION.
Any discrepancies found during the ground inspection, operational
ground check and operational check flight set forth in Sections 10.05, 10.06
and 10.07 above, which were not corrected by Lessee prior to return of
Aircraft to Lessor, may be corrected by Lessor or its designee after return
of the Aircraft and Lessee shall reimburse Lessor for all reasonable direct
costs and expenses paid by Lessor or its designee for accomplishing such
discrepancy corrections. Lessee shall pay Lessor or its designee for all
such costs and expenses incurred within 10 days of the date of receipt of an
invoice therefor.
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10.10 FLIGHT COST.
All flights pursuant to Section 10.07 and 10.08 shall be made at
Lessee's expense and Lessee shall pay for any and all reasonable
costs associated with such flights including, but not limited to, costs for
crew, oil, airport fees, insurance, takeoff/landing fees, airway
communication fees, ground handling fees and customs duties, if any. All
obligations and risks with respect to the Aircraft under this Lease or
otherwise shall be Lessor's from and after technical acceptance by Lessor
under Section 10.08, except as otherwise expressly provided herein.
10.11 INDEMNIFICATION.
Section 16 hereof shall apply to all activity pursuant to this Section
10 and shall cover Lessor's representatives with regard to the return of
the Aircraft.
10.12 INSURANCE.
To the extent not covered by the existing insurance certificates, with
respect to Lessee's aviation liability insurance, Lessee shall (i) cause
Lessor to be named as an additional insured under Lessee's aviation liability
insurance policies to the extent of Lessee's undertaking set forth in
Section 10.11 and (ii) shall furnish to Lessor not later than 7 Business
Days prior to the start of Lessor's ground inspection of the Aircraft
certificates from Lessee's aviation liability insurance carriers in a
form reasonably satisfactory to Lessor stating the limits and terms of
Lessee's liability insurance coverage, and showing that Lessor has been
named as an additional insured and specifically referring to Section 10.11.
With respect to Lessee's hull insurance, Lessee shall (i) cause
Lessee's hull and war risk insurance carriers to waive all rights of
subrogation against Lessor and Lender to the extent of Lessee's
undertaking set forth in Section 10.11 and (ii) shall furnish to Lessor,
not later than 7 Business Days prior to the start of Lessor's ground
inspection on the Aircraft, certificates from Lessee's hull and war risk
insurance carriers, in a form acceptable to Lessor (such approval not to be
unreasonably withheld), stating that such carriers have so waived all
rights of subrogation against Lessor and specifically referring to Section
10.11.
10.13 MANUALS AND TECHNICAL RECORDS.
(a) Lessee shall return to Lessor, at the time the Aircraft is returned
to Lessor, all of the Manuals and Technical Records and other data
previously provided to Lessee at delivery as described in Exhibit D hereto,
as updated and maintained by Lessee through the date of return of the
Aircraft subject to retention time limits of the Aeronautical Authority.
In addition, Lessee shall also provide Lessor at the time the Aircraft is
returned to Lessor, all records, documents, manuals, authorizations,
drawings and data in English which were developed or caused to be
developed by Lessee or required by the Aeronautical Authority, updated and
maintained by Lessee for the Aircraft and through the date of return of
the Aircraft in an accurate and correct condition.
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(b) All Manuals and Technical Records which have been supplied by
Lessor to Lessee shall be returned in accordance with United States FAA
F.A.R. 91.417 and 121.380.
10.14 SERVICE BULLETIN KITS.
All vendors' and manufacturers' Service Bulletin kits ordered and
received by Lessee at the time of redelivery of the Aircraft and which
Lessee obtained free of charge from such vendors or manufacturers for the
Aircraft but not installed therein shall be returned with the Aircraft,
as part of the Aircraft at the time of return, free of charge to Lessor and
shall be loaded by Lessee on board the Aircraft as cargo.
10.15 LESSEE'S SPECIAL EXTERIOR MARKING.
At the time of the return of the Aircraft, Lessee shall paint the
Aircraft solid white. In the event that, notwithstanding Lessee's obligation
to do so, Lessee does not paint the Aircraft solid white, Lessor shall
have no obligation to remove any markings prior to the sale, lease, or other
disposition of the Aircraft by Lessor after its return; however, if Lessor
elects to paint the Aircraft solid white, Lessee shall pay Lessor's
reasonable direct costs and expenses paid for such painting within 10 days
of the date of Lessors invoice therefor.
10.16 OWNERSHIP.
Any documents, equipment and any other items returned to Lessor
pursuant to this Section 10 which are not already owned by Lessor
shall thereupon become the property of Lessor.
10.17 STORAGE UPON RETURN.
Upon request of Lessor received at least 30 days prior to the end of
the Term, Lessee will store the Aircraft at its expense in Honolulu, Hawaii
for a period not exceeding 60 days. Lessee shall at its expense maintain
liability and hull insurance with respect to the Aircraft during such
storage period that meet industry standards for a stored aircraft and
Lessor shall be named an additional insured and loss payee under such
insurance.
SECTION 11. TITLE; REGISTRATION; LIENS.
11.01 Title.
Lessee acknowledges that during the Lease Term full legal title to the
Aircraft shall remain vested in Lessor notwithstanding the possession and
use thereof by Lessee, and Lessee shall take all actions, subject to
Section 18, where applicable, at its expense that Lessor may reasonably
require to evidence the interest of Lessor in the Aircraft or to protect such
interest against the claims of any other Person (other than claimants
under Lessor Liens). Lessee shall not attempt to hold itself out as
having any power to sell or dispose of the Aircraft or any Engine or
Propeller.
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11.02 REGISTRATION: FILINGS: REGISTRATION.
(a) The Aircraft shall be registered at the FAA in the name of Lessor
throughout the Term and Lessee shall not do, and shall further use its
best endeavors to ensure that no third party (except with regard to Lessor
Liens) does, any act or thing which might prejudice or cancel such
registration.
(b) Lessee shall take or cause to be taken, at Lessee's cost and
expense, such actions as are necessary or requested by Lessor and appropriate
to maintain, so long as this Lease is in effect, (i) registration of the
Aircraft at the FAA, in the name of the Lessor including, without
limitation, the filing of all reports and applications and the payment of all
fees and (ii) maintaining the ownership interest of Lessor in the
Aircraft, provided, however, the foregoing shall not be deemed to impose
upon Lessee any obligation with respect to Lessor Liens. Lessee shall take
such actions at Lessee's expense as are necessary or reasonably
requested by Lessor to maintain the perfection of any security interest
that may be claimed to be created by this Lease, including without
limitation, the recording, filing, re-recording, and refiling of this
Lease, any other Operative Document, any financing statements or
other instruments. Lessee shall take no action adversely affecting
the due registration of the Aircraft with the FAA in the name of the Lessor.
11.03 LIENS.
Lessee shall not directly or indirectly create, incur, assume or suffer
to exist any Lien on or with respect to the Airframe or any Engine or
Propeller other than Permitted Liens. Lessee promptly, at its own expense,
shall take such action as may be necessary to duly discharge any Lien
other than a Permitted Lien if the same shall arise at any time and shall
indemnify Lessor with respect to any charge or cost incurred in connection
with such Lien.
11.04 NOTICE OF OWNERSHIP.
As soon as practicable after the Delivery Date but in any event within
5 Business Days of the Delivery Date, Lessee shall affix in a
reasonably prominent position on the flight deck or cockpit, and on each of
the Engines, a reasonably legible notice which shall be provided by Lessor,
reading as follows:
"XXXXXX LEASE FINANCE CORPORATION,
Owner and Lessor,
Leased to ALOHA ISLANDAIR, INC., Lessee"
Once affixed as aforesaid, such notice shall not be defaced, covered or
removed during the Term, unless the Lessor instructs Lessee by notice
hereunder to change such notice. Lessee will not allow the name of any
person other than Lessor or a lender designated in writing by Lessor to be
placed on the Airframe or any Engine or Propeller
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as a designation that might be interpreted as a claim of ownership or
any security or other interest therein.
SECTION 12. INSURANCE.
On or before the Delivery Date and until the Aircraft is returned to
Lessor in accordance with Section 10 hereof, Lessee, at its cost and
expense, shall obtain, maintain and keep in full force and effect the
following insurance with respect to the Aircraft (Lessor recognizes that
such insurances may not cover the Manuals and Technical Records), carried
with insurers and re-insurers of recognized standing who normally
participate in aviation insurances in the leading international insurance
markets:
12.01 ALL-RISK INSURANCE.
All-risk hull, ground and flight insurance on the Aircraft (with
flight, taxiing and ingestion coverages) in an amount not less than
the Stipulated Loss Value. Such hull insurance shall cover Engines or
engines, Propellers or propellers and Parts temporarily removed from the
Airframe pending installation of the same or similar Engines, engines,
Propellers or propellers or Parts on the Airframe in an amount not less than
their replacement cost.
12.02 WAR RISK INSURANCE.
War risk and allied perils insurance on the Aircraft in an amount not
less than the Stipulated Loss Value covering the perils of:
(a) war, invasion, acts of foreign enemies, hostilities (whether war be
declared or not), civil war, rebellion, revolution, insurrection, martial
law, military or usurped power, or attempts at usurpation of power;
(b) strikes, riots, civil commotions or labor disturbances;
(c) any act of one or more persons, whether or not agents of a
sovereign power, for political or terrorist purposes and whether the loss
or damage therefrom is accidental or intentional;
(d) any malicious act or act of sabotage;
(e) confiscation, nationalization, seizure, restraint, detention,
appropriation, requisition of title or use by or under the order of
any government (whether civil, military or de facto) or public or local
authority other than the government or any public or local authority of
the country of registration; and
(f) hijacking or any unlawful seizure or wrongful seizure or wrongful
exercise of control of the Aircraft or crew in flight (including any attempt
at such seizure or control) made by any person or persons on board this
Aircraft acting without the consent of Lessee.
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12.03 LIABILITY INSURANCE.
Public liability insurance for a combined single limit of not less than
the amount set forth in Exhibit B hereto for public liability insurance,
which shall:
(a) include public liability insurance, passenger liability insurance
and property damage liability insurance; and
(b) provide that all the provisions thereof, except the limits of
liability, shall operate in the same manner as if there were a separate
policy covering each such insured.
12.04 ELECTRONIC DATE RECOGNITION INSURANCE.
Satisfactory coverage against the risks associated with electronic date
recognition problems, in the form of Date Recognition Limited Coverage
Clauses AVN2000 and AVN2001, or equivalent, substitute or replacement in
respect thereof in accordance with then current market practice (and
Lessee shall make and comply with the warranties, representations, and
undertakings required to be given in connection with obtaining/maintaining
such clauses).
12.05 DEDUCTIBLES AND SELF INSURANCE.
Any insurance carried in accordance with this Section 12 may contain a
provision for a deductible or self insurance in an amount not to exceed
the amount set out in Exhibit B hereto as the permitted insurance deductible.
12.06 ADDITIONAL REQUIREMENTS: LOSS PAYMENT.
The insurance required under this Section 12 shall be provided on an
agreed value basis (as to the Aircraft as a whole, but not as to its
individual parts) and the policies shall, where applicable:
(a) name Lessor and each other Insured Party as additional insureds as
its interests may appear;
(b) provide that the insurance shall not be invalidated by any action
or inaction by Lessee or any other Person and insure the interest of Lessor
and each other Insured Party regardless of any breach or violation by Lessee
or any other Insured Party of any warranty, declaration or condition
contained in such policies;
(c) provide that the insurers shall waive any right of subrogation
against Lessor and any other Insured Party;
(d) provide that in the event of separate insurance being arranged to
cover the all-risk hull insurance and the war risk and allied perils
insurance, the underwriters subscribing to such insurance agree to a 50/50
claim funding arrangement in the event of any dispute as to which insurance
is applicable;
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(e) be of the type usually carried by major airlines owning and
operating similar aircraft, engines and propellers, and covering risks of
the kind customarily insured against by such airlines;
(f) be primary and without right of contribution from other insurance
which may be available to Lessor and any other Insured Party;
(g) provide that Lessor and each other Insured Party shall have no
liability for premiums, commissions, calls or assessments with respect to
such policies; and
(h) subject to Section 12.09 hereof, name Lessor (or any lender or
other assignee designated by Lessor) as loss payees, as their interests
may appear, and provide that losses will be adjusted with lessee and payable
to loss payees, as their interests may appear, to the extent of coverage
required herein by Section 12.
(i) contain a "cut through" clause satisfactory to Lessor.
12.07 NO SET-OFF.
Each insurance policy to be maintained under this Section 12 shall
contain a waiver of any right of the insurers to any set-off or counterclaim
or any other deduction against Lessee, and Lessor and each other Insured
Party other than with respect to unpaid premiums then due and owing with
respect to the Aircraft (and not any other aircraft).
