Exhibit 10.66
LEASE AGREEMENT
BETWEEN
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE,
LESSOR
AND
ALOHA AIRLINES, INC.,
A DELAWARE CORPORATION,
LESSEE
DATED AS OF
AUGUST 4, 1999
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ONE BOEING MODEL 737-73A AIRCRAFT
MANUFACTURER'S SERIAL NUMBER 28500
TABLE OF CONTENTS
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PAGE
ARTICLE 1. DEFINITIONS.....................................................1-1
ARTICLE 2. ACCEPTANCE UNDER LEASE..........................................2-1
(a) Conditions Precedent............................................2-1
(b) Time of Delivery................................................2-3
(c) Place of Delivery...............................................2-3
(d) Test Flight; Customer Walk-Around...............................2-3
(e) Change Orders...................................................2-3
(f) Development Changes.............................................2-4
(g) Use of Aircraft by Manufacturer.................................2-4
(h) Lessor Aircraft Modifications...................................2-4
ARTICLE 3. TERM AND RENT...................................................3-1
(a) Term............................................................3-1
(b) Basic Rent......................................................3-1
(c) Security Deposit................................................3-1
(d) Supplemental Rent...............................................3-2
(e) Payments on Business Days.......................................3-2
(f) Place of Payment................................................3-2
(g) Prohibition Against Setoff, Counterclaim, Etc...................3-2
ARTICLE 4. REPRESENTATIONS AND WARRANTIES..................................4-1
(a) Lessor's Representations and Warranties.........................4-1
(b) Lessee's Representations and Warranties.........................4-2
ARTICLE 5. POSSESSION AND USE..............................................5-1
(a) Possession......................................................5-1
(b) Lawful Operations; Use..........................................5-1
(c) Maintenance.....................................................5-2
(d) Registration and Insignia.......................................5-3
ARTICLE 6. REPLACEMENT AND POOLING OF PARTS;
ALTERATIONS, MODIFICATIONS AND ADDITIONS........................6-1
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(a) Replacement of Parts............................................6-1
(b) Pooling of Parts................................................6-2
(c) Alterations, Modifications and Additions........................6-2
(d) Transfer of Engines Within Lessee's Fleet.......................6-3
ARTICLE 7. INSPECTION; FINANCIAL INFORMATION; RECORDS......................7-1
(a) Information and Inspection......................................7-1
(b) Financial and Other Information.................................7-1
(c) Reports of Aircraft Use.........................................7-2
ARTICLE 8. INDEMNIFICATION BY LESSEE.......................................8-1
(a) General Indemnity...............................................8-1
(b) General Tax Indemnity...........................................8-2
(c) After-Tax Nature of Indemnity...................................8-4
(d) Survival of Indemnities.........................................8-5
(e) Performance by Indemnitees......................................8-5
ARTICLE 9. DAMAGE, DESTRUCTION, REQUISITION, CONDEMNATION..................9-1
(a) Event of Loss with Respect to Aircraft..........................9-1
(b) Event of Loss with Respect to an Engine.........................9-1
(c) Application of Payments from Governmental
Authorities in Respect of Event of Loss.........................9-2
(d) Application of Payments During Existence of Event or
Event of Default................................................9-2
ARTICLE 10. INSURANCE......................................................10-1
(a) Liability and Property Damage Insurance........................10-1
(b) Insurance Against Loss or Damage to Aircraft...................10-1
(c) Requirements in Insurance Policies.............................10-2
(d) Uninsured Operations...........................................10-3
(e) Application of Insurance Proceeds for Event of Loss............10-3
(f) Application of Insurance Proceeds for Other than
Event of Loss..................................................10-4
(g) Application in Default.........................................10-4
(h) Reports, Certificates, etc.....................................10-4
(i) Insurance - General............................................10-5
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(j) Insurance of Lessee's Interest.................................10-5
ARTICLE 11. MORTGAGES, LIENS, ETC..........................................11-1
ARTICLE 12. RECORDATION AND FURTHER ASSURANCES.............................12-1
ARTICLE 13. RETURN OF AIRCRAFT AND RECORDS.................................13-1
(a) Return.........................................................13-1
(b) Inspection; Test Flight........................................13-1
(c) Flight Hours/Cycles/Time Requirements..........................13-2
(d) General Return Requirements...................................13-11
(e) Records.......................................................13-12
(f) Technical Acceptance; Ferry Flight............................13-12
(g) Aid in Disposition............................................13-13
ARTICLE 14. EVENTS OF DEFAULT..............................................14-1
ARTICLE 15. REMEDIES........................................................15-1
ARTICLE 16. EXCUSABLE DELAY.................................................16-1
(a) General.........................................................16-1
(b) Four (4) Months' Excusable Delay................................16-1
(c) Consequence of Termination......................................16-1
(d) Failure to Terminate............................................16-2
(e) Damage to or Destruction of Aircraft - Delivery Delay...........16-2
(f) Termination Rights Exclusive....................................16-2
ARTICLE 17. MISCELLANEOUS...................................................17-1
(a) Construction and Applicable Law.................................17-1
(b) Notices.........................................................17-1
(c) Lessor's Right to Perform for Lessee............................17-2
(d) Corporate Existence; Merger.....................................17-2
(e) Training and Customer Support...................................17-3
(f) Subject and Subordinate.........................................17-3
(g) Assignment......................................................17-4
(h) Expenses........................................................17-4
(i) Survival........................................................17-4
(j) Integration.....................................................17-5
(k) Federal Bankruptcy Code.........................................17-5
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(l) Counterparts....................................................17-5
(m) Execution by Telecopy...........................................17-5
Schedule "1".................................................................S-1
Exhibit "A"..................................................................A-1
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LEASE AGREEMENT
This Lease Agreement, dated as of August 4, 1999, is entered into by and
between Wilmington Trust Company, a Delaware banking corporation, with a place
of business at Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000-0000, acting not in its individual capacity but solely as Owner
Trustee (herein called "Lessor"), and Aloha Airlines, Inc., a Delaware
corporation, having its principal place of business at 000 Xxxxx Xxxxxx,
Xxxxxxxx, Xxxxxx 00000 (herein called "Lessee").
RECITALS
Lessee desires to lease from Lessor and Lessor is willing to lease to
Lessee the Aircraft described herein upon and subject to the terms and
conditions of this Lease. In consideration of the mutual promises herein, Lessor
and Lessee agree as follows:
TERMS AND CONDITIONS
ARTICLE 1. DEFINITIONS. The following terms shall have the following
meanings and shall be equally applicable to both the singular and the plural
forms of the terms defined herein:
"Approved Maintenance Performer" means any maintenance performer approved
by the FAA and commonly recognized in the industry as a reputable maintenance
performer, or any other person agreed to from time to time in writing by Lessor,
including Air New Zealand Limited, of Christchurch, New Zealand, Aviation
Management Systems, Inc. or Goodyear, each of Phoenix, Arizona, Spar Aerospace
Limited, of Alberta, Canada, and X.X. Xxxxxxxx (formerly known as Tramco), of
Everett, Washington.
"Aircraft" means the Airframe to be leased hereunder, together with each
Engine initially installed on the Airframe when delivered and leased hereunder
(or any engine substituted for any such Engine pursuant to the terms of this
Lease), whether or not any of such initial or substituted Engines may from time
to time no longer be installed on the Airframe or on any other aircraft.
"Airframe" means (i) the Boeing Model 737-73A aircraft, excluding any
Engines or other engines that may be installed on such aircraft from time to
time, to be manufactured and sold pursuant to the Purchase Agreement and leased
by Lessor to Lessee hereunder and under a Lease Supplement; and (ii) any and all
Parts, so long as the same shall be incorporated in or installed on or attached
to the Airframe or so long as title thereto shall remain vested in Lessor in
accordance with the terms of Article 6 hereof after removal from the Airframe.
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"APU" means the auxiliary power unit installed in the Airframe on the
Delivery Date (or such auxiliary power unit as may be substituted therefor after
the Delivery Date in accordance with the requirements of this Lease).
"Basic Rent" for the Aircraft means the basic rent payable for the
Aircraft pursuant to Article 3(b) hereof (as supplemented by Schedule "1"
hereto).
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banking institutions are authorized by law to be closed in the
city of Honolulu, Hawaii, in the city of New York, New York, or other city as
may be designated by Lessor from time to time pursuant to Article 3(f).
"Certificated Air Carrier" means an air carrier certificated by the
Department of Transportation under Section 41102 of Title 49 of the United
States Code, or under similar provisions of any statute enacted in lieu thereof.
"Companion Lease" means the Lease Agreement of even date herewith between
Lessor and Lessee pursuant to which Lessor has agreed to lease to Lessee another
Boeing Model 737-73A aircraft.
"Country of Registration" means the United States of America.
"Cycle" means: (i) with respect to the Airframe, one take-off and landing
of the Airframe and (ii) with respect to an Engine or other engine or any Part
or part, one take-off and landing of the Airframe or other airframe on which
such Engine or other engine or Part or part is installed.
"Delivery Date" means the date of the Lease Supplement for the Aircraft,
which date shall be the same date the Aircraft is delivered to, and accepted by,
Lessee hereunder.
"Dollars" or "$" means lawful currency of the United States of America.
"Engine" means (i) each of the two CFM International Model CFM56-7B20
engines (to be upgraded to CFM56-7B24 engines prior to or promptly following
delivery) specified by manufacturer's serial numbers in the Lease Supplement and
installed on the Airframe on the Delivery Date therefor (or an engine which may
from time to time be substituted for such an Engine pursuant to Article 9(b)
hereof), whether or not from time to time thereafter no longer installed on the
Airframe or installed on any other aircraft and (ii) any and all Parts, so long
as the same shall be incorporated in or installed on or attached to such Engine
(or engine) or so long as title thereto shall remain vested in Lessor in
accordance with the terms of Article 6 hereof after removal from such Engine (or
engine).
"Equipment" means, as the context may require, the Aircraft, Airframe and
Engines then leased hereunder.
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"Event" means an event or occurrence which, with the passing of time and/or
the giving of notice, would constitute an Event of Default.
"Event of Default" means any of the events referred to in Article 14
hereof.
"Event of Loss" with respect to any Item of Equipment means any of the
following events with respect to such Item of Equipment: (a) loss of such Item
of Equipment or the use thereof due to theft or disappearance for a period in
excess of thirty (30) days, or destruction, damage beyond economic repair or
rendition of such Item of Equipment permanently unfit for normal use for any
reason whatsoever; (b) any loss of or damage to such Item of Equipment which
results in an insurance settlement with respect thereto on the basis of a total
loss, or a constructive or compromised total loss; (c) the condemnation,
confiscation or requisition of title to or use of such Item of Equipment, other
than a requisition for use of such Item of Equipment by the Government of the
Country of Registration of the Aircraft for a period of less than sixty (60)
days; (d) as a result of any rule, regulation, order, or other action by the FAA
or other governmental body having jurisdiction, the use of such Item of
Equipment in the normal course of air transportation of persons shall have been
prohibited for a period of six consecutive months; or (e) any other deprivation
or seizure of such Item of Equipment for a period of more than sixty (60) days.
An Event of Loss to the Aircraft shall be deemed to have occurred if an Event of
Loss occurs with respect to the Airframe of the Aircraft.
"Excusable Delay" shall have the meaning set forth in Article 16 hereof.
"FAA" means, as the context may require or permit, the United States
Federal Aviation Administration, the Department of Transportation, the
Administrator of the Federal Aviation Administration, and any person,
governmental department, bureau, commission or agency succeeding to the
functions of any of the foregoing.
"FAR" means the United States Federal Aviation Regulations issued by the
FAA pursuant to the United States Transportation Code of 1994, as amended or
supplemented from time to time.
"Flight Hour" means: (i) with respect to the Airframe, each hour or part
thereof which elapses from the time the wheels of the Airframe leave the ground
on take-off to the time when the wheels of the Airframe touch the ground on
landing, and (ii) with respect to an Engine or other engine or any Part or part,
including the APU, each hour or part thereof which elapses from the time the
wheels of the airframe, whether or not the Airframe leased hereunder, on which
such Engine or other engine or Part or part is installed, leave the ground on
takeoff to the time when the wheels of such airframe touch the ground on
landing.
"Item of Equipment" means, as the context may require, the Aircraft,
Airframe or any Engine then leased hereunder.
"Incentive Rate" means three (3) percentage points above the prime or base
rate of interest charged by Citibank, N.A., in New York from time to time as its
prime or base
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commercial lending rate, but, if prohibited by applicable law, the maximum
contract rate permitted by applicable law.
"Landing Gear" means the landing gear (as per the Manufacturer's
definition, i.e., excluding actuating mechanisms, etc.) installed on the
Airframe on the Delivery Date (or such landing gear as may be substituted
therefor after the Delivery Date in accordance with the requirements of this
Lease).
"Lease Agreement," "this Lease," "this Agreement," "herein," "hereof,"
"hereunder" or other like words means this Lease Agreement as the same may
hereafter from time to time be supplemented, amended, waived or modified
pursuant to the applicable provisions hereof, including, without limitation,
supplementation hereof by one or more Lease Supplements.
"Lease Supplement" means each Lease Supplement, substantially in the form
of Exhibit "A" hereto, to be entered into between Lessor and Lessee for the
purpose of leasing an Item of Equipment under and pursuant to the terms of this
Lease Agreement.
"Letter of Credit" means an irrevocable, transferable standby letter of
credit issued for the benefit of Lessor by a substantial international banking
institution in Honolulu Hawaii, Los Angeles or San Francisco, California, or New
York, New York, acceptable to Lessor, in form and substance satisfactory to
Lessor in its sole discretion.
"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
security interest or claim.
"Maintenance Program," as of any date of determination, means Lessee's
program of overhaul and maintenance for the Equipment, approved by the FAA and
which: (i) at all times complies in all material respects with the then latest
revision of the Manufacturer's Maintenance Planning Document and, if Lessee's
program of overhaul and maintenance is a block maintenance program, the then
latest revision of Appendix C Document No. D626AO01 (or any restatement thereof)
applicable to the Aircraft as the result of the Flight Hours/Cycles ratio that
the Aircraft has been operated during the Term, (ii) incorporates the then
latest revision of the Manufacturer's Corrosion Prevention and Control Program
for aircraft of similar type as the Aircraft, and (iii) at all times complies in
all material respects with the then latest revision of the Engine manufacturer's
Engine Management Program.
"Manufacturer" means The Boeing Company, a Delaware corporation.
"Mortgage" means the mortgage agreement pursuant to which Lessor will grant
Mortgagee a mortgage interest in the Aircraft to secure repayment of the
financing obligation incurred by Lessor in connection with Lessor's purchase of
the Aircraft, as such mortgage agreement may be modified, amended or
supplemented from time to time.
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"Mortgagee" means the mortgagee under the Mortgage, and its successors and
assigns.
"Owner Participant" means Ansett Worldwide Aviation, U.S.A., a Nevada
general partnership, and its successors and assigns.
"Parts" means all appliances, components, parts, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature,
including the APU and Landing Gear (but excluding whole Engines or engines), so
long as the same shall be furnished with, incorporated in, installed on, or
attached to the Aircraft, Airframe or any Engine or so long as title thereto
shall remain vested in Lessor in accordance with the terms of Article 6 hereof
after removal from the Aircraft, Airframe or such Engine.
"Participant" means Mortgagee, WTC, Owner Participant, and any other person
or entity that has or may hereafter acquire an ownership or mortgage interest in
the Aircraft, whether as owner trustee, mortgagee, indenture trustee, owner
participant, loan participant or otherwise.
"Purchase Agreement" means the Purchase Agreement No. 1909 dated as of
March 6, 1999, including Detail Specification D6-38808-7, Latest Revision, to
the extent the same relates to the sale and the purchase of the Aircraft, as
such Purchase Agreement has heretofore been, and may hereafter from time to time
be, supplemented, amended or modified.
"Rent" means Basic Rent and Supplemental Rent.
"Scheduled Aircraft Delivery" for the Aircraft means the scheduled month of
delivery for the Aircraft set forth in Article 2(b) hereof.
"Security Deposit" means the cash security or Letter of Credit deposited
with Lessor pursuant to Article 3(c) hereof.
"Stipulated Loss Value" for the Aircraft and for each Engine shall have the
meanings set forth in Schedule "1" hereto.
"Supplemental Rent" means any and all amounts, liabilities and obligations
which Lessee assumes or agrees hereunder to pay to Lessor or others, including
Stipulated Loss Value payments, but excluding Basic Rent.
"Term," in respect of an Item of Equipment, means the lease term for which
such Item of Equipment is leased hereunder pursuant to Article 3(a) hereof.
"Trust Agreement" means the Trust Agreement dated as of August 2, 1999,
between WTC and Owner Participant, as amended or supplemented from time to time.
"WTC" means Wilmington Trust Company, a Delaware banking corporation, and
its successors and assigns.
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ARTICLE 2. ACCEPTANCE UNDER LEASE.