12.08 NOTICE OF MATERIAL ALTERATION OR CANCELLATION.
Each insurance policy to be maintained under this Section 12 shall
provide that no cancellation or lapse of coverage for nonpayment of premium
or otherwise, and no substantial change of coverage which adversely affects
Lessor or Lender shall be effective as to Lessor or Lender until not less
than thirty (30) days (seven (7) days in the case of war risk policies)
after issuance to Lessor or Lender (as the case may be) of written notice
from the insurers of such cancellation, lapse or change.
12.09 APPLICATION OF CERTAIN INSURANCE PROCEEDS.
As among Lessor and Lessee, any payments received under policies of
insurance required to be maintained by Lessee pursuant to Sections 12.01
or 12.02, shall be applied as follows:
(a) if such payments are received with respect to loss or damage
(including an Event of Loss with respect to an Engine or Propeller)
not constituting an Event of Loss with respect to the Airframe, such
payments shall be paid over to Lessee or at Lessee's election, to the
repair facility jointly with Lessee, upon performance by Lessee of the
Lessee's repair obligations or (if applicable) replacement obligations
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under this Lease pursuant to Section 13.02 hereof to the reasonable
satisfaction of Lessor and, where appropriate, Lessor shall issue any
necessary payment orders with respect to such payments;
(b) if such payments are received with respect to an Event of Loss with
respect to the Aircraft, so much of such payments as shall not exceed the
amount required to be paid by Lessee pursuant to Section 13.01 hereof shall
be applied by Lessor in reduction of Lessee's obligation to pay such amount
if not already paid by Lessee, and to reimburse Lessee if it shall have
paid all or part of such amount; and the balance, if any, of such payments
shall be paid over to or retained by Lessee.
12.10 INSURANCE FOR OWN ACCOUNT.
Nothing in this Section 12 shall prohibit Lessee, Lessor or any other
Insured Party (in that order of priority should insurance capacity in excess
of the insurances required in this Section 12 be limited as to
availability or amount), at its cost, from obtaining insurance for its
own account and any proceeds payable thereunder shall be payable as provided
in the insurance policy relating thereto, provided that no such insurance
may be obtained which would limit or otherwise adversely affect the
coverage or payment of any insurance required to be obtained or maintained
pursuant to this Section 12.
12.11 CERTIFICATES AND REPORTS.
Lessee shall furnish to Lessor and Lender not later than the Delivery
Date certificates of insurance satisfactory to Lessor and Lender and a
report signed by a firm of independent insurance brokers satisfactory to
Lessor and Lender, such report stating the opinion of such firm that the
insurance then carried and maintained on the Aircraft complies with the
terms of this Section 12. Lessee will prior to the renewal dates of the
insurance policies required pursuant to this Section 12 (but in any event
prior to the cancellation, lapse or expiration of such insurance policies)
provide additional certificates and a report to Lessor and Lender meeting
the terms of the preceding sentence. Lessee will cause such firm to advise
Lessor and Lender in writing promptly of any default in the payment of
any premium and of any other act or omissions on the part of Lessee of
which they have knowledge and which would in such firm's opinion
invalidate or render unenforceable, in whole or in any material part, any
insurance on the Aircraft. Lessee will also cause such firm to advise Lessor
and Lender in writing at least thirty (30) days (seven (7) days in the case
of war risk insurance) prior to the termination or cancellation of, or
material adverse change in, such insurance carried and maintained on
the Aircraft pursuant to this Section 12.
SECTION 13. LOSS, DAMAGE OR REQUISITION.
13.01 AN EVENT OF LOSS OF AIRFRAME.
(a) Upon the occurrence of an Event of Loss with respect to the
Aircraft during the Term, Lessee shall give Lessor written notice of
such Event of Loss
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as soon as is practicable but in no event later than ten (10) Business
Days after such occurrence. Lessee shall thereafter pay or cause to be
paid to the Lessor in immediately available funds upon the earlier of
(i) receipt of insurance proceeds with respect to such Event of Loss or
(ii) 60 days following the Event of Loss, an amount equal to (A) the
Basic Rent, if any, due and payable pursuant to the terms of Section
7.01 and Exhibit B hereto due on or before such date of payment, PLUS (B)
all unpaid Supplemental Rent (other than Stipulated Loss Value) due on or
before such date of payment, PLUS (C) the Stipulated Loss Value for the
Aircraft determined as of the date of payment.
(b) In the event of a payment in full of the Stipulated Loss Value for
the Aircraft and other Rent payable as provided in Section 13.01 (a) above,
(i) this Lease and the obligations of Lessee to pay Basic Rent and
Supplemental Rent shall terminate; and (ii) Lessor shall convey to Lessee
all of Lessors right, title and interest, AS-IS, WHERE-IS WITHOUT
RECOURSE OR WARRANTY, EXPRESS OR IMPLIED except for a warranty against
Lessor's Liens, in and to (1) the Airframe and Engines and Propellers and
(2) all claims for damage to the Airframe and Engines and Propellers, if
any, against third persons arising from the Event of Loss (unless any
insurance carrier requires that such claims be assigned to it).
13.02 ENGINE OR PROPELLER LOSS.
Upon the occurrence during the Term of an Event of Loss with respect to
an Engine or Propeller not then installed on the Airframe or an Event of
Loss with respect to an Engine or Propeller installed on the Airframe not
involving an Event of Loss with respect to the Airframe, Lessee shall
give Lessor and Lender written notice thereof as soon as is practicable
but in no event later than ten (10) Business Days after such occurrence
and shall within 45 days of the occurrence of such Event of Loss and on at
least 5 days' prior written notice to Lessor substitute a Replacement
Engine for such Engine or a Replacement Propeller for such Propeller.
In such event, immediately upon the effectiveness of such substitution on
the date set forth in such notice and without further act, (i) title
to the Replacement Engine or Replacement Propeller shall thereupon vest
in Lessor (subject only to Permitted Liens), (ii) title to the replaced
Engine or Propeller shall thereupon vest in Lessee, in AS-IS, WHERE-IS
CONDITION, free and clear of all rights of Lessor and free and clear of
Lessor Liens (other than Lessor Liens arising out of events occurring after
the transfer which are not attributable to actions of the Lessor or
omissions by the Lessor of actions which the Lessor is legally obligated
to take) and shall no longer be deemed an Engine or Propeller hereunder, and
(iii) such Replacement Engine or Replacement Propeller shall become
subject to this Lease and be deemed part of the Aircraft for all purposes
hereof to the same extent as the Engine or Propeller originally installed
on or attached to the Airframe. Upon such substitution, Lessee shall
execute and deliver to Lessor such bills of sale, opinions and other
documents and instruments as Lessor shall reasonably request by notice
hereunder to evidence the interest of Lessor and conveyance to Lessor of
good and marketable title to such Replacement Engine or Replacement
Propeller. Upon such substitution, (x) Lessor shall execute and deliver
to Lessee such
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bills of sale and other documents and instruments, prepared at Lessee's
expense, as Lessee shall reasonably request to evidence such transfer
and vesting of title in and to the replaced Engine or Propeller in Lessee,
free and clear of all rights of Lessor and (y) Lessee shall receive all
insurance proceeds and proceeds in respect of any Event of Loss causing such
replacement. No Event of Loss with respect to an Engine or Propeller under
the circumstances contemplated by this Section 13.02 shall result in any
reduction of Lessee's obligations to pay Rent hereunder. Lessee agrees
that it shall at all times during the Term maintain or cause to be
maintained one (1) Engine, or other aircraft engine and one (1) Propeller or
other aircraft propeller suitable and available for use on the Airframe
and/or the airframe included with the Other Aircraft.
13.03 PAYMENTS FROM GOVERNMENTAL AUTHORITIES FOR REQUISITION OF TITLE
OR USE.
(a) Any payments on account of an Event of Loss (other than insurance
proceeds or other payments the application of which are provided for in
this Section 13, or elsewhere in this Lease, as the case may be) received at
any time by Lessor or by Lessee from any governmental authority or other
Person will be applied as follows:
(i) if such payments are received with respect to an Engine or
Propeller, such payments shall be paid over to, or retained by, the
Lessor, and upon completion of (or, if requested by Lessee,
simultaneously with) Lessee's replacement obligation, shall be paid
over to, or retained by, Lessee; and
(ii) if such payments are received with respect to the
Aircraft, (A) so much of such payments as shall not exceed the
Stipulated Loss Value and any other amount required to be paid by
Lessee pursuant to Section 9.01 hereof, shall be applied in reduction
of Lessee's obligation to pay such Stipulated, Loss Value and other
amounts, to the extent not already paid by Lessee, and, to the extent
already paid by Lessee shall be applied to reimburse Lessee for such
payment, (B) the balance, if any, of such payment remaining thereafter
shall be retained by Lessor; and
(b) In the event of a requisition for use by any government, so long as
it does not constitute an Event of Loss of the Airframe and the Engine
or engines or Propellers or propellers installed thereon during the Term,
Lessee shall promptly notify Lessor of such requisition and all Lessee's
obligations under this Lease shall continue to the same extent as if such
requisition had not occurred. Any payments received by Lessor or Lessee
from such government with respect to such requisition shall be paid over to
or retained by, Lessee.
13.04 APPLICATION OF PAYMENTS DURING EXISTENCE OF EVENT OF DEFAULT.
Any amount referred to in Section 13 or Section 12 hereof which is
payable to Lessee shall not be paid to Lessee, or, if it has been
previously paid directly
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to Lessee, shall not be retained by Lessee if at the time of such payment
an Event of Default shall have occurred and be continuing, but shall be paid
to and held by the Lessor as security for the obligations of Lessee under
this Lease and/or applied to any unpaid Rent hereunder then due, and at such
time as there shall not be continuing any such Event of Default, such
remaining amount shall be paid over to Lessee.
SECTION 14. EVENT OF DEFAULT
Each of the following events shall be an Event of Default:
14.01 FAILURE TO MAKE PAYMENTS.
If Lessee or Guarantor shall fail to pay in full in the manner provided
in, and at the place required by the terms of, Section 7 and Exhibit B
hereof, any payment of Rent when due and such failure shall continue
for five (5) Business Days.
14.02 FAILURE TO OBTAIN OR MAINTAIN INSURANCE.
If Lessee fails to obtain or maintain any insurance pursuant to the
provisions of Section 12 of this Lease or operates or locates or
permits operation or location of the Aircraft in violation of Section 9.02
hereof.
14.03 FAILURE TO PERFORM OTHER OBLIGATIONS.
If Lessee or Guarantor fails to duly observe or perform any of its
other obligations or agreements under any Operative Document and such
failure shall not have been remedied within a period of ten (10) Business
Days after delivery of written notice to Lessee or Guarantor, as the
case may be, specifying the same from Lessor unless such failure is
curable and Lessee or Guarantor, as the case may be, shall after the
delivery of such notice, be diligently proceeding to correct such
failure and shall in fact correct such failure within thirty (30) days after
the delivery of such notice.
14.04 REPRESENTATIONS AND WARRANTIES UNTRUE.
If any representation or warranty made by Lessee in any Operative
Document or in any document or certificate furnished to Lessor or Lender
in connection therewith shall be untrue, inaccurate or incomplete in any
material respect.
14.05 INSOLVENCY OR BANKRUPTCY.
(a) If Lessee or Guarantor shall become insolvent or shall generally
not pay its debts as they mature or acknowledges that it cannot pay its debts
as they mature or Lessee or Guarantor shall apply for, shall consent
to, or acquiesce in the appointment of a trustee, custodian, liquidator or
receiver of Lessee or Guarantor or its property; or, in the absence of
such application, consent or acquiescence, a trustee, custodian,
liquidator or receiver shall be appointed for Lessee or Guarantor by a court
of competent jurisdiction or for a material part of its property; or
any bankruptcy, reorganization, debt arrangement or other proceedings
under any bankruptcy or
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insolvency law shall be instituted by or against Lessee or Guarantor.
(b) If any bankruptcy, reorgarization, dissolution or liquidation
proceeding shall be instituted (i) by Lessee or Guarantor or (ii) against
Lessee or Guarantor and not be vacated within 60 days of the
initiation of such preceding.
14.06 LOSS OF REGISTRATION OR PROTECTION.
If Lessee fails to comply with its obligations under Section 11.02
hereof.
14.07 LOSS OF LICENSE.
If Lessee shall fail to remain a Certificated Air Carrier or Lessee
shall suspend all or substantially all of its airline operations or Lessee
shall fail to retain a valid Air Operator's Certificate.
14.08 OTHER LEASE.
If an "Event of Default" (as defined therein) shall occur under the
Other Lease or any other lease between the Lessor and the Lessee.
14.09 FINAL JUDGMENT.
Final judgment for the payment of money in I excess of $500,000 or
final judgments for the payment of money in excess of $500,000 in the
aggregate shall be rendered against Lessee or Guarantor unless such
judgment(s) shall have been stayed, insured against or adequate reserves for
the payment thereof shall have been set aside in accordance with generally
accepted accounting principles.
14.10 OTHER DEFAULT.
Any event of default shall have been declared under any agreement
relating to Lessee's or Guarantor's debt or lease obligations in an
amount exceeding $500,000 individually or in the aggregate (and determined,
in the case of lease obligations, by the present value of the remaining lease
payments).
14.11 CONTEST.
The existence, validity or enforceability of the rights of the Lessor
under the Lease are contested by Lessee.
14.12 FAILURE TO MAINTAIN LETTER OF CREDIT.
If Lessee fails to deliver to Lessor and keep in full force and effect
an acceptable Letter of Credit at the times and in the form and amounts
required under Exhibit B hereto.
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14.13 FAILURE TO MAINTAIN THE GUARANTY.
If, for any reason, the Guaranty ceases to be in full force and effect.
SECTION 15. REMEDIES.
Upon the occurrence of any Event of Default and at any time
thereafter so long as the same shall be continuing, Lessor, at its option,
may declare this Lease to be in default; and at any time thereafter so long
as Lessee shall not have remedied all outstanding Events of Default, Lessor
may do, and Lessee shall comply with, one or more of the following with
respect to all or any part of the Airframe and the Engines and Propellers,
as Lessor in its sole discretion shall elect, to the extent permitted by,
and subject to compliance with any mandatory requirements of, Applicable Law
then in effect:
(a) Cause Lessee, upon notice hereunder to Lessee by Lessor and
at Lessee's expense, to, and Lessee shall, promptly return all or such part
of the Airframe or the Engines or Propellers as Lessor may demand to
Lessor at such location in the United States as selected by Lessor in the
manner and condition required by, and otherwise in accordance with all of
the provisions of, Section 10 hereof; or Lessor, at its option, may enter
upon the premises where the Airframe or any or all Engines or
Propellers are located or believed to be located and take immediate
possession of and remove such Airframe or Engines or Propellers without the
necessity for first instituting proceedings, or by summary proceedings
or otherwise, in which connection, to the extent permitted by Applicable
law, Lessee waives and agrees to waive any requirement that Lessor post any
bond or other security in connection with any such proceedings, and
Lessee shall comply therewith, all without liability to Lessor for or by
reason of such entry or taking possession, whether for the restoration or
damage to property caused by such taking or otherwise;
(b) Sell or otherwise dispose of any or all of the Aircraft, at
public or private sale and with or without notice to Lessee or advertisement,
as Lessor may determine or hold, use, operate, lease to others or keep
idle all or any part of the Airframe or any Engine or Propeller as
Lessor, in its sole discretion, may determine, in any such case free
and clear of any rights of Lessee except as hereinafter set forth in this
Section 15 and without any duty to account to Lessee with respect to such
action or inaction or for any proceeds with respect thereto and the
proceeds of any such sale shall be applied by Lessor to reduce Lessee's
obligations under 15(d) below or otherwise due hereunder;
(c) Whether or not Lessor shall have exercised, or shall thereafter
at any time exercise, any of its rights under paragraph (a) or paragraph (b)
above with respect to all or any part of the Aircraft, (i) if Lessor
shall have succeeded in repossessing the Aircraft as a result of the
exercise of such rights within thirty (30) Business Days following such
declaration of default, Lessor shall have the right to recover from Lessee
any amounts which may be then due and unpaid or which may become due for the
use of the Aircraft (including, without limitation, any Basic Rent and
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other obligations accruing hereunder after the date of the occurrence of
the Event of Default through the date the Lessor is revested with possession
of the Aircraft as a result of the exercise of such rights) and also to
immediately recover from Lessee any damages, costs and expenses,
including reasonable Attorney's fees which Lessor shall have sustained by
reason of such Event(s) of Default or any other breach by Lessee of its
obligations hereunder; or (ii) if Lessor shall not have succeeded in
repossessing the Aircraft as a result of the exercise of such rights
within thirty (30) Business Days following such declaration of default,
Lessor, by written notice to Lessee specifying a payment date not earlier
than ten (10) days from the date of such notice, may demand that the Lessee
pay to Lessor, and Lessee shall pay Lessor, on the payment date specified in
such notice, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Basic Rent due for periods commencing on or after the
payment date specified in such notice), any unpaid Basic Rent due for
periods prior to the period commencing with the payment date specified in
such notice, plus whichever of the following amounts Lessor, in its sole
discretion, shall specify in such notice: (aa) an amount equal to the
excess, if any, of the Stipulated Loss Value for the Aircraft,
computed as of the payment date specified in such notice, over the
aggregate fair market rental value (computed as hereafter in this Section
provided) of the Aircraft for the remainder of the scheduled Term, after
discounting such aggregate fair market rental value to present worth using
a discount rate equal to 1/2 of 1 % per annum above the prime rate as
announced from time to time by Citibank, N.A. in effect on the date of
computation; or (bb) an amount equal to the excess, if any, of the
Stipulated Loss Value for the Aircraft on the payment date specified as
the payment date in such notice over the fair market sales value of the
Aircraft (computed as hereafter in this Section provided) as of the
payment date specified in such notice;
(d) In the event Lessor, pursuant to paragraph (b) above, shall
have sold the Aircraft, Lessor, in lieu of exercising its rights under
paragraph (c) above with respect to the Aircraft, may, if it shall so
elect, demand that Lessee pay Lessor, and Lessee shall pay to Lessor, on
the date of such sale, as liquidated damages for loss of a bargain and not
as a penalty (in lieu of the Basic Rent due for periods commencing on or
after such date of sale), any unpaid Basic Rent due for periods up to and
including the period in which such sale occurs, plus the amount of any
deficiency between the net proceeds of such sale (after deduction of all
costs of sale including, without limitation, costs of overhaul,
maintenance, broker's fees, preparation and moving to sale) and the
Stipulated Loss Value; and/or
(e) Terminate this Lease as to the Airframe or any or all of
the Engines or Propellers, or exercise any other right or remedy which
may be available under Applicable Law or proceed by appropriate court action
to enforce the terms hereof or to recover damages for the breach hereof
(which shall include recovery of the present value, calculated at a
discount rate equalling the prime rate as announced from time to time of
Citibank, N.A. as in effect on the date of calculation, of all Basic Rent
for the period corresponding to the unexpired portion of the Term),
provided, however, that this Lease shall be deemed to be terminated
automatically and immediately upon the occurrence of any Event of Default
under Section 14.05.
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In addition, Lessee shall be liable for any and all Rent due
hereunder before or after any termination hereof, together with interest
on such unpaid amounts at the Overdue Rate, and all costs and expenses
(including reasonable attorneys' fees and disbursements) paid by Lessor as
a result of the occurrence of any Event of Default or the exercise of
remedies with respect thereto including all costs and expenses incurred
in connection with the return of the Airframe or any Engine or Propeller in
accordance with the terms of Section 10 hereof or in placing the Aircraft
in the condition and with airworthiness certification as required by
such Section and such obligation shall survive any termination of the Lease.
Except as otherwise expressly provided above, no remedy referred to in
this Section 15 is intended to be exclusive, but each shall be
cumulative and in addition to any other remedy referred to above or
otherwise available to Lessor at law or in equity; and the exercise or
beginning of exercise by Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Lessor of any or all such
other remedies. No express or implied waiver by Lessor of any Default or
Event of Default hereunder shall in any way be, or be construed to be, a
waiver of any future or subsequent Default or Event of Default.
For the purposes of paragraph (c) above, the "aggregate fair
market rental value" or the "fair market sales value" of the Aircraft
shall be the rental value or sales value, as the case may be, which would
be obtained in an arm's-length transaction between an informed and willing
lessee or purchaser, as the case may be, under no compulsion to lease or
purchase, as the case may be, and an informed and willing lessor or seller,
as the case may be, in each case based upon the actual condition and
location of the Aircraft, which value shall be determined by mutual
agreement or, in the absence of mutual written agreement, pursuant to
an appraisal prepared and delivered in the United States by a nationally
recognized firm of independent aircraft appraisers selected by Lessor. The
cost of such appraisal shall be borne by Lessee.
(f) To the extent permitted by applicable law, Lessee waives any
and all rights and remedies conferred upon a lessee by UCC Sections 2A-508
through 2A-522 (where applicable), including (without limitation) any
rights to (i) cancel or repudiate this Lease, (ii) reject or revoke
acceptance of any Aircraft, (iii) recover damages from Lessor for breach
of warranty or for any other reason, (iv) claim a security interest in
any rejected property in Lessee's possession or control, (v) deduct from
the Rent or other sums due and payable under this Lease all or any part of
any claimed damages resulting from Lessor's alleged defaults under this
Lease, (vi) recover from Lessor any general, special, incidental or
consequential damages for any reason whatsoever, and (vii) specific
performance, replevin or the like for the Aircraft. Lessee further waives
its rights under Section 2A-401 and 2A-402 to suspend performance of any of
its obligations under this Lease with respect to the Aircraft. Lessee waives
any and all rights to notice and to a judicial hearing with respect to the
repossession of the Aircraft by Lessor upon the occurrence of an Event of
Default hereunder.
SECTION 16. INDEMNITIES AND EXPENSES.
16.01 GENERAL INDEMNIFICATION AND WAIVER OF CERTAIN CLAIMS.
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(a) INDEMNIFICATION. Lessee assumes liability for, and hereby agrees
to indemnify, protect, save and keep harmless each Indemnitee from and
against any and all liabilities, obligations, losses, damages, injuries,
penalties, claims (including, without limitation, claims involving or
alleging any Indemnitee's negligence and claims involving strict or absolute
liability in tort), demands, actions, penalties, suits, costs, expenses and
disbursements (including, without limitation, legal fees and expenses,
consultation fees and costs of environmental investigation and
remediation) of any kind and nature whatsoever (collectively, a "CLAIM")
which may be imposed on, incurred by or asserted against an Indemnitee,
whether or not such Indemnitee shall also be indemnified as to any such Claim
by any other Person, in any way relating to or arising out of this Lease,
any Operative Document to which Lessee or Guarantor is a party, or any other
document contemplated hereby, or the performance or enforcement of any of
the terms hereof or thereof, or in any way relating to or arising out of the
manufacture, purchase, acceptance, rejection, ownership, delivery, lease,
sublease, possession, use, operation, maintenance, condition,
registration, sale, return, storage or other disposition of each Aircraft
or any Engine or Part thereof or any accident in connection therewith
(including, without limitation, latent and other defects, whether or not
discoverable and any claim for patent, trademark or copyright infringement),
regardless of where, how and by whom operated, the failure of Lessee to
perform or comply with any law or any provision of the Operative Documents
to which Lessee or Guarantor is a party or the breach by Lessee of its
obligations or representations and warranties hereunder or the failure
of Lessee to comply with any law; provided, however, that Lessee shall not
be required to indemnify any Indemnitee for any Claim in respect of any
Aircraft arising from acts or events which occur prior to commencement
of the Term of this Lease or after possession of such Aircraft has been
re-delivered to Lessor in accordance with Section 10 hereof. Further
provided that Lessee shall not be required to indemnify (i) an Indemnitee
for any Claim resulting from acts which would constitute the willful
misconduct or gross negligence of such Indemnitee, (ii) Lessor or its
Affiliates for any Claim resulting from acts which would constitute the
willful misconduct or gross negligence of any respective agent, director,
employee or representative, if acting within the scope of their
employment or duties, of Lessor or its Affiliates, or (iii) any other
Indemnitee for any Claim resulting from acts which would constitute the
willful misconduct or gross negligence of any agent, director, employee or
representative, if acting within the scope of their employment or
duties, of such Indemnitee.
(b) WAIVER OF CERTAIN CLAIMS. Lessee hereby waives and releases
any Claim now or hereafter existing against any Indemnified Person arising
out of death or personal injury to personnel of the Lessee, loss or damage
to property of Lessee, or the loss of use of any property of Lessee, which
may result from or arise out of the condition, use or operation of the
Aircraft during the Term, including without limitation any latent or
patent defect whether or not discoverable.