(a) CONDITIONS PRECEDENT. Lessor hereby agrees to lease to Lessee
hereunder, and Lessee hereby agrees to lease from Lessor hereunder, the
Aircraft, as further evidenced by the execution by Lessor and Lessee of a Lease
Supplement. Lessor's obligation to lease the Aircraft to Lessee hereunder shall
be subject to the following conditions precedent being complied with to Lessor's
satisfaction or being waived by Lessor in its discretion:
(i) PRE-DELIVERY. On or prior to the date specified below, Lessor shall
have received:
(1) within ten (10) days following the date this Lease is signed by
Lessee, a resolution of the Board of Directors of Lessee, certified by the
Secretary or an Assistant Secretary of Lessee, duly authorizing or ratifying the
lease of the Aircraft hereunder and the execution, delivery and performance of
this Lease and the Lease Supplement, together with an incumbency certificate as
to the person or persons authorized to execute and deliver such documents on
behalf of Lessee;
(2) on the signing of this Lease, Lessor shall have received the
Security Deposit described in Article 3(c) and Schedule "1" hereto; and
(3) on or prior to October 1, 1999, a copy of Lessee's Maintenance
Program for the Aircraft to enable Lessor to verify to its satisfaction that the
Maintenance Program complies in all material respects with the Boeing
Maintenance Planning Document and, if Lessee's maintenance program is a block
maintenance program, Appendix C No. D626AO01 Blocked Maintenance Program, latest
amendment, applicable to the Aircraft operations of Lessee (and Lessor agrees to
maintain the confidentiality of Lessee's Maintenance Program and not disclose
Lessee's Maintenance Program to any person other than Owner Participant, its
agents and representatives (who in turn shall maintain the confidentiality
thereof), or for purposes of bridging the Aircraft from Lessee's Maintenance
Program to another maintenance program).
(ii) DELIVERY. The following additional conditions shall be complied
with to Lessor's satisfaction (or be waived by Lessor) at or prior to the time
the Aircraft is ready for delivery from Lessor to Lessee hereunder or on such
earlier date as may be applicable to such condition:
(1) Lessor shall have received the following:
(A) the Lease Supplement for the Aircraft, duly authorized and
executed by Lessee and dated the Delivery Date for the Aircraft;
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(B) the first installment of Basic Rent for the Aircraft
required under Article 3(b), less the sum of $100,000 heretofore deposited by
Lessee with Lessor (which $100,000 deposit will be applied by Lessor towards the
first installment of Basic Rent);
(C) at least five (5) Business Days prior to the Delivery Date,
a certificate and an opinion signed by independent aircraft insurance brokers as
to the due compliance with the insurance provisions of Article 10 hereof,
(D) a favorable opinion of counsel for Lessee, addressed to
Lessor and dated the Delivery Date for the Aircraft, concerning the matters set
forth in clauses (i) through (vii), inclusive, of Article 4(b) hereof, and as to
such other matters as Lessor shall specify;
(E) at Lessee's expense, a favorable opinion of FAA counsel
concerning the proper filing for recordation of this Lease and the Mortgage with
the FAA to protect and perfect Lessor's and Mortgagee's interests in the
Aircraft;
(F) a copy of Lessee's air transport license and Lessee's air
carrier operating certificate, issued by the FAA, authorizing the operation of
Boeing 737-700 aircraft; and
(G) such other documents as Lessor may reasonably request.
(2) On the Delivery Date for the Aircraft the following statements
shall be true and Lessor shall have received a certificate signed by a duly
authorized officer of Lessee, dated such Delivery Date, stating that:
(A) the representations and warranties contained in Article
4(b) hereof are true and accurate on and as of such date as though made on and
as of such date (except to the extent that such representations and warranties
relate solely to an earlier date);
(B) no event has occurred and is continuing, or would result
from the lease of the Aircraft, which constitutes an Event or an Event of
Default; and
(C) all necessary approvals, authorizations, consents,
licenses, certificates and orders of the FAA and any other governmental or
regulatory authority having jurisdiction with respect to the ownership, use or
operation of the Aircraft or the transactions contemplated by this Lease have
been obtained, and such approvals, authorizations, consents, licenses,
certificates and orders are in full force and effect and constitute sufficient
authorization therefor.
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If Lessee fails for any reason to fulfill the conditions contained in this
Article 2 in a timely manner, other than as a result of Lessor's failure to
perform its obligations hereunder, the same shall constitute an Event of Default
under this Lease.
(b) TIME OF DELIVERY. Subject to the provisions of Article 16 hereof, the
Aircraft shall be delivered to Lessee in compliance with Detail Specification
D6-38808-7, Latest Revision, and Lessee shall accept delivery of the Aircraft
hereunder upon tender of delivery of the Aircraft by Manufacturer under the
Purchase Agreement, currently scheduled during the second half of November,
1999. Lessor shall give Lessee at least seven (7) days' advance notice of the
expected Delivery Date for the Aircraft. If, after the expiration of such
7-days' advance notice period, delivery of the Aircraft is delayed beyond such
expected Delivery Date due to Lessee's fault or responsibility, without limiting
Lessor's rights to terminate this Lease and to recover damages as the result of
Lessee's failure to take delivery of the Aircraft, Lessee shall promptly
reimburse Lessor for all costs and expenses incurred by Lessor as a result of
such delay, including but not limited to reasonable amounts for transportation,
storage, insurance, taxes, preservation or protection of the Aircraft, legal
expenses attributable to the delay, and Lessee shall also be obligated to pay
Lessor, on demand, an amount equal to the Basic Rent that would have been
payable in respect of the Aircraft hereunder if Lessee had taken delivery of the
Aircraft on such expected Delivery Date, prorated on a daily basis for each day
from and including such expected Delivery Date to the earlier of the date the
Aircraft is delivered to Lessee hereunder or the date this Lease is terminated
or canceled by Lessor as a result of Lessee's failure to take delivery of the
Aircraft in accordance with the terms and conditions of this Lease.
(c) PLACE OF DELIVERY. The Aircraft shall be delivered to Lessee hereunder,
at Lessee's expense, at an airport in or near Seattle, Washington, or Las Vegas,
Nevada, or, at Lessee's expense, at such alternate site as may be mutually
agreed upon in writing by Lessor and Lessee in an effort to minimize as much as
reasonably possible, consistent with law, any sales, use or similar tax exposure
to the parties relating to the place of delivery of the Aircraft.
(d) TEST FLIGHT; CUSTOMER WALK-AROUND. Lessee shall have the right to
participate in the test flight(s) and customer walk-around for the Aircraft
contemplated by the Purchase Agreement, and Lessor shall give Lessee as much
advance notice thereof as is practicable in order for Lessee to be able to
participate in such flight(s) and customer walkaround.
(e) CHANGE ORDERS. Subject to the terms of the Purchase Agreement, the
Detail Specification may, by mutual agreement between Lessee and Lessor, be
amended from time to time by change order or other written agreement, which
shall set forth in detail the particular changes to design, performance, weight,
balance, Scheduled Aircraft Delivery and Rent for the Aircraft and the other
provisions of this Agreement. Such change orders and other written agreements
shall be signed on behalf of Lessee and Lessor by their respective duly
authorized representatives.
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(f) DEVELOPMENT CHANGES. The Detail Specification also may be revised by
Manufacturer without Lessee's consent to incorporate development changes if such
changes do not affect Lessor's cost, or adversely affect the Scheduled Aircraft
Delivery, guaranteed weight or guaranteed performance of the Aircraft or
interchangeability or replaceability requirements under the Detail
Specification. Development changes are changes deemed necessary to correct
defects, improve the Aircraft, prevent delay, or insure compliance with the
Purchase Agreement. Lessor shall notify Lessee of all changes made in the Detail
Specification pursuant to this Article 2(f) by furnishing to Lessee revised
pages for the Detail Specification.
(g) USE OF AIRCRAFT BY MANUFACTURER. Lessee agrees that Manufacturer may
use the Aircraft to be leased hereunder for flight tests prior to delivery if
such flight tests are permitted under the Purchase Agreement. Lessee shall
accept delivery of the Aircraft used for flight tests in accordance with this
Article 2(g) without any reduction in the Rent for depreciation or wear and tear
resulting therefrom.
(h) LESSOR AIRCRAFT MODIFICATIONS. Prior to the Delivery Date, if
consistent with Manufacturer's and vendor lead-time constraints, but otherwise
as promptly following the Delivery Date as is consistent with modification
facility and vendor lead-time constraints, Lessor shall cause the Detail
Specification for the Aircraft to be amended at Lessor's cost to: (i) increase
the thrust of the Engines to 24,000 lbs., (h) increase the MTOW to 154,500 Ibs.,
and (iii) configure the cabin interior to a two-class layout of 12 first class
seats and 112 economy class seats. Lessor shall be responsible for coordinating
the completion and certification of the modifications referred to in clauses
(i), (ii) and (iii), above. Lessee shall be entitled to have a representative
present during the course of the performance of such modifications by such
modification facility, and Lessee shall be entitled to review the maintenance
contract in respect thereof (but shall not have any right to require
modifications or additions thereto). The maintenance contract shall include
warranties that will be assigned to Lessee.
Promptly following the date this Lease is signed by Lessee, Lessor will
purchase a slimline (or a half G2) galley for installation by Lessee at Lessor's
expense (but charged to Lessor at Lessee's cost, i.e., no overhead or profit)
upon delivery by the manufacturer thereof. The estimated time for delivery is
seven months, but Lessor shall work with the manufacturer of the galley in an
effort to improve such delivery time. Lessor also agrees to purchase a drop down
LCD video system for installation by Lessee at Lessor's expense (but charged to
Lessor at Lessee's cost, i.e., no overhead or profit) upon delivery by the
manufacturer thereof. The estimated time for delivery is ten months, but Lessor
shall work with the manufacturer of the video system in an effort to improve
such delivery time. Further, Lessor will cause the Manufacturer or the
modification facility that configures the interior seating referred to in the
preceding paragraph to install wiring and other necessary provisions for the
video system during the interior modification, to the extent reasonably
practicable. Lessor shall be responsible for coordinating the completion and
certification of the galley and video system installation.
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Lessee shall be entitled to an abatement of Basic Rent, prorated on a daily
basis, but not to exceed an aggregate of fifteen (15) days, for each full day
that the Aircraft cannot be operated by Lessee solely as the result of the
required grounding of the Aircraft to incorporate the modifications referred to
in this Article 2(h). Lessee agrees to use its best efforts to minimize such
downtime by performing the modifications in a continuous and efficient manner.
All Parts removed from the Aircraft in connection with the foregoing
modifications as well as the parts and equipment required to perform such
modifications shall at all times be and remain the property of Lessor, and
Lessee shall make such Parts and equipment available to Lessor for disposition
by Lessor.
Except as specifically provided above, the Aircraft is delivered to Lessee
hereunder "AS-IS, WHERE-IS"
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ARTICLE 3. TERM AND RENT.
(a) TERM. Except as otherwise provided herein, the Aircraft shall be leased
to Lessee hereunder for a Term of ten (10) years, commencing on the Delivery
Date for the Aircraft.
(b) BASIC RENT. Lessee shall pay Lessor Basic Rent for the Aircraft
throughout the Term in 120 consecutive monthly in advance payments, due and
payable commencing on the Delivery Date for the Aircraft and on the like date in
each calendar month thereafter to and including the 120th calendar month, or if
such month has no such date, on the last Business Day of such month. The amount
of each monthly Basic Rent payment payable for the Aircraft throughout the Term
shall be as specified in paragraph 2 of Schedule "1" hereto.
(c) SECURITY DEPOSIT. On the date this Lease is signed by Lessor and
Lessee, Lessee shall provide Lessor with the cash or Letter of Credit Security
Deposit specified in paragraph 3 of Schedule "1" hereto to be held by Lessor as
security for performance of all Lessee's obligations hereunder and under the
Companion Lease. Lessee agrees to maintain the Security Deposit with Lessor for
the original amount thereof until all Lessee's obligations hereunder shall have
been fully performed. Lessor may commingle the cash Security Deposit with its
general funds.
In the event Lessee fails to take delivery of the Aircraft as provided
herein or if any other Event of Default occurs and is continuing or shall result
in the termination or cancellation of this Lease by Lessor, in addition to any
other rights or remedies Lessor may have hereunder or under the Companion Lease,
Lessor shall be entitled, at its option, to draw on the Letter of Credit, if
any, for the full amount thereof or for any portion thereof as Lessor shall
elect, and apply all or any proceeds thereof, or, as the case may be, all or any
portion of the cash Security Deposit towards any or all amounts due under this
Lease or the Companion Lease, whether such amounts due constitute Basic Rent
payments hereunder or thereunder, damages for breach of this Lease or the
Companion Lease, or other Rent payments hereunder or thereunder. If at the time
the Letter of Credit, if any, is drawn upon Lessor shall not have finally
determined the full amount to become payable hereunder and under the Companion
Lease (including without limitation, the extent of its damages hereunder or the
damages under the Companion Lease), Lessor shall be entitled to retain the
unapplied portion of the cash Security Deposit or the unapplied proceeds of the
Letter of Credit, as the case may be, until such time as such final
determination has been made and full and, final payment thereof has been
received (and Lessor agrees to use reasonable efforts to make prompt
determination of the full amount payable hereunder and under the Companion
Lease).
Upon full performance by Lessee of all its obligations hereunder, and
provided no Event or Event of Default shall have occurred and be continuing,
Lessor shall promptly return the Security Deposit to Lessee.
- 3-1 -
(d) SUPPLEMENTAL RENT. Lessee also agrees to pay to Lessor, or to
whomsoever Lessor shall direct in writing, any and all Supplemental Rent
promptly as 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 the
rights, powers and remedies provided for herein, by law or otherwise, as in the
case of non-payment of Basic Rent. Lessee will also pay to Lessor, as
Supplemental Rent, on demand, interest at the Incentive Rate on any part of any
Basic Rent not paid when due and on any other payment of Supplemental Rent not
paid when due or demanded by Lessor in accordance with the terms hereof for the
period for which the same shall become due until the same shall be paid. Such
interest will accrue on a day to day basis.
(e) PAYMENTS ON BUSINESS DAYS. If any date on which a payment of Rent
becomes due and payable is not a Business Day, the Rent payment otherwise due
and payable on such date shall be due and payable on the immediately succeeding
Business Day.
(f) PLACE OF PAYMENT. All Rent shall be payable in Dollars, in immediately
available funds, not later than 11:00 a.m., New York City time, on the due date
thereof, at the office of Citibank, N.A., 21st Floor, Zone 1, 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, 00000, ABA No. 000000000 (CHIPS ID 0008), for credit to the
account of Ansett Worldwide Aviation, U.S.A., Account No. 00000000, or at such
other location or account as Lessor shall from time to time designate in
writing. Rent payments payable hereunder shall be deemed to have been paid only
at the time actually credited to Lessor's account referred to above. All
interest and other payments payable hereunder that are pro-rated on an
annualized or other periodic basis shall be calculated on the basis of a year
consisting of 360 days and twelve 30-day months.
(g) PROHIBITION AGAINST SETOFF, COUNTERCLAIM, ETC. Lessee's obligation to
pay Rent hereunder shall be absolute and unconditional and shall not be affected
by any circumstances, including, without limitation: (i) any setoff,
counterclaim, recoupment, defense or other right which Lessee may have against
Lessor, Manufacturer, any Participant or any other person for any reason
whatsoever, (ii) any defect in the title, airworthiness, condition, design,
operation, or fitness for any particular purpose or for use, or any damage to or
loss or destruction, of the Aircraft, or any interruption or cessation in the
use or possession thereof by Lessee for any reason whatsoever, (iii) any
insolvency, bankruptcy, reorganization or similar proceedings by or against
Lessor, Lessee, Manufacturer, any Participant or other person, or (iv) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
Lessee hereby waives, to the extent permitted by applicable law, any and
all rights which it may now have or which may at any time hereafter be conferred
upon it by statute or otherwise to terminate, cancel, quit, or surrender this
Lease or the Aircraft or to reject or revoke acceptance of the Aircraft, or to
any abatement, suspension, deferment or reduction of Rent or the performance of
any other obligations, except in accordance with the express terms hereof.
- 3-2 -
For the avoidance of doubt, nothing in this Article 3(g) shall be construed
to prevent Lessee from commencing legal proceedings against Lessor to recover
damages from Lessor for the breach by Lessor of any of its obligations under
this Lease.
- 3-3 -
ARTICLE 4. REPRESENTATIONS AND WARRANTIES.
(a) LESSOR'S REPRESENTATIONS AND WARRANTIES. THE AIRCRAFT IS DELIVERED AND
LEASED HEREUNDER "AS-IS, WHERE-IS" AND NEITHER LESSOR NOR ANY PARTICIPANT NOR
ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY GUARANTY,
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS,
VALUE, CONDITION, DESIGN, CONFORMITY TO THE PROVISIONS OF THE PURCHASE AGREEMENT
DESCRIPTION, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR FOR A PARTICULAR
PURPOSE OF ANY ITEM OF EQUIPMENT OR ANY PART THEREOF, OR ANY MODIFICATION MADE
PURSUANT TO ARTICLE 2(h) HEREOF, OR AS TO THE QUALITY OF THE MATERIAL OR
WORKMANSHIP OF THE EQUIPMENT OR ANY PART THEREOF OR AS TO ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESSED OR IMPLIED, WITH RESPECT TO THE
EQUIPMENT OR ANY PART THEREOF, OR ANY MODIFICIATION MADE PURSUANT TO ARTICLE
2(h) HEREOF, AND LESSEE HEREBY WAIVES ALL WARRANTIES, GUARANTEES, RIGHTS AND
REMEDIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY OBLIGATION OR
LIABILITY OF LESSOR OR ANY PARTICIPANT WITH RESPECT TO ANY IMPLIED WARRANTY OF
MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE
OF DEALING, USAGE OF TRADE, ANY IMPLIED WARRANTY OF FITNESS AND ANY DIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND OR NATURE, WHETHER OR NOT
ARISING FROM THE NEGLIGENCE BUT, AS TO LESSOR OR A PARTICIPANT, EXCLUDING GROSS
NEGLIGENCE AND WILLFUL MISCONDUCT OF LESSOR OR SUCH PARTICIPANT, AS THE CASE MAY
BE, AND ANY RISKS WITH RESPECT THERETO ARE HEREBY ASSUMED BY LESSEE, except that
Lessor represents to Lessee that:
(i) Lessor has full power, authority and legal right to enter into and
perform its obligations under this Lease.