16.02 GENERAL TAX INDEMNITY.
(a) INDEMNITY. Lessee agrees to pay and to indemnify each
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Indemnitee for, and hold each Indemnitee harmless from and against, all
license and registration fees, income, franchise, gross receipts, sales,
use, excise (including without limitation, any excise tax imposed by the
State of Hawaii), personal property, ad valorem, value added (except as
indicated in subclause 16.02(a)(i) below), leasing, leasing use, stamp,
documentary, landing, airport use or other taxes, and all levies, imposts,
duties, charges, or withholdings of any nature, each of the foregoing
together with any penalties, forfeitures, fines or interest thereon
("Impositions"), arising out of the transactions contemplated by this
Lease and imposed against an Indemnitee, Lessee or the Aircraft or any
part thereof by any Federal, state, local or foreign government or other
taxing authority upon or with respect to the Aircraft or any part
thereof or upon the sale, purchase, ownership, delivery, leasing,
possession, use, operation, return, transfer or other disposition thereof
or based on or measured by the rentals, receipts or earnings arising
therefrom, or upon or with respect to this Lease. Notwithstanding the
provisions of the above paragraph, Lessee's obligations under this
Section 16.02 shall not include any of the following:
(i) Impositions on, based on, or measured by, net income
of any Indemnitee (other than taxes in the nature of sales, use,
property or value added tax but including within this exclusion, any
value added tax, consumption tax or similar tax in the event such tax
is enacted by a taxing jurisdiction, as a complete substitute or
replacement of an Imposition on, based on, or measured by, net income
as a revenue source for that jurisdiction), imposed by the United
States of America or any United States federal taxing authority or
imposed by any state or local political subdivision or taxing
authority in any jurisdiction where the Lessor maintains an office
or other place of business (and for this purpose the ownership
or leasing of the Aircraft in any such jurisdiction shall not
be deemed to constitute the maintenance of a place of business)
and in which the Lessor would have been subject to taxation without
regard to the transactions contemplated by this Lease;
(ii) any impositions imposed as a result of a voluntary
sale, transfer of title, mortgaging, pledging, financing, or other
voluntary disposition by any Indemnitee of the Aircraft or part
thereof or interest therein, or any interest in the Rent or part
thereof or any interest in the Lease or part thereof, unless such
sale, transfer, mortgage, pledge or disposition occurs by reason of
the occurrence of a Default or an Event of Default or the exercise
of Lessor's remedies under this Lease upon an Event of Default;
(iii) any Impositions imposed on any Indemnitee to the
extent caused by the gross negligence or willful misconduct of such
Indemnitee;
(iv) Impositions relating to the Aircraft or any part
thereof, or interest therein, for any taxable period or
portion thereof, relating to events occurring prior to commencement
of the Term of this Lease or after the expiration of the Term
of this Lease and the redelivery of the Aircraft in accordance with
this Lease;
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(v) indemnification of the Lessor, but without prejudice
to the rights of indemnification of any other Indemnitee, with
respect to any Impositions imposed as a direct result of the willful
misconduct or gross negligence of the Lessor or its affiliates or,
if acting within the scope of their employment or duties, of
Lessor's officers, directors, employees, agents or
representatives or as a direct result of a breach by Lessor of its
express obligations under this Lease or as a direct result of an
express representation or warranty given by Lessor in this Lease
not being true and correct at the date when, or when deemed to have
been, given or made;
(vi) indemnification of any lender to Lessor or any permitted
successor or assign thereof, but without prejudice to the rights
of indemnification of any other Indemnitee, (aa) with respect to
any Impositions imposed on such lender, successor or assign as a
direct result of its own willful misconduct or gross negligence or,
if acting within the scope of their employment or duties, the
willful misconduct or gross negligence of the officers, directors,
employees, agents or representatives of such lender, successor or
assign otherwise asserting the right to indemnification hereunder;
or (bb) in the event any such lender, its successor or assign shall,
in the course of the exercise of rights and remedies under the
relevant security agreement or other assignment, exercise the
rights and remedies of the Lessor under this Lease, (I) with
respect to any Impositions imposed on such lender, successor or
assign as a direct result of its own breach of its own obligations
expressly undertaken in its own capacity (and not merely as successor
in interest to Lessor under the relevant security agreement or
other assignment); or (II) with respect to any Imposition imposed as
a direct result of an express representation or warranty given by
such lender, successor or assign in its own capacity (and not
merely as successor in interest to Lessor under the relevant
security agreement or other assignment) not being true and correct
at the date when, or when deemed to have been, given or made; or
(vii) Impositions imposed on an Indemnitee by a taxing
jurisdiction (other than the United States or any jurisdiction in
which the Lessee is organized, maintains a place of business or
from which the Lessee may make payments under this Lease or where the
Aircraft may be located or operated) which would not have been
imposed on such Indemnitee but for such Indemnitee engaging in
transactions unrelated to the transactions contemplated by this
Lease.
(b) Reports. In case of any report or return to be made with respect
to any Imposition or possible Imposition, Lessee will either make such
report or return in such manner as will show the ownership in Lessor of the
Aircraft, and when requested by an Indemnitee send a copy of such
report or return to the Indemnitee, or will notify the Indemnitee of such
requirement and make such report or return in such manner as shall be
satisfactory to the Indemnitee. Lessee shall, at its own expense, duly
file all required reports and returns respecting all Impositions paid or
indemnified against by Lessee pursuant to this Section 16.02 to the extent
Lessee is permitted by Applicable
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Law to do so. If the same must be filed by an Indemnitee, Lessee will
advise such Indemnitee of the necessity of filing the same and, in
sufficient time before the same is due, furnish such Indemnitee with a
completed copy thereof. Lessee shall hold each Indemnitee harmless from
and against any liabilities, obligations, losses, damages, penalties,
claims, actions, suits and costs arising out of any insufficiency or
inaccuracy in any information in such report or return filed or supplied
by Lessee, except to the extent that the same is attributable to an
Indemnitee's failure to timely provide Lessee accurate information which
Lessee has requested, in writing, with specificity and which Lessee needs
to fulfill its reporting or return obligations, an Indemnitee's failure
to timely and properly file returns which have been timely prepared by
Lessee and timely delivered to such Indemnitee or with respect to which
Lessee has provided such Indemnitee the necessary information which would
enable such Indemnitee to do so. If actual notice is given by any authority
to an Indemnitee that a report or return is required to be filed with
respect to any such Impositions referred to in this Section 16.02 and
Lessor has actual notice thereof, Lessor shall cause that Indemnitee to
promptly notify Lessee of such required report or return. Lessor agrees to
cause each Indemnitee to respond to any reasonable request, of which
Lessor has actual notice, of Lessee for information within the control
of such Indemnitee with respect to the filing of any such report or return.
Lessee agrees to pay any reasonable costs, fees or other charges of
independent counsel or independent accountants incurred by Lessor or such
Indemnitee in connection with any such response or request
contemplated by this subsection.
(c) Contests. If claim is made against an Indemnitee for any
Imposition with respect to which Lessee has an obligation under this
Section 16.02 and Lessor has actual notice thereof, Lessor shall cause such
Indemnitee to promptly notify the Lessee but failure to so notify the
Lessee shall not reduce the Lessee's obligations hereunder, except to
the extent that Lessee is thereby precluded from contesting such claim or
Imposition. If reasonably requested by the Lessee in writing and provided
no Default or Event of Default shall have occurred and is continuing,
Lessor, at the sole expense of the Lessee, shall itself (or shall cause
such Indemnitee to) in good faith and diligently contest (and not settle
without Lessee's written consent) or shall (or shall cause such Indemnitee
to) permit the Lessee, if desired by the Lessee, to contest in the name of
the Lessee the validity, applicability or amount of such Imposition.
Lessee may contest, or require that Lessor or such Indemnitee contest, by
(a) resisting payment thereof if practicable, (b) not paying the same
except under protest with funds advanced by Lessee on an interest-free
basis, if protest is necessary and proper, and (c) if payments be made,
using reasonable efforts to obtain a refund thereof in appropriate
administrative and judicial proceedings; provided, however, that, in each
such instance, the Lessor and such Indemnitee shall not be required to
undertake any contest unless:
(i) Lessee shall have provided Lessor with an opinion of
legal counsel reasonably acceptable to Lessor to the effect that a
reasonable basis exists to contest such claim and, prior to the
commencement of any appeal of an adverse judicial decision, with
an opinion of such legal counsel to be effect that a reasonable
basis exists to appeal such adverse judicial decision (which opinions
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shall be obtained at Lessee's sole cost and expense);
(ii) such proceedings do not involve any material risk or
danger of the sale, forfeiture or loss of the Aircraft or any part
thereof or interest therein or the imposition of civil or
criminal fines, penalties, forfeitures or sanctions against
Lessor or such Indemnitee or the creation of any Lien other than a
Lien for Impositions not yet due or being contested in good
faith by appropriate proceedings, and for payment of which such
reserves if any, as are required to be provided under generally
accepted accounting principles have been made unless Lessee has
provided to Lessor a bond or other security reasonably satisfactory
to Lessor (provided that in the case of civil or criminal fines,
penalties, forfeitures or sanctions such bond or other
security shall be satisfactory to Lessor in its sole discretion)
to protect against such risk or danger;
(iii) in the event that the subject matter of the contest
is of a continuing nature and has previously been decided
adversely pursuant to the contest provisions of this Section 16.02 by
the highest court to which an appeal could be taken (other than the
U.S. Supreme Court), there has been a change in the law (including,
without limitation, amendments to statutes or regulations,
administrative rulings and court decisions) after such claim shall
have been so previously decided and Lessor shall have received an
opinion of independent tax counsel selected by the Lessee and
reasonably acceptable to Lessor, which opinion shall be obtained
at the Lessee's sole expense, to the effect that, as a result of
such change, it is more likely than not that the position which
Lessor, an Indemnitee or the Lessee, as the case may be, had
asserted in such previous contest would prevail;
(iv) no Default or Event of Default shall have occurred and
be continuing;
(v) prior to the commencement of any contest undertaken by
the Lessee or any contest undertaken by Lessor or any Indemnitee with
respect to which Lessor or such Indemnitee is required to follow the
direction of the Lessee, the Lessee shall have delivered to Lessor
a written acknowledgement of its obligations to indemnify fully
Lessor and such Indemnitee to the extent that the contest is not
successful;
(vi) if such contest is to be initiated by the payment of,
and the claiming of a refund for, such Imposition, Lessee shall have
advanced to Lessor or such Indemnitee sufficient funds (on an
interest-free basis) to make such payments, provided, however,
that Lessee shall indemnify Lessor and such Indemnitee for any
adverse tax consequences resulting from such advance; and
(vii) such contest does not involve any Imposition or taxes
of any Indemnitee not indemnified hereunder.
Lessee shall not be deemed to be in default under any of the
above
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indemnification provisions of this Section 16.02 so long as Lessee
shall diligently prosecute a contest in conformity with the
requirements of this Section 16.02(c), or in the case where the
Lessor or an Indemnitee shall be prosecuting such contest
pursuant to this Section 16.02(c), Lessee has fulfilled all of its
obligations under this Section 16.02(c) with respect to such
contest. Notwithstanding the foregoing, if a claim is made
against an Indemnitee which, if successful, would result in an
Imposition under circumstances which would require the Lessee to
indemnity such Indemnitee, such Indemnitee shall be released from
its responsibility to contest such claim, or part thereof, if it
agrees in writing with Lessee not to seek indemnification from
Lessee in respect of the claim, or such part thereof to be
contested. In the event an Indemnitee fails diligently to contest,
or refuses to permit the Lessee to contest, a claim or, part thereof
which such Indemnitee has the obligation to contest or to permit
Lessee to contest under this Section 16.02, then Lessee shall not be
obligated to indemnify such Indemnitee for such claim or such part
thereof to the extent that Lessee is precluded thereby from
contesting any such claim and Lessor shall cause such Indemnitee
to refund to Lessee to such extent any amounts paid or advanced by
Lessee in connection with such Imposition that were the subject of
such claim (plus interest from the date payment is due at the rate
established for refunds by the authority imposing such Imposition).
(d) REFUNDS. If an Indemnitee shall obtain a refund of all or any
part of such Imposition paid by Lessee, Lessor shall cause such Indemnitee to
pay the Lessee the amount of such refund less the amount of any Impositions
payable by such Indemnitee in respect of the receipt of such refund;
provided that such amount shall not be payable (x) before such time as the
Lessee shall have made all payments or indemnities then due to Lessor under
the Lease, or (y) while any Default or Event of Default is outstanding and
continues unremedied. If in addition to such refund, such Indemnitee
shall receive an amount representing attorneys fees, interest or other
amount with respect to of such refund, the Lessee shall be paid that
proportion of such amounts (net of any Impositions imposed on the receipt
of such amounts by such Indemnitee) which is fairly attributable to
Impositions paid by the Lessee prior to the receipt of such refund.
16.03 AFTER-TAX BASIS; SURVIVAL.
It is understood and agreed that all payments for which Lessee
is obligated hereunder are to be made on an "after tax basis" so that the
amount the Lessee shall be required to pay with respect to any Claim or
Imposition indemnified against hereunder shall be an amount sufficient
to restore the Indemnitee(s) to the same position such Indemnitee(s)
would have been in had such Claim not been asserted or such Imposition not
been incurred taking into account, INTER ALIA, Impositions, fees and
other charges, however imposed, required to be paid on the receipt of an
indemnity under this Section 16 and further taking into account any tax
benefits realized by such Indemnitee(s) that is attributable to such
indemnifiable imposition. The Lessee's obligations hereunder shall survive
the expiration or earlier
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termination of this Lease and return of the Aircraft to Lessor.