(ii) This Lease has been duly authorized by all necessary action on the
part of Lessor.
(iii) Neither the execution and delivery by Lessor of this Lease nor
the performance by Lessor of any of the transactions contemplated hereby require
the consent, approval, order or authorization of, or registration with, or the
giving of notice to, the FAA or any other domestic or foreign governmental
authority.
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(iv) This Lease has been duly executed and delivered by Lessor and
constitutes, and the Lease Supplement when executed and delivered by Lessor will
constitute, legal, valid and binding obligations of Lessor, enforceable in
accordance with their terms.
Provided no Event or Event of Default has occurred and is continuing,
Lessor agrees to assign or otherwise make available to Lessee, without
representation, warranty or recourse of any kind, express or implied, such
rights as Lessor may have with respect to the Equipment under any warranty,
service policy or product support plan of Manufacturer or any subcontractor,
vendor or supplier of any Equipment, or part thereof, to the extent the same
legally may be assigned or otherwise made available to Lessee.
THE WARRANTIES OF LESSOR SET FORTH IN THIS ARTICLE 4 ARE EXCLUSIVE AND IN
LIEU OF ALL OTHER WARRANTIES OF LESSOR OR ANY PARTICIPANT, INCLUDING FITNESS FOR
USE OR FOR A PARTICULAR PURPOSE AND MERCHANTABILITY, WRITTEN OR ORAL, EXPRESS OR
IMPLIED.
(b) LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee represents and warrants
that:
(i) Lessee is a corporation duly organized and existing in good
standing under the laws of Delaware, has full power, authority and legal right
to own its properties and to carry on its business as presently conducted and to
perform its obligations under this Lease, is a Certificated Air Carrier duly
authorized to act as such pursuant to the laws of the Country of Registration,
holds all licenses, certificates and permits from all governmental authorities
necessary for the conduct of its business, and is duly qualified to do business
as a corporation in good standing in each jurisdiction in which the failure to
be so qualified would have a materially adverse effect on Lessee or on its
ability to perform its obligations hereunder.
(ii) This Lease has been duly authorized by all necessary action on the
part of Lessee, does not require any approval of stockholders of Lessee, and
neither the execution and delivery hereof nor the consummation of the
transactions contemplated hereby nor compliance by Lessee with any of the terms
and provisions hereof does or will violate any provision of the articles of
incorporation or by-laws of Lessee or any law, rule, regulation, judgment, order
or decree of any government or governmental instrumentality or court having
jurisdiction over Lessee or any of its activities or properties, or does or will
result in any breach of, or constitute any default under, or result in the
creation of any Lien upon any property of Lessee under, any indenture, mortgage,
deed of trust, conditional sale contract, loan or credit agreement, or other
agreement or instrument to which Lessee is a party or by which Lessee or its
properties may be bound or affected.
(iii) Neither the execution and delivery by Lessee of this Lease nor
the performance by Lessee of any of the transactions contemplated hereby require
the consent, approval, order or authorization of, or registration with, or the
giving of notice to, the FAA or any other domestic or foreign governmental
authority, except for the approvals, authorizations
- 4-2 -
and consents that have heretofore been obtained, true and complete copies of
which have been delivered to Lessor.
(iv) This Lease has been duly executed and delivered by Lessee and
constitutes, and the Lease Supplement when executed and delivered by Lessee will
constitute, legal, valid and binding obligations of Lessee, enforceable in
accordance with their terms.
(v) Except for the registration of the Aircraft in the name of Lessor
and the filing for recordation of this Lease, the Lease Supplement and the
Mortgage with the FAA, no other registration and no further filing or recording
of this Lease, the Mortgage or any other instrument or document is necessary or
advisable under the laws of the Country of Registration or any other
jurisdiction in order to: (1) establish the priority, legality, validity or
enforceability of the obligations of Lessee under this Lease, or (2) fully
protect, establish and perfect Lessor's title to and interest in the Aircraft or
Lessor's rights and interests hereunder (including with respect to the Security
Deposit) as against Lessee and any third parties in any jurisdiction.
(vi) There are no suits or proceedings pending or, to the knowledge of
Lessee, threatened in any court or before any regulatory commission, board or
other administrative governmental agency against or affecting Lessee which may
have a materially adverse effect on the financial condition or business of
Lessee except those described in writing to Lessor prior to the date hereof.
(vii) Lessee is a Certificated Air Carrier within the meaning of
Section 41102 of Title 49 of the United States Code and an air carrier holding
an air carrier operating certificate issued by the United States Secretary of
Transportation pursuant to chapter 447 of Title 49 of the United States Code,
and Lessor is entitled to the benefits and protections of Section 1110 of the
Bankruptcy Code (11 U.S.C. Section 1110) in respect of the Aircraft leased to
Lessee under this Lease.
(viii) Lessee has filed or caused to be filed all tax returns which are
required to be filed and has paid or caused to be paid all taxes shown to be due
or payable on said returns and on any assessment received by Lessee, to the
extent that such taxes have become due and payable.
(ix) The consolidated and consolidating financial statements reflecting
Lessee's balance sheet and statements of income and retained earnings for the
three fiscal years ended December 31, 1998 (copies of which have been furnished
to Lessor) are complete and correct and fairly set forth Lessee's financial
condition as of such dates and the results of its operations for such periods,
and since December 31, 1998, there has been no material adverse change in such
condition or operations.
(x) Lessee has fully disclosed to Lessor all facts which Lessee knows
are material for disclosure to Lessor in the context of this Lease and the
transactions contemplated hereby, and Lessee knows of no facts which would
render any prior information furnished by or on behalf of Lessee to Lessor
inaccurate or misleading.
- 4-3 -
ARTICLE 5. POSSESSION AND USE.
(a) POSSESSION. Subject to the right of Lessee to deliver possession of any
Item of Equipment to the manufacturer thereof for testing or other similar
purposes or to any organization for service, repair, maintenance or overhaul
work on such Item of Equipment or any part thereof or for alterations or
modifications in or additions to such Item of Equipment to the extent required
or permitted by the terms of Article 6 hereof, LESSEE SHALL NOT SUBLEASE, ASSIGN
OR OTHERWISE TRANSFER OR RELINQUISH POSSESSION OR CONTROL OF ANY ITEM OF
EQUIPMENT, OR ANY PART THEREOF, WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR,
which consent will not be unreasonably withheld (provided that if Lessee seeks
consent from Lessor for a proposed sublease, Lessee shall be responsible
(whether or not Lessor consents to the proposed sublease) for all expenses,
including attorneys' fees, incurred by Lessor in connection with assessing or
implementing the proposed sublease, and any such sublease shall be and be
expressly made subject and subordinate to this Lease and the Mortgage and all
Lessor's rights and remedies hereunder and Mortgagee's rights under the
Mortgage).
(b) LAWFUL OPERATIONS; USE. Lessee will not permit any Item of Equipment to
be maintained, used or operated in violation of any law, rule, regulation,
airworthiness directive or order of any government or governmental authority
having jurisdiction (domestic or foreign, including, without limitation, any
United States law, rule or regulation governing United States manufactured or
owned aircraft), or in violation of any airworthiness certificate, license or
registration relating to any Item of Equipment issued by any such authority. In
the event that any such law, rule, regulation, airworthiness directive, order,
certificate, license or registration requires addition to or modification or
alteration of the Equipment, Lessee shall conform therewith at its expense and
shall maintain the same in proper condition for operation under such laws,
rules, regulations, airworthiness directives, orders, certificates, licenses or
registrations. Lessee will not cause or permit any Equipment to be flown or
transported to any airport or country if so doing would cause Lessor or any
United States owner of such Equipment to be in violation of United States laws,
rules, regulations or decrees. Without limiting the foregoing, Lessee shall use
the Equipment solely in its commercial operations for which it is duly licensed.
Lessee shall ensure that the Aircraft is at all times operated by, and
under control of, qualified and duly licensed pilots employed by Lessee, with
proper ratings; provided, however, qualified pilots that are contracted to
Lessee, but are not employees of Lessee, may conduct ferry flights and
maintenance test flights of the Aircraft. Lessee agrees not to cause or permit
any person under any circumstance to cause the Aircraft or any Engine to be (i)
operated or used for any purpose for which such Item of Equipment was not
designed and reasonably suited, or (ii) operated or used at any time for any
illegal purpose or in any illegal manner.
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Lessee further agrees that it will not use or permit the use of the
Aircraft for the carriage of: (i) whole animals, living or dead, except in the
cargo compartments according to I.A.T.A. regulations, and except domestic pet
animals carried in a suitable container to prevent the escape of any liquid and
to ensure the welfare of the animal; (ii) acids, toxic chemicals, other
corrosive materials, explosives, nuclear fuels, nuclear wastes, or any nuclear
assemblies or components, except as permitted for cargo under the "Restriction
of Goods" schedule issued by I.A.T.A. from time to time and provided that all
the requirements for packaging or otherwise contained therein are fulfilled;
(iii) any other goods, materials or items of cargo which could reasonably be
expected to cause damage to the Aircraft and which would not be adequately
covered by the insurances maintained in accordance with Article 10 hereof; or
(iv) any illegal item or substance.
(c) MAINTENANCE. Lessee, at its own cost and expense, shall: (i) service,
repair, maintain, modify, overhaul and test, or cause the same to be done to,
each Item of Equipment leased hereunder (A) so as to keep such Item of Equipment
in the same condition and appearance as when delivered to Lessee hereunder
(after giving effect to the modifications referred to in Article 2(h) hereof),
ordinary wear and tear from normal flight operations excepted, and in good
operating condition, (B) so as to keep the Aircraft in the condition as may be
necessary to permit the airworthiness certificate for the Aircraft to be
maintained under the United States Transportation Code of 1994, as amended, and
to be operated under FAR Part 121, and (C) in strict compliance with Lessee's
Maintenance Program, a true and complete copy of which has heretofore been or
will promptly be delivered by Lessee to Lessor (and Lessee agrees not to
materially modify or otherwise vary or permit the same to be done to such
Maintenance Program unless required by law or unless otherwise agreed to by
Lessor); (ii) maintain all records, logs and other materials required by the FAA
to be maintained with respect to such Equipment; and (iii) promptly furnish to
Lessor such information as may be requested by Lessor in writing to enable
Lessor or any Participant to file any reports required to be filed by Lessor or
such Participant with any governmental authority because of Lessor's or such
Participant's interest in the Equipment. Lessee shall ensure that its
Maintenance Program at all times complies in all material respects with the then
latest revision of the Boeing Maintenance Planning Document and, if Lessee's
Maintenance Program is a block maintenance program, the then latest revision of
Appendix C Document No. D626AO01 (or restatement thereof) applicable to the
Aircraft as the result of the Flight Hours/Cycles ratio that the Aircraft has
been operated during the Term and with the then latest revision of the Engine
manufacturer's Engine Management Program. All deficiencies revealed by any
inspection of the Equipment by Lessee, Lessor or any of Lessee's maintenance
providers shall be promptly corrected by proper cleaning, sealing, repairing,
replacement, overhaul, modification and adjustment, and Lessee shall ensure that
only FAA-approved parts and materials are installed or used on the Aircraft.
If the Aircraft, any Engine or any Part is out of revenue service (except
for the active performance of maintenance, repair or overhaul procedures), the
Aircraft, such Engine or such Part shall be properly and safely stored in
accordance with accepted industry and manufacturer specifications and
procedures. Lessee shall notify Lessor promptly of all details relating to any
loss, damage or destruction to the Aircraft, or any part thereof, that
- 5-2 -
affects the airworthiness of the Aircraft, and any loss, theft, damage or
destruction to the Aircraft, or any part thereof, exceeding the sum of $100,000.
Without limiting any of the foregoing, Lessee will maintain and use, and
cause the Equipment to be maintained and used, in the same manner and with the
same care as used by Lessee with respect to similar equipment owned or operated
by Lessee. Further, Lessee agrees that it will not nor will it permit anyone to
discriminate against the Equipment (as compared to other equipment of the same
type owned or operated by Lessee) with respect to its use, operation or
maintenance in contemplation of the expiration or termination of this Lease
Agreement, other than the withdrawal of the Equipment from use and operation as
is necessary to prepare the Equipment for return to Lessor upon such expiration
or termination. To that end, without limitation, Lessee agrees to incorporate in
the Aircraft all Manufacturer, Engine manufacturer and other vendor
optional/recommended service bulletins that Lessee schedules, within the Term,
to incorporate in at least one-third (1/3) of Lessee's fleet of similar
aircraft. For the avoidance of doubt, Boeing 737-200 aircraft will not be
considered aircraft similar to the Aircraft.
Lessee agrees that it will not discriminate against the Engines with
respect to performance restoration build standards, and that it will not remove
any Engine or Part from the Aircraft prior to expiration of the Term to avoid
overhaul, refurbishment, replacement, etc., thereof in connection with the
return of the Aircraft (and such Engine or Part) at the end of the Term.
(d) REGISTRATION AND INSIGNIA. Lessee agrees that it will, on behalf of
Lessor and at Lessee's expense, forthwith upon delivery of the Aircraft, cause
the Aircraft to be duly registered, and at all times thereafter to remain duly
registered, in accordance with Title 49 of the United States Code, as amended.
Lessor agrees that Lessor or any other person who owns the Aircraft from time to
time will be a "citizen of the United States" within the meaning of Title 49 of
the United States Code, as amended (or shall otherwise be qualified to register
the Aircraft without restricting Lessee's operational use of the Aircraft), so
that the Lessee will be able to comply with the requirements of this Article
5(d).
Upon delivery of the Aircraft, unless Lessor otherwise directs, Lessee
shall fasten or cause to be fastened and maintained in the cockpit of the
Aircraft adjacent to the airworthiness certificate for the Aircraft and on each
Engine, in a prominent location, metal nameplates satisfactory to Lessor bearing
the name of Lessor, as owner, and Mortgagee, as mortgagee, of the Aircraft.
Except as above provided, Lessee will not allow the name of any person, firm or
corporation to be placed on the Airframe or any Engine as a designation that
might be interpreted as a Lien thereon; provided, however, Lessee may cause the
Airframe or any Engine to be lettered in an appropriate manner for convenience
of identification of the interest of Lessee therein.
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ARTICLE 6. REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS
AND ADDITIONS.
(a) REPLACEMENT OF PARTS. Lessee, at its own cost and expense, will
promptly replace all Parts which 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 at its own cost and expense 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 and in any event within sixty (60) days after
removal. All replacement parts shall be free and clear of all Liens and shall be
in as good operating condition as, and shall have a value, utility, modification
status and useful life at least equal to, the Parts replaced, assuming such
replaced Parts were in the condition and repair and had the value, utility,
modification status and useful life required to be maintained by the terms
hereof. Additionally, all replacement parts shall have a current valid
"serviceable tag" of the manufacturer or maintenance repair facility providing
such parts to Lessee, identifying the manufacturer, vendor, part number, make,
model and serial number, as well as the accumulated hours or cycles and whether
such parts are new, serviceable or overhauled. No replacement part shall have
less hours and cycles remaining thereon until refurbishment or replacement than
the Part to be replaced. Lessee may temporarily replace any Part that has become
unserviceable, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use with a part that does not meet the
requirements of this paragraph if a complying part cannot be obtained within the
available ground time of the Aircraft, provided the original Part is
re-installed or the non-complying part is removed and replaced by a complying
part as soon as practicable and in any event within 60 days or, if earlier, on
the expiration or earlier termination of the Term. Except as provided in the
preceding sentence, Lessee shall ensure that no part that is a life-limited part
shall be installed on the Airframe or any Engine after the Delivery Date unless
such part is new or Lessee has complete certified, back-to-birth records.
All Parts at any time removed from the Aircraft, Airframe or any Engine
shall remain the property of Lessor, no matter where located, until such time as
such Parts shall be replaced by parts which have been paid for by Lessee and
incorporated or installed in or attached to the Aircraft, Airframe or such
Engine in compliance with the requirements for replacement parts specified
herein. Immediately upon any replacement part becoming incorporated or installed
in or attached to the Aircraft, Airframe or an Engine as above provided, without
further act: (i) title to such replacement part shall thereupon vest in Lessor,
(ii) such replacement part shall become subject to this Lease and be deemed part
of the Aircraft, Airframe or such Engine, as the case may be, for all purposes
hereof to the same extent as the Part originally incorporated or installed in or
attached to the Aircraft, Airframe or such Engine, and (iii) title to the
removed Part shall thereupon vest in Lessee, free and
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clear of all rights of Lessor and the Participants (and persons lawfully
claiming through Lessor or the Participants), and shall no longer be deemed a
Part hereunder.
(b) POOLING OF PARTS. Any Part removed from the Airframe or an Engine as
provided in paragraph (a) of this Article may be subjected by Lessee to a normal
pooling arrangement customary in the airline industry entered into in the
ordinary course of Lessee's business with an air carrier approved by Lessor,
provided the part replacing such removed Part shall be incorporated or installed
in or attached to the Airframe or such Engine in accordance with paragraph (a)
of this Article as promptly as possible after the removal of such removed Part.
In addition, any replacement part when incorporated or installed in or attached
to the Airframe or any Engine in accordance with paragraph (a) of this Article
may be owned by an air carrier approved by Lessor subject to such a normal
pooling arrangement, provided Lessee, at its expense, as promptly thereafter as
possible either (i) causes title to such replacement part to vest in Lessor in
accordance with paragraph (a) of this Article by Lessee acquiring title thereto
for the benefit of, and transferring such title to, Lessor free and clear of all
Liens, or (ii) replaces such replacement part by incorporating or installing in
or attaching to the Airframe or such Engine a further replacement part owned by
Lessee free and clear of all Liens and causing title to such further replacement
part to vest in Lessor in accordance with paragraph (a) of this Article.
(c) ALTERATIONS, MODIFICATIONS AND ADDITIONS. Lessee, at its own expense,
shall make such alterations and modifications in and additions to the Equipment,
and shall perform all alert service bulletins and service bulletins that are
mandated by airworthiness directives (and all service bulletins which are
required to be performed to maintain the warranties for the Equipment) as may be
issued from time to time, to meet the requirements of the Manufacturer, the
Engine manufacturer and the other vendors in respect of the Equipment and the
standards and airworthiness directives of the FAA or other governmental
authority having jurisdiction.
In addition, Lessee, at its own expense, may from time to tune make such
alterations and modifications in and additions to each Item of Equipment as
Lessee may deem desirable in the proper conduct of its business, provided that
no such alteration, modification or addition: (i) materially and adversely
alters the specification, structure or performance of the Aircraft, (ii)
adversely affects the interchangeability or replaceability of Parts, (iii)
invalidates any warranties applicable to the Aircraft, or (iv) in any other way
diminishes the value, utility or useful life of any Item of Equipment or impairs
the condition or airworthiness thereof below the value, utility, useful life,
condition and airworthiness thereof immediately prior to such alteration,
modification or addition, assuming such Item of Equipment was then of the value,
utility and useful life and in the condition and airworthiness required to be
maintained by the terms of this Lease.
Title to all Parts incorporated or installed in or attached or added to any
Item of Equipment as the result of any alteration, modification or addition
shall, without further act, vest in Lessor; provided, however, that so long as
no Event or Event of Default shall have occurred and be continuing, at any time
during the Term, Lessee may remove any
- 6-2 -
Part from such Item of Equipment, provided that (i) such Part is in addition to,
and not in replacement of or in substitution for, any Part originally
incorporated or installed in or attached to such Item of Equipment at the time
of the delivery thereof hereunder (after giving effect to the modifications
referred to in Article 2(h) hereof) or any Part in replacement of, or
substitution for, any such Part, (ii) such Part is not required to be
incorporated or installed in or attached or added to such Item of Equipment
pursuant to the terms of Article 5(b) or 5(c) hereof or the first sentence of
this paragraph (c), and (iii) such Part can be removed from such Item of
Equipment without causing any material damage thereto and without diminishing or
impairing the value, utility, useful life, condition or airworthiness which such
Item of Equipment would have had at such time had such alteration, modification
or addition not occurred. Upon the removal by Lessee of any such Part as above
provided, title thereto shall, without further act, vest in Lessee and such Part
shall no longer be deemed a Part hereunder. Any Part not removed by Lessee as
above provided prior to the return of the Item of Equipment to Lessor hereunder
shall remain the property of Lessor. In addition to the foregoing, if Lessee
makes an alteration, modification or addition to an Item of Equipment in
accordance with the second paragraph of this Article 6(c) (an "Original
Modification"), Lessee, at its own expense, may from time to time during the
Term, so long as no Event or Event of Default shall have occurred and be
continuing, remove such Original Modification and restore such Item of Equipment
to its condition that it would have been in if such Original Modification had
not been made, provided that (i) after such restoration, such Item of Equipment
shall be in compliance with the requirements of Article 5(b) and Article 5(c)
and the first sentence of this paragraph, (ii) such restoration shall comply
with the requirements of subparagraphs (ii) and (iii) of the second paragraph of
this Article 6(c), and (iii) such restoration is performed without causing any
material damage to the Equipment and without diminishing or impairing the value,
utility, useful life,. condition or airworthiness which the Equipment would have
had if the Original Modification had not been made .
In any event, neither Lessor nor any Participant shall bear any liability
or cost for any alteration, modification, addition, or for any grounding or
suspension of certification of any Item of Equipment or for loss of revenue.
(d) TRANSFER OF ENGINES WITHIN LESSEE'S FLEET. So long as no Event or Event
of Default shall have occurred and be continuing, Lessee may install an Engine
on an airframe leased to Lessee or owned by Lessee subject to a security
agreement or mortgage or purchased by Lessee subject to a conditional sale
agreement, provided that (i) such airframe is (and only for so long as it
continues to be) free and clear of all Liens, except the rights of the parties
to the lease, security agreement, mortgage or conditional sale agreement
covering such airframe, (ii) prior to such installation, Lessor shall have
received from the lessor, secured party, mortgagee or conditional seller of such
airframe a written agreement (which may be the lease, security agreement,
mortgage or conditional sale agreement covering such airframe), in form and
substance reasonably satisfactory to Lessor, whereby such lessor, secured party,
mortgagee or conditional seller expressly agrees that neither it/they nor
its/their successors or assigns will acquire or claim any right, title or
interest in any Engine by reason of such Engine being installed on such airframe
at any time while such Engine is subject to this Lease or is owned by Lessor,
and (iii) Lessee maintains insurance in respect of the Engine while it is
- 6-3 -
installed on such airframe for the agreed value specified in paragraph 1 of
Schedule "1" hereto and otherwise on terms acceptable to Lessor in its
reasonable discretion.
Lessor hereby agrees for the benefit of any lessor of any engine leased to
Lessee or any secured party or mortgagee of an engine owned by Lessee subject to
a security interest or mortgage granted by Lessee or any conditional seller of
an engine purchased by Lessee subject to a conditional sale agreement that
neither Lessor nor its successors or assignees will acquire or claim, as against
such lessor, secured party, mortgagee or conditional vendor, or its assignee,
any right, title or interest in any engine owned by such lessor under such lease
or subject to a security interest, mortgage or conditional sale interest in
favor of such secured party, mortgagee or conditional seller under such security
agreement, mortgage or conditional sale agreement as the result of such engine
being installed on the Airframe at any time while such engine is subject to such
lease, security interest, mortgage or conditional sale agreement.
Nothing in this Article 6(d) shall diminish or otherwise affect any of
Lessee's obligations otherwise required to be performed or observed by it under
this Lease.
- 6-4 -
ARTICLE 7. INSPECTION; FINANCIAL INFORMATION; RECORDS.
(a) INFORMATION AND INSPECTION. During the Term of this Lease, Lessee shall
furnish to Lessor such additional information concerning the location,
condition, use and operation of each Item of Equipment as Lessor may reasonably
request in writing, and Lessee shall permit any person designated by Lessor in
writing, at Lessor's expense, to inspect each Item of Equipment, its condition,
use, and operation and the records maintained in connection therewith, and to
visit and inspect the facilities and to discuss the business affairs and
finances of Lessee with the principal officers of Lessee, to the extent the same
relate to Lessee's ability to perform its obligations hereunder, all at such
reasonable times and as often as Lessor may reasonably request; provided,
however, if an Event of Default has occurred and is continuing or as a result of
such inspection Lessor becomes aware that an Event or Event of Default has
occurred and is continuing then Lessee shall reimburse Lessor for all costs and
expenses incurred in conducting such inspection. Any inspection of the Aircraft
shall be a visual walkaround inspection that may include going on-board the
Aircraft, but shall not include opening any panels, bays or the like (except at
a time during a scheduled maintenance visit in which such panels, bays or the
like are scheduled to be opened). Lessee shall also provide Lessor with at least
thirty (30) days' prior written notice of the date on which the Airframe shall
undergo any major check (i.e., any "C" check or above). Neither Lessor nor any
Participant shall have any duty to make any such inspection and shall not incur
any liability or obligation by reason of not making such inspection.
(b) FINANCIAL AND OTHER INFORMATION. Lessee also agrees to furnish Lessor
with the following during the Tenn of this Lease:
(i) within sixty (60) days after the end of each quarter-fiscal year of
Lessee ending after the date of this Lease, the consolidated and consolidating
financial statements reflecting the balance sheet of Lessee, prepared by it as
of the close of the period ended, together with statements of income and
retained earnings of Lessee for such period;
(ii) within one hundred twenty (120) days after the end of each fiscal
year of Lessee, the consolidated and consolidating financial statements
reflecting the balance sheet and statements of income and retained earnings of
Lessee, as of the close of such fiscal year, setting forth in comparative form
the figures for the previous fiscal year, as prepared and certified by
independent public accountants, including their certificate and accompanying
comments;
(iii) together with the financial statements referred to in clause
(ii), a certificate signed by a principal officer of Lessee, to the effect that
such officer has reviewed the relevant terms of this Lease and has made, or
caused to be made under his supervision, a review of the transactions and
condition of Lessee during the accounting period covered by such financial
statements, and that such review has not disclosed the existence during such
accounting period, nor does such officer have any knowledge of the existence, as
at the date of
- 7-1 -
such certificate, of any condition or event which constitutes an Event or an
Event of Default, or, if such condition or event which constitutes an Event or
an Event of Default existed or exists, specifying the nature and period of
existence thereof and what action Lessee has taken or is taking or proposes to
take with respect thereto; and
(iv) such other data and information as Lessor may from time to time
reasonably request in writing.
(c) REPORTS OF AIRCRAFT USE. Within fifteen (15) days following the end of
each calendar month throughout the Term, Lessee shall: (i) notify Lessor of the
number of Flight Hours and Cycles which have been accumulated on the Airframe,
each Engine, the Landing Gear and the APU, respectively, during the preceding
calendar month, and (ii) provide Lessor with details of: (A) replacement of
Engine, APU and Landing Gear (and the reason for such changes), (B) major
repairs, modifications, alterations and additions to an Item of Equipment, and
(C) service bulletins and airworthiness directives applicable to and
accomplished with respect to any Item of Equipment, in each case with respect to
such preceding calendar month.
- 7-2 -
ARTICLE 8. INDEMNIFICATION BY LESSEE.
(a) GENERAL INDEMNITY. Lessee agrees to pay, and on demand to indemnify and
hold harmless, Lessor and each Participant, and their respective officers,
directors, employees, servants, agents, shareholders, affiliates, successors,
assigns and transferees (individually, an "Indemnitee"), from and against any
and all claims, damages, losses, liabilities (including, but not limited to, any
claim or liability for strict liability in tort or otherwise, including, without
limitation, liability arising under any applicable environment, noise or
pollution control statute, rule or regulation), demands, suits, judgments,
causes of action and all legal proceedings, whether civil or criminal,
penalties, fines and other sanctions, and any costs and expenses incurred in
connection therewith, including attorney's fees, which may directly or
indirectly result from, relate to or arise out of the Purchase Agreement
(excluding, for the avoidance of doubt, claims by Manufacturer: (i) for a breach
of the Purchase Agreement prior to the delivery of the Aircraft thereunder, (ii)
based on provisions of the Purchase Agreement that have been redacted from the
copy of the Purchase Agreement provided to Lessee, and (iii) for payment of the
purchase price of the Aircraft) or this Lease or the condition, ownership,
manufacture, purchase, test flight, inspection, delivery, nondelivery,
acceptance, nonacceptance, rejection, import, export, registration, lease,
sublease, possession, control, storage, return, transportation, disposition, use
or operation of any Item of Equipment (except as to an Indemnitee for claims
that are the result of the gross negligence or willful misconduct of such
Indemnitee), or which may be caused by any malfunction or defect in any Item of
Equipment, latent or otherwise, arising from the material or any article used
therein or from the design, testing or use thereof or from any maintenance,
service, repair, overhaul, improvement, modification or alteration thereof,
including any modification made pursuant to Article 2(h) hereof, regardless of
when such defect shall be discovered, whether or not such Item of Equipment is
at the time in the possession of Lessee and wherever located.
Without limiting Lessee's liability under this Article 8(a), Lessee hereby
agrees to indemnify, reimburse and hold the Indemnitees harmless from any and
all liability, claims, demands, costs, charges and expenses, including royalty
payments and counsel fees, in any manner, whether directly or indirectly,
imposed upon or accruing against an Indemnitee because of the manufacture, use
or operation of any Item of Equipment or any design, article or material therein
or relating thereto, whether because of infringement of patent or any other
right. At Lessor's request, Lessee shall assume and conduct promptly and
diligently, at its sole cost and expense, the entire defense of the Indemnitees
against any such claim, and any claim, demand, suit or action for which an
Indemnitee as a buyer is required to assume liability, whether for patent
infringement or otherwise, under the Purchase Agreement.
Notwithstanding anything to the contrary contained in this Article 8(a),
the indemnification provided for in this Article 8(a) shall only apply to events
or circumstances which either (i) occur prior to the expiration or sooner
termination of this Lease and return of the Aircraft pursuant to the terms
hereof, regardless of when asserted, or (ii) are caused by or
- 8-1 -
attributable to acts or omissions of Lessee, or any of its officers, directors,
employees, servants, agents, contractors or affiliates.
(b) GENERAL TAX INDEMNITY. Lessee agrees that each payment of Rent shall be
free of all withholdings and deductions for or on account of taxes, duties and
any other charges of any nature whatsoever, present or future, unless Lessee is
required by operation of law or otherwise to withhold or deduct amounts for or
on account of any of the same, in which event, Lessee will pay such additional
amounts as Rent as will result in the receipt by Lessor on the due date for
payment thereof of the sums which would otherwise have been receivable on such
date had there been no such withholding or deduction. All such withholdings and
deductions shall be promptly paid by Lessee to the relevant taxing authority and
Lessee shall promptly furnish Lessor with evidence of each such payment. The
preceding portion of this paragraph shall not apply to taxes, fees and other
charges with respect to which Lessee is not obligated to indemnify any
Indemnitee pursuant to the remaining portion of this paragraph. In addition, and
not by way of limiting the foregoing, Lessee agrees to pay, and on written
demand to indemnify and hold harmless the Indemnitees from, all license,
recording and registration fees and all sales, use, personal property, stamp,
documentary, customs, excise, income, consumption, value added and other taxes,
levies, imposts, duties, assessments, charges and withholdings of any nature
whatsoever, together with any penalties, fines, additions and interest thereon
(collectively, "taxes, fees and other charges") imposed against an Indemnitee,
Lessee or any Item of Equipment or any part thereof by any government or
governmental subdivision or taxing authority (domestic or foreign), upon or with
respect to any Item of Equipment or any part thereof or upon or with respect to
the purchase, ownership, acceptance, delivery, registration, leasing,
subleasing, possession, use, operation, departure, landing, maintenance, repair,
modification, location, importation, exportation, sale, return, storage or other
disposition thereof, or upon or with respect to the rentals, receipts or
earnings arising therefrom or received with respect thereto, or upon or with
respect to this Lease or the Purchase Agreement (excluding, however, any taxes
(i) based on or measured by Lessor's net income, gross receipts, capital, or
excess profits which are payable by Lessor to (A) the United States federal
government, or (B) any state or local government or other taxing jurisdiction
in the United States other than Hawaii (provided, however, Lessee shall be
liable for such taxes if such taxes are taxes that would not have been imposed
but for the use, operation, registration or location of any Item of Equipment
within the jurisdiction of such taxing authority), or (C) any other jurisdiction
solely as the result of business or transactions unrelated to this Lease, e.g.,
such taxes resulting solely from events or circumstances other than the use,
operation, registration or location of any Item of Equipment or part thereof, or
the location, activities or residency of Lessee in such jurisdiction), unless,
but only so long as, such taxes, fees and other charges are being contested by
Lessee or at Lessee's expense in good faith and by appropriate proceedings, so
long as, in Lessor's reasonable judgment, such proceedings do not involve any
danger of the sale, forfeiture or loss of any Item of Equipment, or any interest
therein.