16.04 EXPENSES.
Lessee shall pay its own legal fees and disbursements and its
other fees and expenses incurred in connection with documenting and
negotiating this transaction, together with the fees and disbursements of
Lessor's FAA counsel. Lessor shall pay all of Lessor's other fees and
expenses including the fees and disbursements of its outside counsel.
SECTION 17. QUIET ENJOYMENT.
The Lessor agrees that unless a Default or Event of Default
hereunder has occurred and is continuing, neither the Lessor nor any
Person claiming through or under any of them will interfere with the quiet
enjoyment, use and operation of the Aircraft by the Lessee as provided
hereunder, including, without limitation, Lessee's possession and use of the
Aircraft.
SECTION 18. ASSIGNMENT.
Lessee shall not assign or transfer any of its rights or
obligations under this Lease or in the Aircraft without the prior written
consent of Lessor. Lessor may assign all or any portion of its rights
or obligations in the Aircraft and Lease without consent of the Lessee,
for security or for any other purpose, and Lessee shall take such actions in
connection therewith as Lessor shall reasonably request, including, but
not limited to, (i) delivering an estoppel certificate causing such
assignee to be named as an additional insured and loss payee under the
insurances required hereunder, naming such assignee as an indemnified party
under the indemnities provided hereunder and addressing such additional
matters as Lessor may reasonably request, (ii) causing an insurance
report and certificates to be issued confirming that the assignee has been
named as additional insured and loss payee under the insurances required
hereunder, (iii) delivering an opinion of counsel to Lessee and (iv) taking
such additional action, and delivering such additional documents as
Lessor may reasonably request. Without limitation of the foregoing, any
assignment by Lessor may (but shall not be required to be) be to an owner
trustee, indenture trustee, agent or other Person acting in a fiduciary
or similar capacity on behalf of other Persons and such other Persons (as
well as such trustee, agent or other Person acting on behalf of such
Persons) shall be entitled to be Indemnitees and Insured Persons
hereunder. No assignment by Lessor hereunder shall release Lessor from its
obligations hereunder except that if, pursuant to any assignment, Lessor
assigns all of its right, title and interest to the Aircraft and Lease,
the assignee thereof shall assume, in a written agreement reasonably
satisfactory to Lessee, all of the Lessors obligations under the Lease
from and after such assignment, the Lessor shall be released from all such
obligations and such assignee shall be the "Lessor" hereunder for all
purposes of this Lease. Lessor will pay the reasonable out-of-pocket
expenses of the Lessee in connection with an assignment by the Lessor
hereunder. No assignment by Lessor hereunder shall result in an increase in
Lessee's
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obligations under this Lease.
SECTION 19. NOTICES.
Unless otherwise. specifically provided herein, all notices required
or permitted by the terms hereof shall be in writing. Any written notice
shall become effective when received. Any written notice shall be sent by
telecopy, commercial courier service or delivered by hand. Any notice shall
be addressed as follows:.
IF TO LESSOR:
Xxxxxx Lease Finance Corporation
0000 Xxxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Lessee:
Aloha Islandair, Inc.
00 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: President
Telephone:
Telecopy: (000) 000-0000
Such persons and addresses may be changed, from time to time, by means of a
notice given in the manner provided in this Section 19.
SECTION 20. LESSOR'S RIGHT TO PERFORM FOR LESSEE.
If Lessee fails to perform or comply with any of its payment or
other obligations herein, Lessor may itself pay or perform such obligation,
and the amount of such payment and the amount of the reasonable
expenses of Lessor incurred in connection with such payment or the
performance of such obligation, as the case may be, together with interest
thereon at the Overdue Rate, shall be deemed Supplemental Rent, payable by
Lessee upon demand by notice hereunder. No such payment or performance by
Lessor shall be deemed to waive any Default or Event of Default or relieve
Lessee of any of its obligations hereunder.
SECTION 21. LEASE; SECTION 1110.
21.01 LEASE.
Lessee and Lessor agree that this Lease is to be treated as a Lease
for Federal income tax purposes, that the Lessor is the owner of the
Aircraft for Federal
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income tax purposes and all other purposes and that the interest of the Lessee
in the Aircraft is that of a lessee only.
21.02 SECTION 1110.
TO THE EXTENT PROVIDED THEREBY (OR TO THE FULLEST EXTENT IT
MAY LAWFULLY SO AGREE, WHETHER OR NOT PROVIDED THEREBY), LESSEE HEREBY
AGREES THAT ANY RIGHT OF LESSOR TO TAKE POSSESSION OF THE AIRCRAFT OR
ENGINES OR PROPELLERS IN COMPLIANCE WITH THE PROVISIONS OF THIS LEASE AND IN
ACCORDANCE WITH SECTION 0000 XX XXXXX 00 XX XXX XXXXXX XXXXXX CODE OR ANY
SIMILAR PROVISION OF ANY SUPERSEDING STATUTE, AS AMENDED FROM TIME TO
TIME, SHALL NOT BE AFFECTED BY THE PROVISIONS OF SECTIONS 362, 363 OR 1129 OF
SAID TITLE, OR OTHER ANALOGOUS PART OF ANY SUPERSEDING STATUTE, AS AMENDED
FROM TIME TO TIME, AND ACCORDINGLY, IT IS THE INTENTION OF THE PARTIES
HERETO THAT TO THE FULLEST EXTENT THAT THE PARTIES HERETO MAY LAWFULLY SO
AGREE THIS AGREEMENT BE AFFORDED THE BENEFITS OF SAID SECTION 1110.
SECTION 22. MISCELLANEOUS.
22.01 WAIVERS, HEADINGS.
No term or provision of this Lease may be changed, waived,
discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. The headings contained herein are for
convenience of reference only and are not intended to define or limit the
scope of any provisions of this lease.
22.02 COUNTERPARTS.
This Lease may be signed in one or more counterparts with the same
effect as if the signatures to each counterpart were upon a single instrument.
All counterparts shall be considered an original of this Lease.
22.03 GOVERNING LAW.
THIS LEASE HAS BEEN DELIVERED IN THE STATE OF CALIFORNIA AND SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF CALIFORNIA, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS
PRINCIPLES THEREOF. THIS LEASE SHALL BE EFFECTIVE FOR ALL PURPOSES AS OF THE
DATE FIRST ABOVE WRITTEN.
22.04 BENEFIT AND BINDING EFFECT.
The terms and provisions of this Lease shall inure to the benefit of
and be
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binding on Lessor and Lessee and their respective successors and permitted
assigns.
22.05 FURTHER ASSURANCES.
Lessor and Lessee, from time to time, shall do and perform such
other and further acts and execute and deliver any and all such other
and further instruments as may be required by law or reasonably
requested by notice hereunder by the other party to establish, maintain
and protect the respective rights and remedies of the other party, to
carry out the intent and purpose of this Lease and the other Operative
Documents to which either is a party.
22.06 SERVICE OF PROCESS: WAIVER OF JURY TRIAL AND IMMUNITY.
(a) LESSEE HEREBY IRREVOCABLY AGREES THAT ANY LEGAL ACTION
OR PROCEEDING AGAINST IT WITH RESPECT TO THE OPERATIVE DOCUMENTS MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT LOCATED IN SAN FRANCISCO, CALIFORNIA
AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, LESSEE HEREBY IRREVOCABLY
SUBMITS TO EACH SUCH JURISDICTION AND HEREBY IRREVOCABLY WAIVES ANY AND ALL
OBJECTIONS WHICH IT MAY HAVE AS TO VENUE IN ANY OF THE ABOVE COURTS.
(b) Lessee hereby irrevocably appoints CT Corporation Systems
(the "Process Agent") as agent for service of process in California.
Lessee hereby authorizes and directs the Process Agent to accept service on
its behalf. In the event that Lessee does not maintain the Process Agent as
its validly appointed agent for service of process, Lessee hereby agrees
that service of process may be made on it by certified or registered mail,
return receipt requested, at its address for notices specified or
determined in accordance with Section 15 hereof. Nothing herein shall
affect the right to serve process in any other manner permitted by law. Any
judicial proceeding by Lessee against the Lessor involving, directly or
indirectly, any matter in any way arising out of, related to, or connected
with any of the Operative Documents shall be brought only in a court
located in the State of California. THE LESSEE AND LESSOR HEREBY WAIVE
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING BROUGHT BY THE LESSEE OR BY THE
LESSOR OR LENDER INVOLVING DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THE OPERATIVE DOCUMENTS.
22.07 USURY LAW.
The parties intend to contract in strict compliance with the usury
laws of the State of California and, to the extent applicable, the United
States. Notwithstanding anything to the contrary in the Operative Documents,
Lessee will not be obligated to pay interest at the Overdue Rate on overdue
payments of Rent or other interest in excess of the maximum non-usurious
interest rate, as in effect from time to time, which may by Applicable
Law be charged, contracted for, reserved, received or collected by Lessor
in connection with the Operative Documents. During any period of time in which
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the then-applicable highest lawful rate is lower than the Overdue Rate,
interest on overdue payments of Rent will accrue and be payable at such
highest lawful rate. However, if at later times such highest lawful rate
is greater than the Overdue Rate, then Lessee will pay interest on overdue
payments of Rent at the highest lawful rate until the interest on overdue
payments of Rent which is paid by Lessee equals the amount of interest
that would have been payable at the Overdue Rate.
22.08 ENTIRE AGREEMENT.
This Lease and the other Operative Documents embody the entire
agreement and understanding among the parties thereto and supersede all prior
agreements and understandings relating to the subject matter thereof.
[Continued on next page]
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IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to
be duly executed by their authorized officers as of the day and year first
above written.
XXXXXX XXXXXX LEASE FINANCE CORPORATION
By: /s/ Xxxxx XxXxxxx
--------------------------------
Name: XXXXX X. XXXXXXX
Title: EXECUTIVE VICE PRESIDENT
CHIEF FINANCIAL OFFICER
LESSEE ALOHA ISLANDAIR, INC.
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
Lease of de Havilland Dash 8-102 Aircraft
MSN 026
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IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to
be duly executed by their authorized officers as of the day and year first
above written.
XXXXXX XXXXXX LEASE FINANCE CORPORATION
By:
--------------------------------
Name:
Title:
LESSEE ALOHA ISLANDAIR, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Name: XXXXXX X. XXXXXXXXX
Title: EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
By: /s/ Xxxx Xxxxxxxx
--------------------------------
Name: XXXX XXXXXXXX
Title: VICE PRESIDENT FINANCE
AND CONTROLLER
Lease of de Havilland Dash 8-102 Aircraft
MSN 026
EXHIBIT B
RENT AND OTHER FINANCIAL MATTERS
[Two pages of confidential information are omitted and filed separately
with the Commission]
SCHEDULE 1 TO EXHIBIT B
LETTER OF CREDIT
Lessee shall provide Lessor, on the Closing Date, with an irrevocable
transferable Letter of Credit in the amount of U.S. $80,000 in a form and
drawn on a U.S. bank acceptable to Lessor, which Letter of Credit shall
be valid during the Term of this Lease and the Other Lease and for ninety
(90) days after the later of the last day of the Term under this Lease and
the last day of the Term under the Other Lease, guaranteeing payment of
Rent due and all other obligations of Lessee to Lessor hereunder and under
the Other Lease, which may be drawn by Lessor upon demand in the event of
Lessee's failure to fulfill any of its obligations hereunder or under the
Other Lease or receipt of notice by Lessor that the Letter of Credit will not
be renewed on a date prior to the last date on which the Letter of Credit
must be valid under this Agreement. Lessor may, but shall not be obliged
to, apply the proceeds of the Letter of Credit in whole or in part, to the
payment of any rent, indemnities, attorneys fees and other expenses,
insurance and other casualty payments and any other amount owing from time to
time by Lessee hereunder or under the Other Lease, or under any other
agreement between Lessor or its associate, subsidiary or affiliate
companies, and Lessee, for the payment of any loss or damage suffered by
Lessor as a result of any other Event of Default or utilize the proceeds of
the Letter of Credit in whole or in part to perform any of Lessee's
obligations under this Lease and the Other Lease or otherwise remedy any
other Event of Default hereunder or thereunder, including, without
limitation, in the redelivery condition for the Aircraft or the Other
Aircraft, without prejudice to any other remedy of Lessor.
In the event Lessor draws upon the Letter of Credit during the Term, then
in such event Lessee shall, upon demand, restore the amount of the Letter of
Credit to the full amount thereof. Failure to so restore promptly the
amount of the Letter of Credit to the full amount thereof shall
constitute an Event of Default.