If a claim is made against an Indemnitee or Lessee for any taxes, fees and
other charges for which Lessee is obligated to indemnify an Indemnitee, or if
notice is received by an Indemnitee or Lessee from a taxing authority that such
a claim is going to be
- 8-2 -
made, such Indemnitee or Lessee, as the case may be, shall promptly notify the
other. If requested by Lessee in writing within thirty (30) days after such
notification, Lessor shall or shall cause such Indemnitee, upon receipt of
indemnity reasonably satisfactory to it and at the expense of Lessee (including
without limitation, all costs, expenses, losses, legal and accounting fees and
disbursements, penalties and interest) in good faith to contest the validity,
applicability or amount of such taxes, fees and other charges in the forum
selected by such Indemnitee by (A) resisting payment thereof if practicable, or
(B) if payment is made, using reasonable efforts to obtain a refund thereof in
appropriate administrative and judicial proceedings; PROVIDED, HOWEVER, Lessor
shall not be required to take or to cause any Indemnitee to take any action to
contest a claim unless (1) Lessee provides Lessor, together with such written
request, with an opinion of independent tax counsel reasonably satisfactory to
Lessor both as to counsel and substance, to the effect that there is a
meritorious basis for such contest, (2) such action to be taken will not result
in the risk of an imposition of criminal penalties or, in Lessor's reasonable
judgment, any risk of any sale, forfeiture or loss of, or creation of any Lien
on any Equipment, or any interest therein, (3) no Event or Event of Default
shall have occurred and be continuing, (4) if such Indemnitee shall pay such tax
and seek a refund, Lessee has advanced the amount of such tax to such Indemnitee
w ith respect to such advance, (5) the amount of the taxes at issue exceeds
$15,000, and (6) Lessee shall have provided such Indemnitee with a written
acknowledgment of liability if and to the extent that the contest is not
successful. Upon written request of Lessee but subject to compliance with the
foregoing provisions of this paragraph, such Indemnitee shall allow Lessee to
prosecute such tax contest in its name (or, if possible, in the name of Lessee)
by granting an appropriate power of attorney or other authorization and such
other action as is reasonably necessary (and Lessee shall also reimburse such
Indemnitee for the costs and expenses, including reasonable attorneys fees,
incurred in connection with its monitoring such tax contest by Lessee), or, upon
written request of Lessee and at Lessee's expense, such Indemnitee shall consult
with Lessee regarding the tax contest and shall follow the reasonable directions
of Lessee as to the prosecution of the tax contest. If an Indemnitee shall
obtain a refund of all or any part of such taxes, fees and other charges paid by
Lessee, Lessor shall cause such Indemnitee to pay Lessee the amount of such
refund, after deducting all costs and expenses that were incurred by such
Indemnitee in connection therewith; provided that such amount shall not be
payable before such time as Lessee shall have made all payments and indemnities
then due hereunder. If in addition to such refund an amount representing
interest on the amount of such refund or an amount representing expenses or
attorneys fees is received, Lessee shall be paid such expenses, attorneys fees
and that proportion of such interest which is fairly attributable to taxes, fees
and other charges paid by Lessee prior to the receipt of such refund; provided,
however, that no amount shall be payable under this or the preceding sentence
during any period in which an Event or an Event of Default has occurred and is
continuing. In case any report or return is required to be made with respect to
any obligation of Lessee under or arising out of this Article 8(b), Lessee will
either make such report or return in such manner as will show the interests of
Lessor and the Participants in the Aircraft and send a copy of such report or
return to Lessor, or will notify Lessor of such requirement and make such report
or return in such manner as shall be reasonably satisfactory to Lessor. Upon
written request by Lessee and at Lessee's expense, Lessor and each Indemnitee
shall furnish to Lessee such information and documentation as is reasonably
necessary for Lessee to assess or
- 8-3 -
prosecute a tax contest, or to make a report or return, as described above,
provided, however, neither Lessor nor any Indemnitee shall be required to
provide Lessee with information that Lessor or such Indemnitee, in its sole and
absolute discretion, determines is confidential tax return information.
Notwithstanding the foregoing, Lessee shall have no obligation to Lessor or
any Indemnitee for any of the following:
(A) Taxes, fees or other charges arising out of any voluntary
transfer (including a transfer by way of security but excluding a transfer
following an Event of Loss or pursuant to the exercise of remedies in connection
with an Event of Default) or disposition (including a disposition by way of
security but excluding a disposition following an Event of Loss or pursuant to
the exercise of remedies in connection with an Event of Default);
(B) Taxes, fees or other charges attributable to any period after
the expiration of the Term and return of possession of the Airframe, the Engines
and the Parts to Lessor or its designee in compliance with the terms of this
Lease;
(C) Taxes, fees or other charges caused solely by a breach by an
Indemnitee of any of such Indemnitee's obligations in this Article 8(b);
(D) Taxes, fees or other charges caused solely by the gross
negligence or willful misconduct of such Indemnitee; or
(E) Taxes, fees or other charges based on or measured by the value
or principal amount of any loan or promissory note (or security therefor)
entered into by Lessor or an Indemnitee or anyone claiming an interest in the
Aircraft or any portion thereof through Lessor or an Indemnitee (other than
Lessee).
(c) AFTER-TAX NATURE OF INDEMNITY. Lessee further agrees that any payment
of indemnity made under this Lease by Lessee shall include any amount necessary
to hold the Indemnitees harmless on an after-tax basis from all taxes, fees and
other charges required to be paid with respect to such payment of indemnity
under the laws of any domestic or foreign governmental or taxing authority,
agency or subdivision. If an Indemnitee realizes a tax benefit resulting from
any item for which it has been indemnified by Lessee (whether such tax benefit
results from a deduction, credit, allocation or otherwise), such Indemnitee
shall promptly after realization pay to Lessee an amount equal to the net value
to such Indemnitee of such tax benefit (such payments not to exceed in the
aggregate the amount of the related indemnity paid by Lessee), but not before
Lessee shall have made all payments or provided all indemnities to such
Indemnitee required pursuant to this Article 8. If such Indemnitee loses such
tax benefit subsequent to any payment to Lessee with respect thereto, Lessee
shall indemnify such Indemnitee with respect to such loss pursuant to this
Article 8. If requested by Lessee, such Indemnitee shall provide, in reasonable
detail, a written explanation of the calculation upon which it based its
determination of the amount of the tax benefit; provided, however, such
Indemnitee shall not be required to provide Lessee with information that such
Indemnitee, in its sole and absolute discretion, determines is confidential Tax
return
- 8-4 -
information, provided that Lessee may require that an Indemnitee furnish all
relevant information to a nationally recognized firm of certified public
accountants selected by such Indemnitee (which shall keep such information
confidential) to verify the accuracy of such Indemnitee's calculation, and the
determination of such firm of certified public accountants shall be binding on
such Indemnitee and Lessee as to the amount which Indemnitee is obligated to pay
to Lessee on account of the subject tax benefit. Lessee shall be responsible for
the fees and expenses of the firm of certified public accountants unless the
review discloses an error made by such Indemnitee exceeding the greater of
$15,000 or 10% of the amount of the subject tax benefit, as the case may be,
determined by such Indemnitee, in which case such Indemnitee shall pay such firm
of certified public accountants' fees and expenses.
(d) SURVIVAL OF INDEMNITIES. All of the obligations of Lessee under this
Article 8 shall continue in full force and effect notwithstanding the expiration
or sooner termination of this Lease and are expressly made for the benefit of,
and shall be enforceable by, the Indemnitees and their successors and assigns.
(e) PERFORMANCE BY INDEMNITEES. For purposes of this Article 8, Lessor
shall cause all Indemnitees to perform their obligations as set forth in this
Article 8.
- 8-5 -
ARTICLE 9. DAMAGE, DESTRUCTION, REQUISITION, CONDEMNATION.
(a) EVENT OF LOSS WITH RESPECT TO AIRCRAFT. From the Delivery Date of the
Aircraft until the return thereof to Lessor in compliance with the requirements
of Article 13 hereof, Lessee shall bear all risks of loss or damage to the
Aircraft, no matter how occasioned and from every source or cause whatsoever.
Upon the occurrence of an Event of Loss with respect to the Airframe or the
Airframe and any Engines or engines then installed thereon, Lessee shall give
Lessor prompt written notice thereof and shall pay or cause to be paid to Lessor
within thirty (30) days of such Event of Loss all Basic Rent payments payable
for the Aircraft (and all other accrued and unpaid Rent) through the date of
such payment, together with the Stipulated Loss Value of the Aircraft. At such
time as Lessor has received the foregoing sums: (A) the obligation of Lessee to
pay Basic Rent hereunder shall terminate, (B) the Term for the Aircraft shall
end, and (C) Lessor will transfer or cause to be transferred to Lessee (or to
the relevant insurers, as the case may be), without representation, recourse or
warranty of any kind, express or implied (except a warranty that the Aircraft is
free of Liens other than Liens which Lessee is required to discharge hereunder,
or defects in title resulting from Lessor's or any Participant's acts), all of
Lessor's and each Participant's right, title and interest, if any, in and to the
Aircraft.
(b) EVENT OF LOSS WITH RESPECT TO AN ENGINE. Upon the occurrence of an
Event of Loss with respect to an Engine not then installed on the Airframe, or
in the Event of Loss with respect to an Engine installed on the Airframe but not
involving an Event of Loss with respect to the Airframe, Lessee shall give
Lessor prompt written notice thereof and Lessee shall, as promptly as possible
and in any event within seventy-five (75) days after the occurrence of such
Event of Loss, duly convey to Lessor, as a replacement for the Engine with
respect to which such Event of Loss occurred, title to another CFM International
Model CFM56-7B24 engine owned by Lessee free and clear of all Liens and having a
value, utility, modification status and useful life at least equal to, and being
in as good operating condition (including the incorporation of all airworthiness
directives and service bulletins in such engine) as, the Engine with respect to
which such Event of Loss occurred, assuming such Engine was of the value,
utility, modification status and useful life and in the condition and repair
required by the terms hereof immediately prior to the occurrence of such Event
of Loss; and in such case, Lessee, at its own expense, will promptly (i) furnish
Lessor with a xxxx of sale, in form and substance satisfactory to Lessor, for
such replacement engine, (ii) execute a supplement hereto in form and substance
satisfactory to Lessor subjecting such replacement engine to this Lease and
cause the same to be duly recorded pursuant to the laws of the Country of
Registration, (iii) furnish Lessor with evidence of Lessee's title to such
replacement engine (including, if requested, an opinion of Lessee's counsel) and
of compliance with the insurance provisions of Article 10 hereof with respect to
such replacement engine as Lessor may reasonably request, and (iv) take such
other action as Lessor may reasonably request in order that title to such
replacement engine be duly and properly vested in Lessor and leased
- 9-1 -
hereunder to the same extent as the Engine replaced thereby. Upon full
compliance by Lessee with the terms of this paragraph (b), Lessor will transfer
to Lessee (or to the relevant insurers, as the case may be), without
representation, recourse or warranty of any kind, express or implied (except a
warranty that such Engine is free of Liens, other than Liens which Lessee is
required to discharge hereunder, or defects in title resulting from Lessor's or
the Participants' acts), all of Lessor's and the Participants' right, title and
interest, if any, in and to the Engine with respect to which such Event of Loss
occurred and, for all purposes hereof, such replacement engine shall be deemed
an "Engine" as defined herein. No Event of Loss with respect to an Engine shall,
except as otherwise expressly provided in this Article 9, result in any
reduction in Basic Rent.
(c) APPLICATION OF PAYMENTS FROM GOVERNMENTAL AUTHORITIES IN RESPECT OF
EVENT OF LOSS. Any payments (other than insurance proceeds, the application of
which is provided for in Article 10 hereof) received at any time by Lessor or
Lessee from any governmental authority or other person with respect to an Event
of Loss with respect to any Item of Equipment will be applied as follows:
(i) if such payments are received with respect to an Event of Loss
relating to the Airframe or the Airframe and the Engines or engines installed on
the Airframe, after reimbursement to Lessor for all costs and expenses,
including attorneys fees, incurred in connection with such Event of Loss, so
much of such payment as shall not exceed the am amounts due under paragraph (a)
of this Article 9 shall be applied in reduction of Lessee's obligation to pay
such amounts, if not already paid by Lessee, or, if already paid by Lessee,
shall be applied to reimburse Lessee for its payment of such amounts, and the
balance, if any, of such payment remaining thereafter will be paid over to or
retained by Lessor; and
(ii) if such payments are received with respect to an Engine under
circumstances contemplated by paragraph (b) of this Article 9, so much of such
payments remaining after reimbursement to Lessor for all costs and expenses,
including attorneys fees, incurred in connection with such Event of Loss shall
be paid over to, or retained by, Lessee, provided that Lessee shall have fully
performed or concurrently therewith will fully perform the terms of Article
9(b).
(d) APPLICATION OF PAYMENTS DURING EXISTENCE OF EVENT OR EVENT OF DEFAULT.
Any amount referred to in clause (i) or (ii) of paragraph (c) of this Article
which is payable to Lessee shall not be paid to Lessee or, if such amount has
been previously paid to Lessee, shall not be retained by Lessee, if at the time
of such payment an Event or an Event of Default shall have occurred and be
continuing. In such event, all such amounts shall be paid to and held by Lessor
as security for the performance by Lessee of its obligations hereunder or, at
Lessor's option, applied by Lessor toward payment of any of such obligations of
Lessee at the time due hereunder as Lessor may elect. At such time as Lessee
shall have cured all Events and Events of Default, all such amounts at the time
held by Lessor in excess of the amounts, if any, which Lessor shall have elected
to apply as above provided shall be paid to Lessee.
- 9-2 -
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement to
be duly executed by their authorized officers or agents as of the date and year
first above written.
LESSOR:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely in its
capacity as Owner Trustee
WITNESS: By:____________________________________
Title:_________________________________
________________________________
LESSEE:
ALOHA XXXXXXXX.XXX.
WITNESS: By:____________________________________
Title:_________________________________
________________________________
WITNESS: By:____________________________________
Title:_________________________________
________________________________
- A-3 -
ARTICLE 10. INSURANCE.
(a) LIABILITY AND PROPERTY DAMAGE INSURANCE. Lessee will carry and maintain
in effect with respect to the Aircraft, at its own expense, with insurers of
recognized responsibility and substantial financial capacity acceptable to
Lessor in its reasonable discretion, comprehensive aircraft third party,
passenger, baggage, cargo, products, mail and airline general third party legal
liability insurance, including war and allied perils, in amounts which are not
less than and of the types usually carried by companies engaged in the same or
similar business, similarly situated with Lessee, and owning or operating
similar aircraft and engines and which covers risks of the kind customarily
insured against by such companies, including, without limitation, bodily injury
and property damage of whatever nature; provided, however, in no event shall
such amounts of insurance coverage be less than a combined single limit of
liability of $600,000,000 for any one occurrence and in the aggregate for
products liability (or such higher amounts as Lessor may from time to time
reasonably require). In no event shall Lessee discriminate against the Aircraft
in respect of the amount or other aspects of liability insurance for the
Aircraft as compared to the amount or other aspects of liability insurance for
other similar aircraft in Lessee's fleet.
(b) INSURANCE AGAINST LOSS OR DAMAGE TO AIRCRAFT. From the Delivery Date of
an Item of Equipment until the return thereof to Lessor in compliance with the
requirements of Article 13 hereof, Lessee shall bear all risks of loss or damage
to such Item of Equipment, no matter how occasioned and from every source or
cause whatsoever. Lessee shall carry and maintain in effect, at its own expense,
with insurers of recognized responsibility and substantial financial capacity
acceptable to Lessor in its reasonable discretion, all-risk ground, flight,
taxiing and ingestion aircraft hull insurance on an agreed value basis covering
the Aircraft, and all-risk insurance on an agreed value basis with respect to
the Engines while not installed in the Aircraft and on a full replacement cost
basis with respect to Parts while not installed in the Aircraft, in each case
which is of the type and in substantially the amounts usually carried by
companies engaged in the same or similar business and similarly situated with
Lessee, and shall include war risk insurance (which shall not be restricted to
physical loss or damage to the aircraft hull) covering the perils of:
(i) 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;
(ii) strikes, riots, civil commotions or labor disturbances;
(iii) 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 resulting therefrom is accidental or intentional;
(iv) any malicious act or act of sabotage;
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(v) confiscation, nationalization, seizure, restraint, detention,
appropriation, requisition for title or use by or under the order of any
government (whether civil, military or de facto) and/or public or local
authority including the government of the Country of Registration; and
(vi) hijacking or any unlawful 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 the Aircraft acting without the
consent of Lessee;
PROVIDED, HOWEVER, that all hull insurance required by this paragraph (b) shall
at all times while the Aircraft is subject to this Lease be for an amount not
less than the Stipulated Loss Value from time to time computed for the Aircraft.
Lessee may self-insure, by means of a deductible or similar clause, the aircraft
hull risk required to be insured against pursuant to this paragraph (b),
provided that the amount of such self-insurance shall not exceed the lesser of
$500,000 for any one occurrence or the lowest amount of
self-insurance/deductible applying to any aircraft in Lessee's fleet. All of the
foregoing insurance policies required under this paragraph (b) shall provide
that any loss which: (i) is less than $500,000 may be adjusted with Lessee and
paid to Lessee, provided that if Lessor or Mortgagee shall have notified
Lessee's insurance brokers that an Event or Event of Default exists hereunder,
such payment shall be made to Lessor or Mortgagee, whoever has provided such
notice, and such payment shall be held by such party pursuant to the terms of
this Lease, (ii) exceeds $500,000 but is less than $3,000,000 shall be adjusted
with Lessor and Lessee and shall be payable to the order of Lessor in Dollars,
and (iii) exceeds $3,000,000 shall be adjusted with Lessor and Lessee and shall
be payable in Dollars to Mortgagee (or is Mortgagee has given notice to the
insurers of the termination of the Mortgage, to Lessor).
(c) REQUIREMENTS IN INSURANCE POLICIES. All insurance policies carried in
accordance with paragraph (a) or (b) of this Article 10 and all policies taken
out in substitution or replacement for any such policies, shall (i) be subject
to Lessor's approval, (ii) include a waiver of any rights of subrogation,
set-off, counterclaim or other deduction, whether by attachment or otherwise as
against Lessor and each Participant, and their respective successors and assigns
(hereafter collectively referred to as the "Additional Insureds"), and the
Indemnitees (as defined in Article 8(a)), (iii) name the Additional Insureds,
and in respect of the insurance carried in accordance with Article 10(a), the
Additional Insureds and the Indemnitees as additional insureds, as their
respective interests appear (but without imposing upon any such Additional
Insured or Indemnitee any obligation imposed upon the insured, including,
without limitation, the liability to pay the premium for such policies), (iv)
provide that in respect of the interests of the Additional Insureds and
Indemnitees in such policies, the insurance shall not be impaired or invalidated
by any action or omission of Lessee or any other person (other than action of
such Additional Insured), and shall insure the Additional Insureds and
Indemnitees, as their respective interests appear, regardless of any breach or
violation by Lessee or any other person (other than such Additional Insured) of
any warranties, declarations or conditions contained in such policies, (v)
provide that if such insurance is canceled or terminated for any reason
whatsoever or is changed in any material respect in relation to the interests of
an Additional Insured or if such insurance is allowed to lapse for
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nonpayment of premium, such cancellation, termination, change or lapse shall not
be effective as to such Additional Insured for thirty (30) days (seven (7) days,
or such lesser period as is customarily available in accordance with industry
practice, in the case of any war risk and allied perils coverage) after receipt
by such Additional Insured of written notice by such insurers of such
cancellation, termination, change or lapse, (vi) in the event Lessee maintains
separate policies to cover all risk aircraft hull and war risk and related
perils insurances, all such policies shall include a 50/50 provisional claims
settlement arrangement in the event of dispute over which policy covers the
loss, (vii) be primary without right of contribution from any other insurance
carried by any Additional Insured or Indemnitee with respect to its interest as
such in the Aircraft, (viii) be in an amount sufficient to prevent Lessee and
any Additional Insured from becoming a co-insurer, (ix) provide for worldwide
geographical coverage, except for exclusions of geographical areas reasonably
acceptable to Lessor, (x) provide satisfactory coverage against the risks
associated with electronic date recognition problems, in the form of AVN2000,
AVN2001 and AVN2002, 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 in accordance with
then current market practice, and (xi) comply to the extent necessary with the
insurance requirements set forth in the Manufacturer's product support and
customer training agreements. Each liability insurance policy carried in
accordance with section (a) of this Article shall contain a cross-liability
endorsement so that each insured, Additional Insured and Indemnitee shall be
protected from claims by each other insured, Additional Insured or Indemnitee,
and a severability of interest provision which shall expressly provide that all
of the provisions thereof shall operate in the same manner as if there were a
separate policy covering each insured, Additional Insured and Indemnitee;
provided, however, such policies shall not operate to increase the insurers'
limit of liability. Lessee shall cause its insurers to agree that the indemnity
and hold harmless provisions of Article 8(a) are insured as a contractual
assumption of liability by Lessee's insurers, but only to the extent of the
risks, covered by the policy of insurance.
(d) UNINSURED OPERATIONS. Lessee shall not operate or locate any Item of
Equipment, or suffer the same to be operated or located, in any recognized or
threatened area of hostilities or in any area or on any route excluded from
coverage by any insurance contemplated by this Article 10. Lessee shall not
operate any Item of Equipment, or suffer the same to be operated, in any manner
or for any purpose which is not covered by the insurance which Lessee is
required to carry and maintain pursuant to this Article 10.
(e) APPLICATION OF INSURANCE PROCEEDS FOR EVENT OF LOSS. All insurance
payments received as the result of the occurrence of an Event of Loss (other
than an Event of Loss described in Article 9(c), above) with respect to an Item
of Equipment, or any part thereof, will be applied as follows:
(i) if such payments are received with respect to an Event of Loss
relating to the Airframe or the Airframe and Engines installed on the Airframe,
so much of such payments remaining after reimbursement to Lessor for all costs
and expenses including attorneys fees incurred in connection with such Event of
Loss as shall not exceed the amounts
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due under paragraph (a) of Article 9 shall be applied in reduction of Lessee's
obligation to pay such amounts, if not already paid by Lessee, or, if already
paid by Lessee, shall be applied to reimburse Lessee for its payment of such
amounts, and the balance, if any, of such payment remaining thereafter will be
paid over to or retained by, Lessee; or
(ii) if such payments are received with respect to an Engine under the
circumstances contemplated by Article 9(b), so much of such payments remaining
after reimbursement to Lessor for all costs and expenses including attorneys
fees incurred in connection with such Event of Loss shall be paid over to, or
retained by, Lessee, provided that Lessee shall have fully performed or,
concurrently therewith, will fully perform the terms of Article 9(b).
(f) APPLICATION OF INSURANCE PROCEEDS FOR OTHER THAN EVENT OF LOSS. The
insurance proceeds of any damage to the Airframe or any Engine, or part thereof,
not constituting an Event of Loss will be applied in payment (or to reimburse
Lessee) for repairs or for replacement property in accordance with the terms of
Articles 5 and 6 hereof, and any balance remaining after compliance with such
Articles with respect to such loss shall be paid to, or retained by, Lessee.
(g) APPLICATION IN DEFAULT. Any amount referred to in clause (i) or (ii) of
paragraph (e) or in paragraph (f) of this Article 10 which is payable to Lessee
shall not be paid to Lessee or, if it has been previously paid directly to
Lessee, shall not be retained by Lessee, if at the time of such payment an Event
or an Event of Defaulft shall have occurred and be continuing. In such event,
all such amounts shall be paid to and held by Lessor as security for the
performance by Lessee of its obligations hereunder or, at Lessor's option,
applied by Lessor toward payment of any such obligations of Lessee at the time
due hereunder as Lessor may elect. At such time as Lessee shall have cured all
Events and Events of Default, all such amounts at the time held by Lessor in
excess of the amounts, if any, which Lessor shall have elected to apply as above
provided shall be paid to Lessee.
(h) REPORTS, CERTIFICATES, ETC. At least five (5) Business Days prior to
the Delivery Date of the Aircraft and concurrently with the renewal of each
insurance policy (but in no event less frequently than once each calendar year),
Lessee will furnish to Lessor and each Additional Insured a certificate signed
by a firm of independent aircraft insurance brokers of recognized standing and
responsibility in the international aviation insurance industry, appointed by
Lessee and acceptable to Lessor, describing in reasonable detail the insurance
then carried and maintained on the Equipment and certifying that the insurance
then carried and maintained on the Aircraft and Engines complies with the terms
hereof. Lessee will advise and will cause such firm to agree to advise Lessor
and each Additional Insured in writing promptly of any default in the payment of
any premium and of any other act or omission on the part of Lessee or otherwise
of which it or they have knowledge and which might invalidate or render
unenforceable, in whole or in part, any insurance on the Aircraft or any Engine.
Lessee will also advise and will also cause such firm to agree to advise Lessor
and each Additional Insured in writing of the termination date of any insurance
carried and maintained on the Aircraft or any Engine pursuant to this Article at
least thirty (30) days
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(seven (7) days, or such lesser period as is customarily available in accordance
with industry practice, in the case of any war risk and allied perils coverage)
prior to such termination date. Upon request by Lessor, Lessee will deliver to
Lessor a true and complete copy of all policies of insurance carried by Lessee
in accordance with the requirements of this Article 10. In the event that Lessee
shall fail to maintain insurance as herein provided, Lessor may at its option
obtain such insurance and, in such event, Lessee shall, upon demand, reimburse
Lessor, as Supplemental Rent, for the cost thereof.
(i) INSURANCE - GENERAL. If at any time Lessor determines that Lessor's
approval of any insurer should be revoked in the interests of the Additional
Insureds as the result of such insurer no longer being of recognized
responsibility and substantial financial capacity acceptable to Lessor in its
reasonable discretion, or if Lessor determines that Lessor's approval of any
insurance should be revoked in the interests of the Additional Insureds as the
result of a change in market practice, Lessor agrees to consult with Lessee and
Lessee's insurance brokers regarding revocation of such approval. If, following
such consultation, Lessor determines that revocation is required, Lessee will
promptly arrange or procure the arrangement of alternative cover satisfactory to
Lessor. Lessee shall, on request, provide Lessor with satisfactory evidence that
the premiums in respect of the insurance required hereby have been paid. Lessee
shall not make, or permit to be made, any modification to or alteration of the
insurance coverage required hereby adverse to the interests of any of the
Additional Insureds or Indemnitees. Lessee shall be responsible for any
deductible in respect of the insurances required hereby. Lessee shall provide
any other insurance/reinsurance related information or assistance in respect of
the insurances required hereby, as Lessor may reasonably request. Lessee shall
at its own expense maintain insurance following the expiration or sooner
cancellation or termination of the Term in respect of Lessee's indemnity and
hold harmless obligations set forth in Article 8(a) hereof, for such period as
Lessor may reasonably require (but in any event not more than two (2) years)
naming each Indemnitee (as defined in Article 8) as an additional insured.
Lessee's obligation under the preceding sentence shall not be affected by Lessee
ceasing to be the lessee of the Aircraft or by any of the Indemnitees (as
defined in Article 8) ceasing to have an interest in respect of the Aircraft.
INSURANCE OF LESSEE'S INTEREST. Nothing contained in this Lease shall
prevent Lessee from carrying insurance against Events of Loss with respect to
the Equipment in excess of that required hereunder, and nothing herein shall
prevent any Additional Insured, at its own expense, from carrying additional
insurance against Events of Loss with respect to the Equipment; PROVIDED,
HOWEVER, (i) Lessee shall not procure insurance or permit Lessee to be named
assured in any insurance with respect to any Item of Equipment which could
prejudice any Additional Insured's rights under the insurance required hereunder
or any right of recovery under any such insurance, and (ii) in the event there
is a limitation on the aggregate amount of insurance which may be carried or
collected by any or all parties in respect of any Equipment, Lessee's right to
carry and collect insurance on such Equipment in excess of that required
hereunder shall be subordinate to and shall not in any way prejudice the right
of any Additional Insured to carry and collect insurance on such Equipment in
excess of such amounts.
- 10-5 -
ARTICLE 11. MORTGAGES, LIENS, ETC. Lessee shall not directly or indirectly
create, incur, assume or suffer to exist any Lien on or with respect to any Item
of Equipment, any part thereof, title thereto or any interest therein, except:
(i) the respective rights of Lessor, the Participants and Lessee as herein
provided, (ii) Liens which result from claims against Lessor that are not to be
paid or indemnified against by Lessee hereunder, (iii) Liens for taxes either
not yet due or being contested in good faith by appropriate proceedings, but
only so long as, in Lessor's judgment, such proceedings do not involve any
danger of the sale, forfeiture or loss of any Item of Equipment, or interest
therein, and (iv) materialmen's, mechanics', workmen's, repairmen's, airport
charges, employees' or other like liens arising by operation of law in the
ordinary course of business and for amounts the payment of which is either not
delinquent or is being contested in good faith by appropriate proceedings, but
only so long as, in Lessor's judgment, such proceedings do not involve any
danger of the sale, forfeiture or loss of any Item of Equipment, or any interest
therein.
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ARTICLE 12. RECORDATION AND FURTHER ASSURANCES. Lessee shall, at its own
cost and expense, cause this Lease, the Lease Supplement, the Mortgage and any
and all additional instruments which shall be executed pursuant to the terms
hereof, so far as permitted by applicable law or regulation, to be kept, filed,
registered and recorded at all times in the appropriate offices pursuant to the
laws of the Country of Registration, and in such other places, whether within or
outside the Country of Registration, as Lessor may reasonably request to perfect
and preserve Lessor's and any Participants title to and interests in the
Equipment and rights hereunder (including its rights to the Security Deposit),
and Lessee shall on request furnish to Lessor an opinion of counsel satisfactory
to Lessor or other evidence satisfactory to Lessor of each such filing,
recordation and registration.
Without limiting the foregoing, Lessee shall do or cause to be done, at its
own cost and expense, any and all acts and things which may be required under
the terms of the Convention for the International Recognition of Rights in
Aircraft, signed at Geneva, Switzerland, on June 18, 1948, to perfect and
preserve the title and interests of Lessor and each Participant in and to the
Equipment within the jurisdiction of any signatory State which has ratified such
Convention and in the territories thereof in which Lessee may operate the
Equipment, and Lessee shall also do or cause to be done at its own expense any
and all acts and things which may be required under the terms of any other
agreement, treaty, convention, pact, or by any practice, custom, or
understanding involving any State in which Lessee may operate, and any and all
acts and things which Lessor may reasonably request, to perfect and preserve the
rights of Lessor and each Participant in the Equipment and hereunder.
In addition, Lessee will promptly and duly execute and deliver to Lessor
such further documents and assurances and take such further action as Lessor may
from time to time reasonably request in order to more effectively carry out the
intent and purpose of this Lease and to establish and protect the rights and
remedies created or intended to be created in favor of Lessor hereunder.
- 12-1 -
ARTICLE 13. RETURN OF AIRCRAFT AND RECORDS.
(a) RETURN. Except as otherwise provided herein, at the expiration of the
Term for the Aircraft or upon the sooner cancellation or termination of this
Lease, Lessee, at its own expense, shall return the Aircraft and related
documentation and records to Lessor by delivering the same to Lessor at an
airport in the western part of the United States as may be designated by Lessor
in full compliance with all Lessee's obligations hereunder. The Aircraft, at the
time of return to Lessor, shall be fully equipped with two Engines properly
installed thereon. On return of the Aircraft to Lessor, but in no event more
than thirty (30) days thereafter, Lessor or Lessee, as the case may be, shall
reimburse the other for the cost of the fuel contained in the fuel tanks of the
Aircraft on return to Lessor, to the extent such fuel is less than (which will
result in payment by Lessee) or exceeds (which will result in payment by
Lessor) the amount of fuel contained in the fuel tanks of the Aircraft on the
Delivery Date.
(b) INSPECTION; TEST FLIGHT. Lessor shall have the right, within sixty (60)
days prior to the expiration date of the Term for the Aircraft, to inspect the
Air craft and its records, including all maintenance, pilots and aircraft
systems functional check reports, to determine whether the Aircraft and its
records will be in compliance with the requirements for return at the expiration
of the Term, including confirmation of the full serviceability status of each
component of the Aircraft. Lessee shall make such personnel available to Lessor
for such inspection of the Aircraft and its records as Lessor may reasonably
require. Lessor's right of inspection shall include: (i) the right to a complete
and thorough inspection of all documents and records maintained for the
Equipment by or for Lessee (including the Engine performance monitoring data),
which Lessee shall make available to Lessor's representatives and designees in
one location, (ii) the right to conduct a full systems functional and
operational check, and (iii) the right to have up to four of its representatives
or designees participate as direct observers in a test flight of the Aircraft of
at least ninety (90) minutes in duration (the cost of which shall be borne by
Lessee) conducted by Lessee in accordance with Manufacturer's standard flight
operation check flight procedures to demonstrate the airworthiness of the
Aircraft and the proper functioning of all systems and components within limits.
All discrepancies and deficiencies from the return conditions provided herein
shall be corrected by Lessee at its expense. If an additional test flight is
required after correction of discrepancies discovered on the initial test flight
or during the inspections, Lessee shall provide such additional test flight.
Lessor's right of inspection shall not include the right to open any panels or
bays that are not required to be opened in connection with the maintenance that
is required to be performed on the Aircraft pursuant to this Article 13, unless
Lessor has reasonable cause to believe that a defect likely exists behind the
closed panel or bay.
If: (x) repairs or other work items are required to cause the Aircraft to
comply with the return requirements provided herein, or (y) Lessor, through no
fault of its own, has not been allowed a full and thorough right to inspect the
Aircraft and its records prior to the end of the Term as contemplated herein, or
(z) Lessee for any other reason fails to
- 13-1 -
return the Aircraft and its records to Lessor at the time or place and in the
condition required hereunder, Lessee shall forthwith take such action as may be
necessary to remedy such noncompliance to enable Lessee to return the Aircraft
and its records to Lessor in accordance with the requirements hereof. Without
waiving any other rights or remedies Lessor may have as a result thereof, Lessee
shall pay Lessor one and one-half (1-1/2) the monthly Basic Rent for the
Aircraft, prorated on a daily basis, payable weekly in arrears, for each day
following the expiration of the Term for the Aircraft until Lessor has been
allowed and has completed a full and thorough right to inspect the Aircraft and
its records prior to the end of the Term as contemplated herein and the Aircraft
is returned to Lessor in the condition and with the supporting documentation
required hereunder at the time of return to Lessor. During the period required
for Lessee to comply with the requirements of this paragraph, Lessee shall not
operate the Aircraft (other than for maintenance, repair or return purposes) and
all of Lessee's other obligations hereunder shall remain in fall force and
effect. Nothing in this paragraph shall be interpreted to give Lessee the right
to retain the Aircraft after the end of the Term.