Notwithstanding the foregoing, in the event that:
(i) the Letter of Credit provided for pursuant to this Lease shall
not have been drawn upon during the Term of this Lease; and
(ii) the Guarantor and its consolidated affiliates shall have a
combined net worth of not less than $5,000,000 as of the last day of the
Term of this Lease as evidenced by the then most recent financial
statements required to be delivered to the Lessor pursuant to this
Lease,
then the Lessor shall release the Letter of Credit provided pursuant to this
Lease on the later of:
B-3
(x) the date the Aircraft is redelivered to the Lessor and accepted
by the Lessor in full compliance with Section 10 of this Lease and
Exhibit F thereto, and
(y) the date on which Lessee shall have satisfied all of its
obligations under this Lease, including its obligations with respect to
the return condition of the Aircraft and the payment of any adjustments
to the Lessor in connection therewith.
For avoidance of doubt, if the condition specified in paragraph (ii) above
is not satisfied, the Letter of Credit shall remain in effect until the
later of the ninetieth day after the last day of the Term under this Lease
or the Other Lease and shall thereupon be returned to Lessee for cancellation.
B-4
EXHIBIT C
ACCEPTANCE CERTIFICATE
ALOHA ISLANDAIR, INC. ("LESSEE"), a corporation organized under the laws of
Delaware, hereby represents, acknowledges, warrants and agrees as follows:
1. Lessee has received this day of , 2000 (Time: ),
at , from XXXXXX LEASE FINANCE CORPORATION ("Lessor") possession of:
A. One (1) de Havilland Model Dash 8-102 Aircraft (described in the
FAA records as a Model DHC-8-102), bearing Manufacturer's Serial
Number 026, U.S. Registration No. N812PH, together with two (2) Xxxxx
& Xxxxxxx XX 120 Engines, Manufacturer's Serial Numbers 120107 and
120142, two (2) Xxxxxxxx Standard 14 SF-7 Propellers,
Manufacturer's Serial Numbers 851114 and 890711 and all appliances,
instruments, accessories, equipment (not including an APU) and parts
attached thereto and thereon, in an airworthy condition;
B. Fuel on board the Aircraft, pounds;
C. All manuals, logbooks, flight records and historical information
regarding the Aircraft, the engines and the accessories and
equipment, including, without limitation, those listed on Exhibit D
to the Lease[, in the possession of Lessor]; and
D. the items listed on Schedule 1 hereto.
2. All of the foregoing were delivered and accepted to Lessee's full
satisfaction and pursuant to the terms and provisions of the Aircraft
Lease Agreement between Lessor and Lessee, dated as of February 22,
2000 (the "Lease"), except as set forth on Schedule 2 hereto. For purposes
of the Lease, Lessor and Lessee agree that the installed hard time components
have, as of the Delivery Date, the time, Flight Hours and Cycles operating
time remaining as set forth on Schedule 3 hereto.
3. The Aircraft, Engines, Propellers and Parts as described in the
Lease have been fully examined by Lessee and have been received in a
condition fully satisfactory to Lessee and in full conformance with the
Lease in every respect except as set forth in Schedule 2 hereto.
C-1
4. The Lease and Operative Documents (as defined therein) are in full
force and effect; Lessor has fully, duly and timely performed all of its
obligations of every kind or nature under the Lease and other Operative
Documents; and Lessee has no claims; deductions, set-offs or defenses of
any kind or nature in connection with the Lease and other Operative Documents.
5. Prior to the Delivery Date, Lessee has obtained all required
permits, authorizations, and licenses required, and has paid all required
foes and taxes relating to the Lease imposed by the United States or any
other government and/or any political subdivision thereof and any
agencies and departments thereof to allow Lessee to operate the Aircraft as
permitted by the terms of the Lease.
6. Lessor and its successors and assigns shall be entitled to rely upon this
Acceptance Certificate.
7. The Delivery Date (as defined in the Lease) is the date written in
paragraph 1 herein.
ALOHA ISLANDAIR, INC. (LESSEE)
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
Lease Acceptance Certificate
Lease of de Havilland Dash 8-102
MSN 026
C-2
SCHEDULE 1
AIRCRAFT LOOSE EQUIPMENT
QTY ITEM DESCRIPTION
3 Crew Oxygen Mask
3 Smoke Goggles
2 Coffee Cup Holders
1 AFM
2 Crew Life Vest
1 Observers Life Vest
2 Hand Microphones
2 Crew Flashlights
1 Crew Fire Extinguisher
1 Crew Fire Ax
1 Spare Filament Holder
1 PBE in cockpit
1 Alternate Extension Handle in cockpit
1 Overhead Emergency Light in cockpit
1 Galley Service Cart with trays
3 Galley Food Tray Boxes
2 Galley Hot Jugs
1 PBE in forward galley storage area
1 Fire Extinguisher in forward galley storage compartment
3 Seat Belt Extensions in forward galley storage compartment
2 Passenger 02 Bottles in forward galley storage compartment
5 Cabin Seat Tables
1 Life Vest under F/A seat
1 Flash Light under F/A seat
1 First Aid Kit in forward galley storage compartment
1 Medical Kit in forward galley storage compartment
1 PBE on aft bulkhead
1 Fire Extinguisher on aft bulkhead
2 Propeller Restraints
2 Engine Plug
2 Static Port Covers
1 Set Windshield Covers
2 Pilot Tube Covers
1 Set Landing Gear Safety Pins
C-3
SCHEDULE 2
LIST OF DISCREPANCIES
1. Refurbish left ice shield as necessary.
2. Refurbish right ice shield as necessary.
3. Left wing to fuselage aft brace upper bolts have rust and corrosion on
the heads. Clean or replace as necessary.
4. Left wing to fuselage aft brace upper bolts have rust and corrosion on
the heads. Clean or replace as necessary.
5. Left engine outboard cowl door de-laminating at aft lower edge. Repair
as necessary.
6. Check top composite access panel just forward of the left exhaust
fingernail for de-lamination. Repair as necessary.
7. Repair damage to forward edge of overhead bin door at seat row 9CDE.
8. Seat 3B table cracked at forward right corner. Replace table.
9. Trim at lower inboard corner of flight attendants seat is damaged.
Repair or replace as necessary.
10. Check cockpit door for freedom of opening and interference with lavatory
door.
11. The overhead ceiling panel around the captain's map light is cracked and
has a piece missing. Repair or replace as necessary.
12. Cockpit floor coming loose in front of the pedestal and inboard of the
copilots seat. Secure as necessary.
13. Check observers seat belt for fraying. Replace as necessary.
14. The pilots coat hook will not stow. Replace as necessary.
15. Composite panel on the outboard side of #2 nacelle just aft of the flap
trailing edge needs repair on the aft edge.
16. Engine condition panel door in the left wheel well has the wrong
fasteners. Replace with correct fasteners.
17. The bottom edge of left and right exhaust fingernails need to be
straightened and smoothed.
18. Non-standard grommet installed on structure under the cockpit floor for
the left elevator cable. Ref. EO 8-53-99-199. Repair as necessary.
19. FDAU needs repair.
Note: Lessor will pay the cost for the correction of items 1 through 18 by
Avmax.
C-4
SCHEDULE 3
TIME CONTROLLED/LIFE LIMITED PARTS STATUS AT DELIVERY
Aircraft: Total Time 31,539 Total Cycles 43,190 Date 23 March 2000
NOMENCLATURE POSITION SERIAL NUMBER TIME SINCE OVERHAUL/INSTALLATION
------------ -------- ------------- --------------------------------
Cockpit Voice Recorder only 101128 due
Flight Data Recorder only 2893 on condition
Air Cycle Machine only unk on condition
Starter/Generator left 290 170 hr
Starter/Generator right 96117 702 hr
AC Generator left 578 170 hr
AC Generator right 96108 2,187 hr
ELT only 408241 due
Fire Bottle Disc. Cart F#1 9705145 1,032 da
Fire Bottle Disc. Cart F#2 9705146 1,032 da
Fire Bottle Disc. Cart A#1 9705143 1,032 da
Fire Bottle Disc. Cart A#2 9705144 1,032 da
Fire Bottle HST fwd 21548D1 1,044 da
Fire Bottle HST aft 15280D1 1,044 da
Crew O2 Bottle, HST only 544077 4,958 da
Transponder left 4371 619 da
Transponder right 4355 635 da
Propeller left 851114 Hub s/n199 7,929 hr
Blade, Prop. #1 852759 3 hr
Blade, Prop. #2 854366 1 hr
Blade, Prop. #3 876632-7 208 hr
Blade, Prop. #4 886214-7 6,432 hr
Propeller Actuator left 890124 6,389 hr
Propeller Control Unit left 870553 4,297 hr
Propeller right 890711 Hub s/n641 6,350 hr
Blade, Prop. #1 860036-7 6,872 hr
Blade, Prop. #2 856034 7,542 hr
Blade, Prop. #3 865607-7 7,050 hr
Blade, Prop. #4 851590 6,872 hr
Propeller Actuator right 106 7,747 hr
Propeller Control Unit right 890357 1,732 hr
Engine left 120107 on condition
Impeller, HP left 2E542 22,890 cy
Impeller, LP left 3F823 9,048 cy
Cover, HP Front left 15B144 9,048 cy
Cover, HP Rear left 15B172 9,048 cy
Disc, HP left 14B921 9,048 cy
Disc, LP left 94A609 9,048 cy
Disc, PT-1 left 86A734 9,048 cy
Disc, PT-2 left 97A582 9,048 cy
Seal, Interstage Air left 11B719 9,048 cy
Blades, HP left various 9,048 cy
Engine right 120142 on condition
Impeller, HP right 5E754 17,361 cy
Impeller, LP right 7F528 3,062 cy
Cover, HP Front right 23B271 7,383 cy
C-5
NOMENCLATURE POSITION SERIAL NUMBER TIME SINCE OVERHAUL/INSTALLATION
------------ -------- ------------- --------------------------------
Cover, HP Rear right 27B996 7,383 cy
Disc, HP right 17B182 7,383 cy
Disc, LP right 23B548 7,383 cy
Disc, PT-1 right 56AO52 15,099 cy
Disc, PT-2 right 18A324 22,021 cy
Seal, Air Interstage right 27B788 7,383 cy
Blades, HP right various 3,062 cy
Ground Prox. Warning only 6345 1 hr.
Air Data Computer left 86101758 40 da
Air Data Computer right 87092321 184 da
Altimeter pilot unk on condition
Altimeter co-pilot unk on condition.
Altimeter standby 8309 541 da
Yolk Assembly, MLG left DCL104-85 OH 5 cy / LL 38,545 cy
Yolk Assembly, MLG right DCL103-85 OH 2,962 cy / LL 41,262 cy
Drag Strut, MLG left DCL127-86 OH 2,961 cy / LL 41,262 cy
Drag Strut, MLG right DCL259-87 OH 2,961 cy / LL 30,380 cy
Shock Strut, MLG left DCL060-85 OH 14,676 cy / LL 36,892 cy
Piston, MLG Shock Strut left 0364WH OH 14,676 cy / LL 36,892 cy
Cylinder, MLG Shock Strut left 057 OH 14,676 cy / LL 36,892 cy
Link, MLG Up. Torque left DCL1 65 OH 14,676 cy / LL 23,730 cy
Link, MLG Lo. Torque left DCL637 OH 14,676 cy / LL 39,455 cy
Shock Strut, MLG right CL1188693R OH 14,676 cy / LL 36,938 cy
Piston, MLG Shock Strut right 231 OH 14,676 cy / LL 36,938 cy
Cylinder, MLG Shock Strut right DCL116 OH 14,676 cy / LL 36,938 cy
Link, MLG Up. Torque right DCL138 OH 14,676 cy / LL 39,455 cy
Link, MLG Lo. Torque right DCL691 OH 14,676 cy / LL 15,434 cy
Pin, Strut to Yolk, MLG left CL1188693R / LL 14,676 cy
Pin, Strut to Yolk, MLG right DCL060-85 / LL 14,676 cy
Stabilizer Stay, MLG left DCL1288688 OH 3,883 cy / LL 37,137 cy
Stabilizer Stay, MLG right DCL1 68-86 OH 7,485 cy / LL 37,308 cy
Drag Strut, NLG only DCL233-89 OH 8,232 cy / LL 29,111 cy
Shock Strut, NLG only PCL092-86 OH 6,046 cy / LL 36,205 cy
Piston, NLG Shock Strut only CH008 OH 6,046 cy LL 36,205 cy
Cylinder, NLG Outer only DCL206 OH 6,046 cy LL 31,338 cy
Cylinder, NLG Inner only 0165WH OH 6,046 cy LL 36,205 cy
Axle, NLG only CH008 OH 6,046 cy LL 36,205 cy
Trailing Arm, NLG only DCL161 OH 6,046 cy LL 31,338 cy
Actuator, Steering, NLG only DCL0338586 on condition / LL 36,205 cy
Trunnion Plates, NLG left & right NSN on condition / LL 43,190 cy
Trunnion Cap, NLG left & right NSN on condition / LL 43,190 cy
C-6
EXHIBIT D
SCHEDULE OF MANUALS/MAINTENANCE RECORDS
DESCRIPTION QUANTITY
----------- --------
Aircraft Journey and Maintenance Log Books Numerous
Aircraft Technical Log Book, Record of Installations and Modifications 1
Engine Log Book for each Engine 1
Propeller Log Book for each Propeller 1
Component Serialization Record 1
Aircraft Technical Log for Airframe 1
FAA Approved Flight Manual (FAA 102) 1
Weight & Balance Manual 1
Customized Chapters Maintenance Manual 1
Customized Wiring Diagram Manual 1
Airworthiness Directive Records for Airframe, Engines and Propellers Numerous
STC Record File 1
Serviceable Tags for Time Controlled and Life Limited Parts 1 Box
Serviceable Tags for On Condition Components 1 Box
Structural Deviation Inspection Requirements Log 1
Electrical Load Analysis File 1
Engineering Orders Numerous
Engineering Authorizations Numerous
Previous Maintenance Checks Accomplished, A1-A10,C-1-C-6, 40K 1 ea
Computer Runs for Current status of Inspections, time controlled and LLPs Numerous
Current Weight & Balance File 1 ea
D-1
EXHIBIT E
RETURN ACCEPTANCE CERTIFICATE
XXXXXX LEASE FINANCE CORPORATION ("LESSOR"), a corporation
organized under the laws of California, hereby represents, acknowledges,
warrants and agrees as follows:
1. Lessor has received this day of , 200-
(Time: __), at from ALOHA ISLANDAIR, [ INC. ("Lessee")
possession of:
A. One (1) de Havilland Model Dash 8-102 Aircraft, bearing
Manufacturer's Serial Number 026 together with two (2)
Xxxxx & Whitney_ Engines, Manufacturer's Serial Numbers
and , two (2) Xxxxxxxx Standard propellers,
Manufacturer's Serial Numbers and and all appliances,
instruments, accessories, equipment (not including an
APU) and parts attached thereto and thereon, in an
airworthy condition;
B. Fuel on board the Aircraft, ; and
C. All usual and customary manuals, logbooks, flight
records and historical information regarding the
Aircraft, the engines and the accessories and equipment,
including, without limitation, those listed on Exhibit D
to the Lease.