(c) FLIGHT HOURS/CYCLES/TIME REQUIREMENTS. At the time of return of the
Aircraft to Lessor:
(i) The Airframe shall be fresh out of its next sequential block
"6C" systems, zonal and structural check (all as described in the latest
revision of the Boeing Maintenance Planning Document and the latest revision
of Appendix C No. D626AOOI (or restatement thereof) applicable to the
Aircraft as the result of the hour/cycle ratio that the Aircraft has been
operated during the Term) or equivalent block-type maintenance check,
including all corresponding lower level checks (i.e., "A" and lower "C"
checks), and corrosion prevention and control and aging aircraft inspections,
if any, and all other known inspections and routine and non-routine tasks due
at such time, all with full fault rectification and interior refurbishment
and all without taking into account any sampling programs (collectively
referred to hereafter as the "6C Maintenance"). If Lessee's Maintenance
Program permits such 6C Maintenance to be performed in phases, Lessee shall
perform all phases of such 6C Maintenance immediately prior to return of the
Aircraft to Lessor in order to align such maintenance of the Aircraft with
the Boeing Maintenance Planning Document and the latest revision of Appendix
C No. D626AO01 (or restatement thereof) to the same extent as if Lessee's
Maintenance Program did not permit such maintenance to be performed in
phases. During such 6C Maintenance, Lessee shall also perform any other work
reasonably requested by Lessor and not otherwise required hereunder (provided
such other work does not increase the ground time required for Lessee to
prepare the Aircraft for return to Lessor as required hereby, or, if it does
increase the downtime, Lessor and Lessee shall have agreed to a Basic Rent
abatement for such additional ground time), and Lessor will reimburse Lessee
for the cost of such work (including labor and materials), billed at Lessee's
most preferred customer's rates. Lessee shall give Lessor at least thirty
(30) days prior notice of the date on which such 6C Maintenance is to be
performed.
If the Airframe is not fresh from such 6C Maintenance at the time of return
to Lessor, subject to the requirements of the next succeeding paragraph of this
clause (i), Lessee shall pay Lessor a Dollar amount determined by multiplying
the then current
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cost of such 6C Maintenance for the Airframe as quoted by an FAA-approved
overhaul facility selected by Lessee and reasonably acceptable to Lessor
(provided that if Lessor and Lessee cannot agree on the FAA-approved overhaul
facility, each shall select an FAA-approved overhaul facility and the quotations
of the two facilities shall be averaged) by (b) a fraction of which (x) the
numerator shall be the number of Flight Hours, Cycles or calendar time
(whichever is limiting) accumulated on the Airframe since the Delivery Date or
its last complete block "6C" check (or the final phase of the phased "6C"
check), as the case may be, and (y) the denominator shall be the total number of
Flight Hours, Cycles or calendar time (whichever is limiting) between block "6C"
checks for the Airframe (determined by reference to the latest revision of the
Boeing Maintenance Planning Document and the latest revision of Appendix C No.
D626AOOI (or restatement thereof) applicable to the Aircraft as the result of
the Flight Hours/Cycles ratio that the Aircraft has been operated during the
Term);
Notwithstanding anything to the contrary in the preceding paragraph, at the
time of return of the Aircraft:
(A) the Airframe shall be fresh out of its next sequential block
"C" check or equivalent block-type maintenance, and the corresponding lower
level checks, and all other inspections and tasks, including corrosion
prevention and control and aging aircraft inspections, if any, and all
structural/systems/zonal inspections and out-of-sequence inspections due at that
time, and all routine and non-routine tasks shall have been performed, all with
full fault rectification, sufficient to clear the Aircraft for operation until
its next scheduled "C" check, all in accordance with the then latest revision of
the Boeing Maintenance Planning Document and the latest revision of Appendix C
No. D626AO01 (or restatement thereof) applicable to the Aircraft as the result
of the hour/cycle ratio that the Aircraft has been operated during the Term),
and all without taking into account any sampling programs. If Lessee's
Maintenance Program permits such "C" check to be performed in phases, all phases
of such maintenance check shall be performed immediately prior to return of the
Aircraft to Lessor in order to align such maintenance of the Aircraft with the
then latest revision of the Boeing Maintenance Planning Document and the latest
revision of Appendix C No. D626AO01 (or restatement thereof) to the same extent
as if Lessee's Maintenance Program did not permit such maintenance check to be
performed in phases. During such "C" check, Lessee shall also perform any other
work reasonably requested by Lessor and not otherwise required hereunder
(provided such other work does not increase the ground time required for Lessee
to prepare the Aircraft for return to Lessor as required hereby, or, if it does
increase the downtime, Lessor and Lessee shall have agreed to a Basic Rent
abatement for such additional ground time), and Lessor will reimburse Lessee for
the cost of such work (including labor and materials), billed at Lessee's most
preferred customer's rates. Lessee shall give Lessor at least thirty (30) days
prior notice of the date on which such "C" check is to be performed; and
- 13-3 -
(B) the Airframe shall have at least 4,000 Flight Hours/Cycles or
sixteen (16) months, whichever is limiting, remaining to its next 6C
Maintenance.
(ii) The Landing Gear shall be fresh from overhaul or shall be new
(i.e., no Flight Hours/Cycles/calendar time accumulated thereon, whichever is
limiting).
Notwithstanding the preceding paragraph, if the Landing Gear is not
returned fresh from overhaul or new, at the time the Aircraft is returned to
Lessor, subject to the requirements of the last sentence of this paragraph,
Lessee shall pay Lessor a Dollar amount computed by multiplying: (A) the then
current estimated cost of overhaul of the Landing Gear as quoted by an
FAA-approved overhaul facility selected by Lessor and reasonably satisfactory to
Lessee, by (B) a fraction the numerator of which shall be the number of Flight
Hours/Cycles/calendar time (whichever is limiting) accumulated on the Landing
Gear since new or since its last overhaul and the denominator shall be the total
number of Flight Hours/Cycles/calendar time (whichever is limiting) allowable
between overhauls (determined by reference to the latest revision of the Boeing
Maintenance Planning Document). In any event, on return of the Aircraft the
Landing Gear shall have at least 4,000 Flight Hours/Cycles or sixteen (16)
months (whichever is limiting) remaining until its next scheduled overhaul
(determined by reference to the latest revision of the Boeing Maintenance
Planning Document).
(iii) Each "hard time/life limited" component of the Aircraft,
including life-limited Parts of the Engines, the APU and the Landing Gear (but
excluding components referred to in clause (iv), below, and excluding the
Landing Gear as a whole) shall be fresh from overhaul or shall be new (i.e., no
Flight Hours/Cycles/calendar time accumulated thereon, whichever is limiting).
Notwithstanding the preceding paragraph, if any "hard time/life limited"
component, including life-limited Parts of the Engines, the APU and the Landing
Gear (but excluding components referred to in clause (iv), below, and excluding
the Landing Gear as a whole) is not returned fresh from overhaul or new, at the
time the Aircraft is returned to Lessor, subject to the requirements of the last
sentence of this paragraph, Lessee shall pay Lessor a Dollar amount computed by
multiplying: (A) the then current estimated cost of overhaul or purchase and
replacement of such component, as quoted by an FAA-approved overhaul facility
selected by Lessor and reasonably satisfactory to Lessee, by (B) a fraction the
numerator of which shall be the number of Flight Hours/Cycles/calendar time
(whichever is limiting) accumulated on each "hard time/life limited" component,
as the case may be, since new or since its last overhaul and the denominator
shall be the total number of Flight Hours/Cycles/calendar time (whichever is
limiting) allowable between overhauls (determined by reference to the latest
revision of the Boeing Maintenance Planning Document). In any event, on return
of the Aircraft each "hard time/life limited" component of the Aircraft,
including life-limited Parts of the Engines, the APU and the Landing Gear (but
excluding the components referred to in clause (iv), below, and excluding the
Landing Gear as a whole) shall have at least 4,000 Flight Hours/Cycles or
sixteen (16) months (whichever is
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limiting) remaining until its next scheduled overhaul (determined by reference
to the latest revision of the Boeing Maintenance Planning Document). For the
avoidance of doubt, Lessor does not intend to receive double payment for any
item for which compensation if paid pursuant to this Article 13(c). Therefore,
the provisions of this Article 13(c) shall be construed so that if appropriate
payment in respect of a Part is paid pursuant to one clause of this Article
13(c), an equivalent payment in respect of such Part shall not be payable
pursuant to any other clause of this Article 13(c).
(iv) Each component of the Aircraft which has a hard time/life limit
(i.e., hours/cycles/calendar time) to overhaul interval/shop visit
interval/replacement of less than 4,000 Flight Hours/Cycles or sixteen (16)
months (whichever is limiting) shall have 100% of its Flight
Hours/Cycles/calendar time remaining until next overhaul interval, shop visit
interval or replacement (determined by reference to the latest revision of the
Boeing Maintenance Planning Document).
(v) Each Engine and the APU shall be fresh out of its heavy maintenance
shop visit requiring teardown/disassembly and resulting in full performance
restoration. If an Engine or the APU is not fresh out of its heavy maintenance
shop visit requiring teardown/disassembly and resulting in full performance
restoration on return to Lessor, subject to the requirements of the next
succeeding paragraph of this clause (v), on return of the Aircraft to Lessor
Lessee shall pay Lessor a Dollar amount computed by multiplying: (A) the then
current estimated cost of such heavy maintenance shop visit requiring
teardown/disassembly and resulting in full performance restoration for such
Engine or the APU, as the case may be, as quoted by an FAA-approved overhaul
facility selected by Lessee and reasonably satisfactory to Lessor (provided that
if Lessor and Lessee cannot agree on the FAA-approved overhaul facility, each
shall select an FAA-approved overhaul facility and the quotations of the two
facilities shall be averaged), by (B) a fraction the numerator of which shall be
the number of Flight Hours/Cycles/calendar time (whichever is limiting)
accumulated on such Engine or the APU since new or since its last heavy
maintenance shop visit requiring teardown/disassembly and resulting in full
performance restoration (whichever is later), and the denominator shall be the
total number of Flight Hours/Cycles/calendar time (whichever is limiting)
allowable between heavy maintenance shop visits requiring teardown/disassembly
and resulting in full performance restoration. The industry mean time between
removals for engines and auxiliary power units of similar age, characteristics
and maintenance histories as such Engines and the APU, determined by Lessor from
records maintained by the manufacturer of such equipment on the basis of the
average of the industry mean time between removals over the immediately
preceding two (2) years, shall be used to determine the number of Flight
Hours/Cycles/calendar time allowable between heavy maintenance shop visits
requiring teardown/disassembly and resulting in full performance restoration.
The industry mean time between removals for engines and auxiliary power units
does not include removals solely for foreign object damage or customer
convenience.
Notwithstanding anything to the contrary in the preceding paragraph, on
return of the Aircraft, each Engine and the APU shall have at least 3,000 Flight
Hours/Cycles or one (1) year (whichever is limiting) remaining to the industry
mean time
- 13-5 -
between removals for engines and auxiliary power units of similar age,
characteristics and maintenance histories as such Engines and the APU,
determined from records maintained by the manufacturer of such equipment on the
basis of the average of the industry mean time between removals over the
immediately preceding two (2) years.
(vi) Each major component of the Aircraft which is "on condition" or
"condition monitored" (other than such components referred to in clause (vii),
below) shall be fresh out of its heavy maintenance shop visit. If any such major
component is not fresh out of its heavy maintenance shop visit on return to
Lessor, subject to the requirements of the next succeeding paragraph of this
clause (vi), on return of the Aircraft to Lessor Lessee shall pay Lessor a
Dollar amount computed by multiplying: (A) the then current estimated cost of
such heavy maintenance shop visit for such component, as quoted by an
FAA-approved overhaul facility selected by Lessor and reasonably satisfactory to
Lessee, by (B) a fraction the numerator of which shall be the number of Flight
Hours/Cycles/calendar time (whichever is limiting) accumulated on such component
since new or since its last heavy maintenance shop visit (whichever is later),
and the denominator shall be the total number of Flight Hours/Cycles/calendar
time (whichever is limiting) allowable between heavy maintenance shop visits.
The average industry mean time between failures over the immediately preceding
twelve months for components of similar age, characteristics and maintenance
histories, as determined by Lessor from records maintained by Manufacturer,
shall be used to determine the number of Flight Hours/Cycles/calendar time
allowable between heavy maintenance shop visits.
Notwithstanding anything to the contrary in the preceding paragraph, on
return of the Aircraft, each major component of the Aircraft which is "on
condition" or "condition monitored" (other than such components referred to in
clause (vii), below) shall have at least 4,000 Flight Hours/Cycles or sixteen
(16) months (whichever is limiting) remaining to the industry mean time between
failures for components of similar age, characteristics and maintenance
histories, determined on the basis of the average of the industry mean time
between failures over the immediately preceding twelve months from records
maintained by Manufacturer.
(vii) Each "on condition" or "condition monitored" major component of
the Aircraft which has an industry mean time between failures of less than 4,000
Flight Hours/Cycles or sixteen (16) months (whichever is limiting), determined
on the basis of the average of the industry mean time between failures over the
immediately preceding twelve months, shall have 100% of its Flight Hours, Cycles
or calendar time, whichever is limiting, remaining to the industry mean time
between failures for such component, determined on the basis of the average of
the industry mean time between failures over the immediately preceding twelve
months from records maintained by Manufacturer.
(viii) Except as otherwise required above, each component of the
Aircraft which has a calendar limit to removal and replacement or refurbishment
shall have at least one year remaining to operate until removal and replacement
or refurbishment (determined by reference to the latest revision of the Boeing
Maintenance Planning
- 13-6 -
Document), and each component of the Aircraft which has a calendar limit to
removal and replacement or refurbishment of less than one year (determined by
reference to the latest revision of the Boeing Maintenance Planning Document)
shall have 100% of its calendar time remaining until next removal and
replacement or refurbishment.
All of the foregoing overhauls, checks, maintenance and visits shall have
been performed by an Approved Maintenance Performer and be in compliance with
Lessee's Maintenance Program (except to the extent otherwise specified above).
Lessee shall not be entitled to any adjustment or to be reimbursed or in any way
compensated if the Airframe, any Engine or any Parts are returned in a better
condition than as required under this Article 13.
(d) GENERAL RETURN REQUIREMENTS. The Airframe, Engines and Parts shall have
been maintained, serviced and repaired throughout the Term in accordance with
(i) all the requirements of this Lease, (ii) Lessee's Maintenance Program, and
(iii) the rules and regulations of the FAA, and shall be in compliance with the
following:
(1) AIRWORTHINESS CERTIFICATE; REGISTRATION. The Aircraft when returned to
Lessor shall have a currently effective airworthiness certificate (and, if
required by Lessor, an airworthiness certificate for export to such location as
may be designated by Lessor) issued by the FAA, and shall be in such condition
and shall have such supporting documentation as required to maintain the
airworthiness certificate from the FAA for FAR Part 121 passenger operations
with no restrictions and an FAA certificate of registration. The Aircraft will
be equipped for operation in accordance with FAR Part 121 passenger operations.
(2) GENERAL CONDITION. Each Item of Equipment shall be in the same
condition as when delivered to Lessee, ordinary wear and tear from normal flight
operations (subject to the obligations set forth in Article 5(c) and alterations
and modifications properly made by Lessee as permitted or required under this
Lease) excepted, shall be in good operating condition, and shall be free and
clear of all Liens, except Liens which result from acts of Lessor or of a
Participant which are not indemnified against hereunder. The Aircraft shall be
clean, internally and externally, and serviceable by commercial passenger
airline operating standards, and shall have installed thereon and furnished
therewith all Engines, Parts and equipment installed thereon or furnished
therewith (including all cabin passenger service and loose equipment) at the
commencement of the Term (after giving effect to the modifications referred to
in Article 2(h) hereof) or replacements therefor (as herein authorized) and
additions and improvements thereto made in accordance with the provisions of
this Lease. No Part will have a total time since new in hours, cycles or
calendar time greater than 110% of the total time since new in hours, cycles or
calendar time of the Airframe.
The Aircraft shall be capable of certificated, full-rated performance
without limitation throughout the entire operating envelope, as defined in the
Aircraft flight manual, and performance compliance will be demonstrated at the
time of the technical acceptance flight test and by on-wing static inspection
and testing of the powerplants in accordance with the Engine maintenance manual.
- 13-7 -
The Engines shall not be on "watch" for any reason requiring any special or
out-of-sequence inspection and shall comply with the operations specification of
Lessee and the Engine manufacturer (or, if such requirements differ, whichever
is the more limiting), without waiver, carryover, deferment, restriction or
exception. If the historical and technical records and/or trend monitoring data
indicate an acceleration in the rate of deterioration in the performance of an
Engine or the APU which is higher than normal as per the recommendations of the
manufacturer of such Engine or APU, Lessee shall, prior to return, correct such
conditions that are determined to be causing such accelerated rate of
deterioration or that otherwise exceed Lessee's or the manufacturer's
maintenance manual tolerances.
Without limiting any of the foregoing, on return the Aircraft shall comply
with the following:
(i) FUSELAGE, WINDOWS AND DOORS: The fuselage shall be free of major
dents and abrasions which are out of Manufacturer's manual limits, scab patches
which are temporary or out of Manufacturer's manual limits, and loose or pulled
rivets (reasonable wear and tear from normal flight operations excepted);
windows shall be free of delamination, distortion and blemishes out of
Manufacturer's manual limits and shall be properly sealed and free of crazing
(reasonable wear and tear from normal flight operations excepted); and doors
shall be free-moving, correctly rigged, and fitted with serviceable seals; and
all external placards and markings shall be installed and legible;
(ii) WINGS AND EMPENNAGE: All leading edges shall be free from damage
out of Manufacturer's manual limits; all control surfaces shall be waxed and
polished and all unpainted cowlings and fairings shall be polished; and all
wings, empennage and fuel tanks shall be free of fuel leaks; all flight controls
shall be properly balanced, and all external placards and markings shall be
installed and legible;
(iii) INTERIOR: The interior of the Aircraft shall be deepcleaned;
carpets, galleys, lavatories, ceiling, side walls, overhead, passenger service
units, bag racks and bulkhead panels shall be serviceable, secure, clean and
free of cracks and reasonably stain-free (provided the cosmetic appearance is
reasonably acceptable to Lessor); all seats shall be fully serviceable, in good
condition and repainted as necessary; all signs and decals shall be clean and
legible; and all calendar-lifed emergency equipment shall have a minimum of one
year's life remaining; all carpets, cushions and seat covers shall be in
original pattern and color (unless Lessor shall have agreed otherwise with
Lessee in writing) and in good condition and clean and the seats shall conform
to FAA fire-resistance and crash-worthiness regulations; and all placards and
markings shall be installed and legible; all galley areas shall not have any
detectable cracks or corrosion, shall meet safety and health standards, shall
present a good appearance and shall be free of food and contamination; all
galley floors shall be sealed and reasonably stain-free (provided the cosmetic
appearance is reasonably acceptable to Lessor), shall have an effective non-skid
coating and shall meet safety and health standards; all galley structures,
galley inserts and galley carts will be clean and sealed, and shall not have any
detectable leaks, cracks or other defects and shall be fully serviceable.