2. All of the foregoing were delivered and accepted to
Lessor's full satisfaction and pursuant to the terms and provisions of
the
Lease Agreement between Lessor and Lessee dated as of February 22, 2000
(the "Lease") except as set forth on Schedule 2 hereto.
3. The Aircraft, Engines, Propellers and Parts as described in the
Lease have been fully examined by Lessor and have been received in a
condition fully satisfactory to Lessor and in full conformance with the
Lease except as set forth on Schedule 2 hereto.
E-1
Dated this ______________ day of __________________. 200__
XXXXXX LEASE FINANCE CORPORATION
(LESSOR)
By: _______________________________
Name: _____________________________
Title: ____________________________
Lease Return Acceptance Certificate
Lease of de Havilland Dash 8-102
MSN 026
E-2
EXHIBIT F
GENERAL RETURN CONDITIONS OF THE AIRCRAFT
1. GENERAL RETURN CONDITIONS OF THE AIRCRAFT.
(a) OPERATING CONDITION. The Aircraft shall be in as good
operating condition as on the Delivery Date, ordinary wear and tear from normal
airline passenger operations excepted.
(b) CLEANLINESS STANDARDS. The Aircraft shall be clean by
United States commercial airline standards and shall have received an exterior
and an interior deep cleaning since its last commercial flight and shall be in
the condition required for immediate service in the commercial carriage of
passengers.
(c) CERTIFICATE OF AIRWORTHINESS. The Aircraft shall have, and
be in compliance with, a current valid Standard Certificate of Airworthiness
issued by the FAA without any corrections, repairs, modifications, alterations
or overhauls having to be performed by Lessor to meet such standards and rules.
If required by Lessor, Lessee shall assist Lessor to do the necessary paperwork
to request in the name of Lessor or such other Person designated by the Lessor
a Certificate of Airworthiness for Export so as to allow Lessor to place the
Aircraft on a different aircraft registry. If any work, including engineering,
is required on the Aircraft to obtain such Certificate of Airworthiness for
Export, Lessee will cooperate with Lessor to do or cause to be done such work
at Lessor's expense.
(d) COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. The Aircraft
shall be in compliance with all Airworthiness Directives affecting the
Aircraft. In the event Lessee has obtained a waiver or applicable deviation
from the Aeronautical Authority from having to comply with any such
Airworthiness Directives, Lessee at its expense shall, irrespective of such
waiver or deviation, fully comply with all such Airworthiness Directives
covered by such waiver or deviation prior to the return of the Aircraft to
Lessor as if such waiver or deviation did not exist. It is expressly understood
that with respect to Airworthiness Directives with respect to which compliance
is required during the Term Section 9.06 shall apply.
(e) DEFERRED MAINTENANCE. The Aircraft shall have had
accomplished thereon all outstanding deferred maintenance items and flight
discrepancies. Items deferred because of maintenance concessions (i.e., an
exemption to operate beyond the normal limits by monitoring) shall be brought
up-to-date as if such maintenance concessions or exemptions did not exist.
(f) CORROSION TREATMENT. The Aircraft shall have been
maintained by cleaning and treating of all mild corrosion and correcting of all
moderate and
F-1
severe or exfoliated corrosion in accordance with the Maintenance Program.
(g) CONFIGURATION AND CONDITION. The Aircraft shall be
returned in the same configuration as on the Delivery Date and in the same
condition with all Parts installed therein as on the Delivery Date, excepting
only Modifications, additions, replacements and substitution of Parts as may
have been properly made by Lessee pursuant to Section 9 of the Lease and as
specifically otherwise set forth in this Exhibit F. Lessee shall, prior to such
return of the Aircraft, furnish Lessor with a list of all such Modifications
made during the Term. Lessee shall provide Lessor with the last twelve (12)
reliability reports for the Aircraft as provided to the Aeronautical Authority
and a list of all rotable Parts installed on the Aircraft during the last
twelve (12) months of the Term and of all rotable Parts replaced during said
last twelve (12) months. Lessee shall not replace Parts with parts having an
operating record indicating a higher failure rate than the average for the same
type of parts placed by Lessee in other aircraft or engines or propellers of
the same respective model and manufacturer during the last twelve (12) months
of the Term.
(h) PART 121 OPERATION. The Aircraft shall be in a condition
as to be immediately capable of being operated as a Part 121 Aircraft.
(i) INTERIOR CONDITION. The interior of the Aircraft will be
in substantially the same condition as it was on the Delivery Date, ordinary
wear and tear excepted. Cabin windows shall be clear and without major crazing
or scratches.
II. CONDITION OF AIRFRAME AND ENGINES.
The Airframe at the time of its return to Lessor shall meet
the requirements set forth below, all at Lessee's expense, except as otherwise
provided herein:
(a) Lessee shall have performed or caused to be
performed prior to redelivery to the Lessor the following: (i) a
segment of the de Havilland Equalized Maintenance Program (without
changing the sequence thereof), (ii) any maintenance or
inspections, including structural inspections, required by the
Maintenance Program and not included in the Equalized Maintenance
Program or, any replacement Maintenance Program for the de Havilland
Equalized Maintenance Program, in effect on the Redelivery Date, (the "Out
of Phase Items") due within 3,500 Flight Hours or Cycles or 12 months
(whichever is the more limiting) after the end of the Term, and (iii)
either the Aircraft shall be redelivered to the Lessor with not less than
the number of Cycles remaining until the next 40,000 cycle structural
inspection required under the de Havilland Maintenance Program as it had
remaining on the Delivery Date, or Lessee shall compensate Lessor in
respect of the deficiency as provided in Section III hereof. In the event,
during the Term, the Lessee adopts a Maintenance Program other than the de
Havilland Equalized Maintenance Program the requirement in (i) above shall be
changed to, an "A" and "C" check or their equivalent under the Maintenance
Program. The
F-2
Aircraft shall not have been operated since the completion of the maintenance
required in this section except for flights pursuant to Section 10.07 and 10.08.
For purposes of clause II (a) (ii) above, in the event any maintenance or
inspection is required within the period after the end of the Term set forth
therein, Lessee shall be deemed to have satisfied such requirement if it
performs the next such maintenance or inspection due after the end of the Term
(it not being intended that Lessee be required to perform any terminating action
due after the later of the end of the Term or the return of the Aircraft to the
Lessor pursuant to Section 9.06).
(b) Lessee will correct any deficiencies revealed during such
check, if any, and all deferred maintenance items;
(c) The cockpit shall be cleaned and placards replaced if
required by the Maintenance Program. Those items which are reasonably found by
Lessor to be defective items in the Aircrafts interior will be replaced or
repaired in accordance with the Maintenance Program. All cockpit windshields
and windows shall be free of delamination, bubbles or signs of overheat;
(d) Lessee will permanently repair impact damage to the
Aircraft not within the limits of the structural repair manual caused by ground
handling equipment or impact damage caused by foreign objects if required by
and shall be repaired in accordance with the structural repair manual or other
FAA approved data;
(e) Except as otherwise provided in this Exhibit F, all Parts
shall be serviceable in accordance with Aeronautical Authority standards and
have a value, modification status and condition equivalent to the Parts
originally installed in the Aircraft, ordinary wear and tear excepted. All
installed life-limited and time controlled components, including the landing
gear, shall either (i) have not less than the number of Flight Hours and Cycles
or days as its respective then authorized life remaining to the next scheduled
maintenance as it did on the Delivery Date or (ii) Lessee shall compensate
Lessor in respect of the deficiency as provided in Section III hereof.
Notwithstanding the foregoing and Section III, below, in no event shall any
single component have less than 3,500 Flight Hours or Cycles or 12 months
(whichever is the most limiting) of its then authorized life remaining to the
next scheduled maintenance;
(f) The Propellers shall either (i) have not less than the
number of Flight Hours and Cycles remaining to their next scheduled removal as
each did on the Delivery Date or (ii) Lessee shall compensate Lessor in
respect of the deficiency as provided in Section III hereof. Notwithstanding
the foregoing and Section III, below, in no event shall any Propeller have
fewer than 3,500 Flight Hours or Cycles (whichever is more limiting) until its
next scheduled removal;
(g) The Engines shall be returned zero time from a major
refurbishment except for flights pursuant to Section 10.07 and 10.08. Engine
Life Limited Parts (LLP) and time controlled Parts shall either (i) have not
less than the
F-3
number of Flight Hours or Cycles (whichever is more limiting) remaining to their
next scheduled removal as each had on the Delivery Date, or, with respect to any
Life Limited Part or time controlled component that -is replaced in the
refurbishment performed at Lessor's expense pursuant to Section 9.03, had at the
time of installation, or (ii) Lessee shall compensate Lessor in respect of the
deficiency as provided in Section III hereof. Notwithstanding the foregoing and
Section III, below, in no event shall any LLP or time controlled Part have less
than 3,500 Flight Hours or Cycles (whichever is more limiting) until its next
scheduled removal, and
(h) The Aircraft shall be returned with the same amount of
fuel on board as when delivered. All engine oil tanks, hydraulic reservoirs and
oxygen cylinders shall be serviced full.
Ill. ADJUSTMENTS.
In the event the Airframe, Engines, Propellers, Parts or other
components (each a "Component") do not meet the return conditions in Part II
above, and the relevant provision permits Lessee to either meet such condition
or compensate Lessor (herein, a "Compensation Item"), the Lessee shall pay the
Lessor a dollar amount computed by multiplying (i) the cost to Lessee of having
an outside supplier or contractor perform checks, scheduled removal, scheduled
maintenance or replacement of the Component, whichever is the appropriate
measure for such return condition (the "Periodic Service"), by (ii) a fraction
of which (x) the numerator shall be the difference between the required number
of Flight Hours or Cycles (whichever is more limiting) for such Component to
the next Periodic Service specified in Part II above and the actual number of
Flight Hours or Cycles (whichever is more limiting) remaining for such
Component to the next Periodic Service and (y) the denominator shall be the
number of Flight Hours or Cycles (whichever is more limiting) allowable between
each instance of Periodic Service for such Component. To the extent that the
remaining life of any Component (excluding for this purpose any LLP or time
controlled component that is replaced in the refurbishment performed at
Lessor's expense pursuant to Section 9.03) exceeds the Flight Hours or Cycles
(whichever is more limiting) to the next Periodic Service required in a
Compensation Item in part II above and no Default or Event of Default shall
then exist, the Lessee shall be entitled to a credit against amounts due to
Lessor by operation of the preceding sentence. Such credit shall equal a dollar
amount calculated by multiplying (i) the cost to Lessee of having an outside
supplier or contractor perform the appropriate Periodic Service for the
Component by (ii) a fraction of which (x) the numerator shall be the difference
between the actual number of Flight Hours or Cycles (whichever is more
limiting) remaining for such Component to the next Periodic Service and the
required number of hours of operation or Cycles for such Component to the next
Periodic Service specified in Part II above, and (y) the denominator shall be
the number of Flight Hours or Cycles (whichever is more limiting) allowable
between each instance of Periodic Service for such Component, provided that (1)
the credit shall only be used to offset the Lessee's obligation to pay a dollar
adjustment to Lessor pursuant to this Part Ill and in no event shall Lessor be
required to pay any amount
F-4
to Lessee by reason of the condition of any Component and (2) no credit provided
herein shall be used to offset a dollar adjustment caused by the Component
having less than the minimum hours of Flight Hours or Cycles (whichever is more
limiting) to the next Periodic Service provided for in Part II above.
F-5
ACCEPTANCE CERTIFICATE
ALOHA ISLANDAIR, INC. ("LESSEE"), a corporation organized under the
laws of Delaware, hereby represents, acknowledges, warrants and agrees as
follows:
1. Lessee has received this 24th day of March, 2000 (Time: 11:45 a.m.
CST time) at Wichita, Kansas, from XXXXXX LEASE FINANCE CORPORATION
("Lessor") possession of:
A. One (1) de Havilland Model Dash 8-102 Aircraft (described
in the FAA records as a Model DHC-8-102), bearing
Manufacturer's Serial Number 026, U.S. Registration No.
N812PH, together with two (2) Xxxxx & Whitney PW120 Engines,
Manufacturer's Serial Numbers 120107 and 120142, two (2)
Xxxxxxxx Standard 14 SF-7 Propellers, Manufacturer's Serial
Numbers 851114 and 890711 and all appliances, instruments,
accessories, equipment (not including an APU) and parts
attached thereto and thereon, in an airworthy condition;
B. Fuel on board the Aircraft, 2200 pounds;
C. All manuals, logbooks, flight records and historical
information regarding the Aircraft, the engines and the
accessories and equipment, including, without
limitation, those listed on Exhibit D to the Lease, in the
possession of Lessor; and
D. the items listed on Schedule 1 hereto.
2. All of the foregoing were delivered and accepted to Lessee's
full satisfaction and pursuant to the terms and provisions of the
Aircraft Lease Agreement between Lessor and Lessee, dated as of February
22, 2000 (the "Lease"), except as set forth on Schedule 2 hereto. For
purposes of the Lease, Lessor and Lessee agree that the installed hard time
components have, as of the Delivery Date, the time, Flight Hours and
Cycles operating time remaining as set forth on Schedule 3 hereto.
3. The Aircraft, Engines, Propellers and Parts as described in the
Lease have been fully examined by Lessee and have been received in a
condition fully satisfactory to Lessee and in full conformance with the Lease
in every respect except as set forth in Schedule 2 hereto.
4. The Lease and Operative Documents (as defined therein) are in full
force and effect; Lessor has fully, duly and timely performed all of its
obligations of every kind or nature under the Lease and other
Operative Documents; and Lessee has no claims; deductions, set-offs or
defenses of any kind or nature in connection with the Lease and, other
Operative Documents.
-1-
5. Prior to the Delivery Date, Lessee has obtained all required
permits, authorizations, and licenses required, and has paid all
required fees and taxes relating to the Lease imposed by the United States
or any other government and/or any political subdivision thereof and any
agencies and departments thereof to allow Lessee to operate the Aircraft as
permitted by the terms of the Lease.
6. Lessor and its successors and assigns shall be entitled to rely
upon this Acceptance Certificate.
7. The Delivery Date (as defined in the Lease) is the date written
in paragraph 1 herein.
ALOHA ISLANDAIR, INC. (LESSEE)
By: /s/ XXXXXX X. XXXXXXXXX
-----------------------------------
Title: EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
-----------------------------------
By: /s/ XXXX XXXXXXXX
-----------------------------------
Title: VICE PRESDIENT FINANCE
AND CONTROLLER
-----------------------------------
Lease Acceptance Certificate
Lease of de Havilland Dash 8-102
MSN 026
-2-
SCHEDULE 1
AIRCRAFT LOOSE EQUIPMENT
QTY ITEM DESCRIPTION
3 Crew Oxygen Mask
3 Smoke Goggles
2 Coffee Cup Holders
1 AFM
2 Crew Life Vest
1 Observers Life Vest
2 Hand Microphones
2 Crew Flashlights
1 Crew Fire Extinguisher
1 Crew Fire Ax
1 Spare Filament Holder
1 PBE in cockpit
1 Alternate Extension Handle in cockpit
1 Overhead Emergency Light in cockpit
1 Galley Service Cart with trays
3 Galley Food Tray Boxes
2 Galley Hot Jugs
1 PBE in forward galley storage area
1 Fire Extinguisher in forward galley storage compartment
3 Seat Belt Extensions in forward galley storage compartment
2 Passenger O2 Bottles in forward galley storage compartment
5 Cabin Seat Tables
1 Life Vest under F/A seat
1 Flash Light under F/A seat
1 First Aid Kit in forward galley storage compartment
1 Medical Kit in forward galley storage compartment
1 PBE on aft bulkhead
1 Fire Extinguisher on aft bulkhead
2 Propeller Restraints
2 Engine Plug
2 Static Port Covers
1 Set Windshield Covers
2 Pitot Tube Covers
1 Set Landing Gear Safety Pins
SCHEDULE 2
LIST OF DISCREPANCIES
1. Refurbish left ice shield as necessary.
2. Refurbish right ice shield as necessary.
3. Left wing to fuselage aft brace upper bolts have rust and corrosion
on the heads. Clean or replace as necessary.
4. Left wing to fuselage aft brace upper bolts have rust and corrosion
on the heads. Clean or replace as necessary.
5. Left engine outboard cowl door de-laminating at aft lower edge.
Repair as necessary.
6. Check top composite access panel just forward of the left exhaust
fingernail for de-lamination. Repair as necessary.
7. Repair damage to forward edge of overhead bin door at seat row 9CDE.
8. Seat 3B table cracked at forward right corner. Replace table.
9. Trim at lower inboard corner of flight attendants seat is damaged. Repair
or replace as necessary.
10. Check cockpit door for freedom of opening and interference with lavatory
door.
11. The overhead ceiling panel around the captain's map light is cracked and
has a piece missing. Repair or replace as necessary.
12. Cockpit floor coming loose in front of the pedestal and inboard of the
copilots seat. Secure as necessary.
13. Check observers seat belt for fraying. Replace as necessary.
14. The pilots coat hook will not stow. Replace as necessary.
15. Composite panel on the outboard side of #2 nacelle just aft of the
flap trailing edge needs repair on the aft edge.
16. Engine condition panel door in the left wheel well has the wrong
fasteners. Replace with correct fasteners.
17. The bottom edge of left and right exhaust fingernails need to be
straightened and smoothed.
18. Non-standard grommet installed on structure under the cockpit floor for
the left elevator cable. Ref. EO 8-53-99-199. Repair as necessary.
19. FDAU needs repair.
Note: Lessor will pay the cost for the correction of items 1 through 18 by
Avmax.
SCHEDULE 3
TIME CONTROLLED/ LIFE LIMITED PARTS STATUS AT DELIVERY
Aircraft: Total Time 31,539 Total Cycles 43,190 Date 23 March 2000
NOMENCLATURE POSITION SERIAL NUMBER TIME SINCE OVERHAUL/INSTALLATION
Cockpit Voice Recorder only 101128 due
Flight Data Recorder only 2893 on condition
Air Cycle Machine only unk on condition
Starter/Generator left 290 170 hr
Starter/Generator right 96117 702 hr
AC Generator left 578 170 hr
AC Generator right 96108 2,187 hr
ELT only 408241 due
Fire Bottle Disc. Cart F#1 9705145 1,032 da
Fire Bottle Disc. Cart F#2 9705146 1,032 da
Fire Bottle Disc. Cart A#1 9705143 1,032 da
Fire Bottle Disc. Cart A#2 9705144 1,032 da
Fire Bottle HST fwd 21548D1 1,044 da
Fire Bottle HST aft 15280D1 1,044 da
Crew O2 Bottle, HST only 544077 4,958 da
Transponder left 4371 619 da
Transponder right 4355 635 da
Propeller left 851114 Hub s/n199 7,929 hr
Blade, Prop. #1 852759 3 hr
Blade, Prop. #2 854366 1 hr
Blade, Prop. #3 876632-7 208 hr
Blade, Prop. #4 886214-7 6,432 hr
Propeller Actuator left 890124 6,389 hr
Propeller Control Unit left 870553 4,297 hr
Propeller right 890711 Hub s/n641 6,350 hr
Blade, Prop. #1 860036-7 6,872 hr
Blade, Prop. #2 856034 7,542 hr
Blade, Prop. #3 865607-7 7,050 hr
Blade, Prop. #4 851590 6,872 hr
Propeller Actuator right 106 7,747 hr
Propeller Control Unit right 890357 1,732 hr
Engine left 120107 on condition
Impeller, HP left 2E542 22,890 cy
Impeller, LP left 3F823 9,048 cy
Cover, HP Front left 15B144 9,048 cy
Cover, HP Rear left 15B172 9,048 cy
Disc, HP left 14B921 9,048 cy
Disc, LP left 94A609 9,048 cy
Disc, PT-1 left 86A734 9,048 cy
Disc, PT-2 left 97A582 9,048 cy
Seal, Interstage Air left 11B719 9,048 cy
Blades, HP left various 9,048 cy
Engine right 120142 on condition
Impeller, LP right 5E754 17,361 cy
Impeller, HP right 7F528 3,062 cy
Cover, HP Front right 23B271 7,383 cy
Cover, HP Rear right 27B996 7,383 cy
Disc, HP right 17B182 7,383 cy
Disc, LP right 23B548 7,383 cy
Disc, PT-1 right 56AO52 15,099 cy
Disc, PT-2 right 18A324 22,021 cy
Seal, Air Interstage right 27B788 7,383 cy
Blades, HP right various 3,062 cy
Ground Prox. Warning only 6345 1 hr.
Air Data Computer left 86101758 40 da
Air Data Computer right 87092321 184 da
Altimeter pilot unk on condition
Altimeter co-pilot unk on condition
Altimeter standby 8309 541 da
Yolk Assembly, MLG left DCL104-85 OH 5 cy / LL 38,545 cy
Yolk Assembly MLG right DCL103-85 OH 2,962 cy / LL 41,262 cy
Drag Strut, MLG left DCL127-86 OH 2,961 cy / LL 41,262 cy
Drag Strut, MLG right DCL259-87 OH 2,961 cy / LL 30,380 cy
Shock Strut, MLG left DCL060-85 OH 14,676 cy / LL36,892 cy
Piston, MLG Shock Strut left 0364WH OH 14,676 cy / LL 36,892 cy
Cylinder, MLG Shock Strut left 057 OH 14,676 cy / LL 36,892 cy
Link, MLG Up. Torque left DCL165 OH 14,676 cy / LL 23,730 cy
Link, MLG Lo. Torque left DCL637 OH 14,676 cy I LL 39,455 cy
Shock Strut, MLG right CL1188693R OH 14,676 cy / LL 36,938 cy
Piston, MLG Shock Strut right 231 OH 14,676 cy / LL 36,938 cy
Cylinder, MLG Shock Strut right DCL116 OH 14,676 cy / LL 36,938 cy
Link, MLG Up. Torque right DCL138 OH 14,676 cy / LL 39,455 cy
Link, MLG Lo. Torque right DCL691 OH 14,676 cy / LL 15,434 cy
Pin, Strut to Yolk, MLG left CL1188693R / LL 14,676 cy
Pin, Strut to Yolk, MLG right DCLO60-85 / LL 14,676 cy
Stabilizer Stay, MLG left DCL1288688 OH 3,883 cy / LL 37,137 cy
Stabilizer Stay, MLG right DCL168-86 OH 7,485 cy / LL 37,308 cy
Drag Strut, NLG only DCL233-89 OH 8,232 cy / LL 29,111 cy
Shock Strut, NLG only DCL092-86 OH 6,046 cy / LL 36,205cy
Piston, NLG Shock Strut only CH008 OH 6,046 cy / LL 36,205 cy
Cylinder, NLG Outer only DCL206 OH 6,046 cy / LL 31,338 cy
Cylinder, NLG Inner only 0165WH OH 6,046 cy / LL 36,205 cy
Axle, NLG only CH008 OH 6,046 cy / LL 36,205 cy
Trailing Arm, NLG only DCL161 OH 6,046 cy / LL 31,338 cy
Actuator, Steering, NLG only DCL0338586 on condition / LL 36,205 cy
Trunnion Plates, NLG left & right NSN on condition / LL 43,190 cy
Trunnion Cap, NLG left & right NSN on condition / LL 43,190 cy
3-2