- 13-8 -
(iv) COCKPIT: All placards and markings shall be clean, secure, and
legible, all fairing panels shall be free of cracks and shall be reasonably
stain-free (provided the cosmetic appearance is reasonably acceptable to
Lessor), and shall be clean, secure, and repainted as necessary; all floor
coverings shall be clean and effectively secured and sealed; all seat covers
shall be in good condition and clean and shall conform to FAA fire resistance
regulations; and all seats shall be fully serviceable and in good condition;
(v) CARGO COMPARTMENTS: All panels and nets shall be in good condition;
all cargo-restraint and moving mechanisms shall be serviceable; and all
compartments shall meet then current FAA fire regulations; all doors shall be
rigged and functioning properly; and the compartments shall be clean;
(vi) LANDING GEAR AND WHEEL XXXXX: The Landing Gear and all wheel xxxxx
shall be clean, free of leaks, and repaired as necessary; and all placards and
markings shall be clean, secure, and legible;
(vii) LAVATORIES: All lavatory areas shall be clean and reasonably free
of cracks and free of detectable corrosion, meet safety and health standards,
present a good appearance and shall be free of abnormal contamination; all
lavatory floors and floor coverings shall be in good condition and clean, shall
be sealed and reasonably stain-free (provided the cosmetic appearance is
reasonably acceptable to Lessor), and shall have an effective non-skid coating;
mirrors shall be free of cracks and delamination and free of noticeable and
unsightly scratches; all doors and latches shall be properly fitted and fully
functional; lavatory systems shall be clean, free of leaks, detectable cracks
and other defects and shall be properly sealed and fully functional; and
(viii) TIRES AND BRAKES: All tires and brakes shall be fully
serviceable and have a minimum of 75% wear-life remaining. No tire shall have
more than two recaps.
(3) MODIFICATIONS. At Lessor's request, Lessee shall, at Lessee's expense,
remove any or all alterations or modifications in or additions to any Item of
Equipment accomplished during the Term not required to be incorporated or
installed in or attached to such Item of Equipment to obtain an airworthiness
certificate and registration from the FAA, including the modifications
contemplated by Article 2(b) hereof, and Lessee shall, at Lessee's expense,
restore such Item of Equipment to the value, utility, condition and
airworthiness thereof which would have existed had such alterations,
modifications or additions not been made (provided that Lessor shall provide
Lessee with the necessary Parts that were returned by Lessee to Lessor pursuant
to Article 2(h), to enable Lessee to make such restoration). Without limiting
any other obligations of Lessee under this Lease, all modifications made to the
Aircraft during the Term shall be in accordance with FAA-approved data.
(4) REPAIRS. All repairs performed since the Delivery Date and that exist
on the Equipment at return shall be permanent in accordance with the
Manufacturer's Structural Repair Manual, provided that if such Structural Repair
Manual authorizes as
- 13-9 -
permanent a non-flush structural patch repair or a flush-type structural patch
repair, or does not cover such repair, such repair shall be a flush-type
permanent repair. All repairs shall be in accordance with Lessee's Maintenance
Program and conform to the Manufacturer's Structural Repair Manual or the Engine
manufacturer's approved manual, as the case may be, and shall be provided with
approval by the FAA if so required. Any repair not covered by the Manufacturer's
Structural Repair Manual or the Engine manufacturer's approved manual, as the
case may be, shall be in accordance with FAA-approved data and shall be approved
by Manufacturer or the Engine manufacturer, as the case may be.
(5) TERMINATING ACTION. Lessee shall perform all deferred and carryover
maintenance items and clear all pilot discrepancies with respect to the Aircraft
on a terminating action basis. All airworthiness directives issued during the
Term by the FAA, all changes required by any amendments or changes to the FAR's
during the Term, and all alert service bulletins or service bulletins that are
mandated by airworthiness directives issued during the Term by a manufacturer or
vendor applicable to the Equipment having a date for compliance that falls on or
prior to twelve (12) months or 3,000 Flight Hours or Cycles, as the case may be,
after the expiration of the Term (or return of the Aircraft, if later) shall be
accomplished in compliance with the issuing entity's specific instructions
without regard to any alternate means of compliance, waiver or operator
exemptions delaying compliance. Without limiting the foregoing, any
airworthiness directives, FAR's or manufacturer's or vendor's alert service
bulletins or service bulletins that are mandated by airworthiness directives
issued during the Term which allow temporary compliance by inspection or other
action (other than by terminating action) but require terminating compliance on
or prior to twelve (12) months or 3,000 Flight Hours or Cycles, as the case may
be, after the expiration of the Term (or return of the Aircraft, if later) shall
have such terminating compliance complete prior to return, and all
manufacturer's and vendor's service bulletins issued during the Term which are
rendered mandatory by the Manufacturer's then current ETOPS Compliance
Configuration and Maintenance Procedures Guide and which require a repetitive
inspection, modification or terminating compliance on or prior to twelve (12)
months or 3,000 Flight Hours or Cycles, as the case may be, after the
expiration of the Term (or return of the Aircraft, if later) shall have such
inspection, modification or terminating compliance completed at the highest
level of compliance possible prior to return. Without limiting the foregoing,
the Aircraft shall be in full compliance with the Manufacturer's then current
ETOPS Compliance Configuration and Maintenance Procedures Document for 120 (or,
if applicable, 180) minutes ETOPS operation. The Aircraft shall also be in
compliance with the Manufacturer's SSI, SSID, Corrosion Prevention and Control
and Aging Aircraft Programs, and shall comply with United States and ICAO (to
the extent applicable to aircraft operated in the United States) noise and
environmental regulations.
(6) BORESCOPE INSPECTION, ETC. Lessor shall have the right at Lessee's
expense to carry out a fall video borescope inspection of the gas path of the
hot and cold sections of each Engine and the APU and undertake a full
operational check (power assurance run) of each Engine and the APU system.
Lessee shall provide evidence satisfactory to Lessor reflecting the correction
at Lessee's expense of any watch items or unserviceable or
- 13-10 -
reject conditions or defects or discrepancies found not to be in compliance with
manufacturer's maintenance manual limits during such inspections and checks.
(7) KITS. Lessee shall have ordered during the Term all no-charge kits for
the Aircraft offered by Manufacturer, the. Engine manufacturer and other
vendors, and, if not incorporated in the Aircraft at the time of return
hereunder (unless required to do so by the terms hereof), Lessee shall return
such kits to Lessor with the Aircraft. Lessor shall be provided with all
modification kits and other such items that are on order for the Aircraft.
(8) LEAKS, ETC. The Airframe and Engines so returned shall be free of fuel
leaks, and the fuel system of the Aircraft, including the Engines, shall have
been tested and free of bacteriological, fungus and other contamination and
corrosion and shall show no indication of breakdown. The hydraulic and oil
systems of the Aircraft, including the Engines, shall have been tested and free
of contamination and corrosion and shall show no indication of breakdown. Lessee
shall provide copies of the results of laboratory tests of all such systems to
Lessor and of full bacteriological and fungus tests of all fuel tanks performed
no more than thirty (30) days prior to return of the Aircraft. Any
bacteriological, fungus or other contamination or corrosion revealed thereby
shall be corrected or treated to Lessor's satisfaction prior to return.
(9) PAINTING. Lessee shall remove all special markings of Lessee, and shall
strip the paint from the Aircraft and repaint the Aircraft in a livery specified
by Lessor after application of corrosion protection and performance of other
procedures, in accordance with industry practice, with control surfaces
balanced and other procedures performed in accordance with Manufacturer's
maintenance procedures, all at Lessee's expense. Lessee shall also weigh the
Aircraft.
(10) NOISE CREDITS. Any and all noise credits, base level rights or any
other types of rights which accrue with respect to the Aircraft shall be deemed
to be transferred to and to have accrued to the benefit of Lessor upon the
expiration or sooner cancellation or termination of this Lease for any reason.
(e) RECORDS. Upon the return of the Aircraft, (i) the Airframe, Engines and
all Parts shall be documented with work orders, vendor serviceable tags, etc. to
have been maintained, repaired and overhauled by FAA certified repair stations
or by those approved by the FAA through reciprocal agreements and in a manner so
that such equipment is approved by the FAA for use on United States registered
and certificated aircraft, and (ii) Lessee shall deliver to Lessor (A) all
logs, manuals, certificates, data and inspection, modification, maintenance and
overhaul records, amended to their latest amendment revision available
generally, required to be maintained with respect thereto under applicable rules
and regulations of the FAA or other governmental authority having jurisdiction,
and (B) all logs, manuals and catalogs included with the Aircraft on the
Delivery Date therefor or supplied during the Term hereof, amended to their
latest amendment revision available generally.
If non-computerized copies of maintenance records are not available, then
Lessee shall take action with the pertinent regulatory agencies to insure that
Lessor and
- 13-11 -
the FAA are provided with all requested necessary and proper guarantees of
methods of compliance, component overhaul and management, scheduling, quality
control, serial number verification, etc.
The head of Lessee's Quality Control Department shall certify in writing
that the data and information contained in all documentation and records
returned to Lessor is true and correct. For any computerized records, the head
of Lessee's Quality Control Department shall sign or initial each computer page.
All Parts identified with safe-life limits shall be identified with their
back to birth service histories, accumulated Cycles or Flight Hours, as
applicable, and remaining service lives on a separate listing. All Parts which
are identified in the maintenance records by part numbers and serial numbers
other than the manufacturer's shall be provided with interchange or cross
reference listing necessary to establish complete traceability.
In the event of missing, incomplete or noncompliant records, Lessee shall
at its expense reaccomplish the tasks necessary to produce such records in
accordance with its Maintenance Program prior to return of the Equipment to
Lessor. Without limiting any of the foregoing, all overhaul and repair
procedures shall as to quality and documentation be such as to enable immediate
transfer to a new operator under FAR Part 121. At the time of return of the
Aircraft to Lessor hereunder, Lessee shall also provide Lessor with evidence
satisfactory to Lessor that Lessee has fully paid and discharged all navigation
charges, airport landing fees and the like which have resulted in or could give
rise to a Lien on the Aircraft or any part thereof if the same remains unpaid.
(f) TECHNICAL ACCEPTANCE; FERRY FLIGHT. Upon completion of the final
inspection of the Aircraft and records by Lessor and, unless otherwise agreed in
writing by Lessor and Lessee, correction of any discrepancies or deficiencies
required to be corrected by Lessee prior to redelivery to Lessor, Lessor shall
execute and deliver to Lessee, a technical acceptance certificate which shall
constitute Lessor's technical acceptance of the Aircraft, except as noted in
such technical acceptance certificate. Notwithstanding the execution and
delivery of such technical acceptance certificate by Lessor, all Lessee's
obligations hereunder shall continue in full force and effect until actual
return of the Aircraft to and final acceptance of the Aircraft by Lessor at the
location specified in Article 13(a), in full compliance with all Lessee's
obligations hereunder, to the same extent as if such technical acceptance
certificate had not been executed by Lessor (it being understood, without
limitation, that Lessee shall (i) bear the full risk of damage and loss to the
Aircraft and shall promptly repair or cause to be repaired any damage to the
Aircraft which may occur prior to completion of ferry flight referred to below,
and (ii) maintain insurance in respect of the Aircraft as required by Article 10
hereof to and including the time of redelivery of the Aircraft to Lessor);
provided, however, Lessee shall not be responsible to correct any discrepancies
or deficiencies that existed at the time of the final inspection of the Aircraft
referred to above but were not raised until completion of the ferry flight of
the Aircraft referred to below if such discrepancies or deficiencies could have
been noted on completion of the final inspection of the Aircraft (i.e., the
foregoing shall not relieve Lessee from its responsibility to correct
discrepancies or
- 13-12 -
deficiencies discovered as the result of the ferry flight of the Aircraft). Upon
technical acceptance of the Aircraft by Lessor, Lessee shall promptly ferry the
Aircraft at Lessee's cost to the redelivery location referred to in Article
13(a) hereof. Lessor shall have the right (subject to compliance with the
requirements or approval of the FAA) for up to five (5) representatives or
designees to travel on the Aircraft on such ferry flight.
(g) AID IN DISPOSITION. Lessee agrees that during the last 180 days of the
Term it will cooperate in all reasonable respects with the efforts of Lessor to
lease or sell the Aircraft, including, without limitation, permitting potential
lessees or purchasers to inspect the Aircraft and the records relating thereto,
provided that the same shall not interfere with Lessee's use of the Aircraft or
require Lessee to incur out-of-pocket expenses for which it is not reimbursed.
- 13-13 -
ARTICLE 14. EVENTS OF DEFAULT. The following events shall constitute Events
of Default (whether any such event shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(a) Lessee shall fail to make any payment of Rent as and when due, and such
failure shall continue for a period of at least three (3) consecutive days;
(b) Lessee shall fail to carry and maintain insurance in accordance with
the provisions of Article 10 hereof;
(c) Lessee shall fail to perform or observe any term, condition or
agreement to be performed or observed by it under Article 3(c) (as supplemented
in Schedule "1" hereto), Article 5(a), 5(b), or 5(d), Article 10(d), Article 12
or Article 13;
(d) Lessee shall fail to perform or observe any other term, condition,
covenant or agreement to be performed or observed by it hereunder or under any
other agreement between Lessor and Lessee and such failure shall continue
unremedied for a period of thirty (30) days after actual knowledge thereof by
Lessee;
(e) Any representation or warranty made by Lessee herein or in any
document or certificate furnished Lessor in connection herewith or pursuant
hereto shall prove to be false or misleading in any material respect;
(f) Any obligation of Lessee for the payment or guarantee of payment of
borrowed money or the deferred purchase price of property or for the payment or
guarantee of payment of rent under any lease of aircraft shall not be paid when
due, whether by acceleration or otherwise, and such default in payment shall
continue beyond any applicable grace period or extension thereof, and the other
party to any such agreement has commenced to exercise any of its remedies under
such agreement;
(g) Lessee shall consent to the appointment of a receiver, custodian,
administrator, trustee, liquidator or any similar official of itself or of a
substantial part of its property, or Lessee shall become insolvent or fail to
pay or admit in writing its inability to pay its debts generally as they come
due, or shall make a general assignment for the benefit of creditors, or Lessee
shall file a voluntary petition for an order for relief pursuant to Section 301
of Title 11 of the United States Code, or any superseding statute, as amended
from time to time, or a voluntary petition in bankruptcy or a voluntary petition
or an answer seeking reorganization in a proceeding under any bankruptcy laws
(as now or hereafter in effect) or an answer admitting the material allegations
of a petition filed against Lessee for an order for relief or in any such
proceeding, or Lessee shall by voluntary petition, answer or consent, seek
relief under the provisions of any other now existing or future bankruptcy or
other similar law
- 14-1 -
providing for the reorganization, liquidation or winding-up of corporations, or
providing for an arrangement, composition, extension or adjustment with its
creditors;
(h) An order, judgment or decree shall be entered by any court of competent
jurisdiction appointing, without the consent of Lessee, a receiver, custodian,
administrator, trustee, liquidator or similar official of Lessee or of any
substantial part of its property, or any substantial part of the property of
Lessee shall be sequestered, and any such order, judgment or decree of
appointment or sequestration shall remain in force undismissed, unstayed or
unvacated for a period of thirty (30) days after the date of entry thereof,
(i) A petition against Lessee for an order for relief pursuant to Section
303 of Title 11 of the United States Code, or any superseding statute, as
amended from time to time or an order for any proceeding under any bankruptcy
laws or other insolvency laws (as now or hereafter in effect) shall be filed and
shall not be withdrawn or dismissed within thirty (30) days thereafter, or,
under the provisions of any law providing for reorganization, liquidation or
winding-up of corporations which may apply to Lessee, any court of competent
jurisdiction shall assume jurisdiction, custody or control of Lessee or of any
substantial part of its property and such jurisdiction, custody or control shall
remain in force unrelinquished, unstayed or unterminated for a period of thirty
(30) days;
(j) Final judgment for the payment of money in excess of $500,000 (or its
equivalent) shall be rendered against Lessee and the same shall remain unpaid,
unstayed or undischarged for a period of thirty (30) days;
(k) Lessee's certificated operations shall be suspended, or Lessee shall
cease to be a Certificated Air Carrier, or the franchises, concessions, permits,
certificates, licenses (including, without limitation, its air operator
certificate or air transport license), rights or privileges required for the
conduct of Lessee's airline operations are revoked, canceled, suspended, not
renewed or otherwise terminated; or
(l) An "Event of Default" under, and as such term is defined in, the
Companion Lease shall have occurred and be continuing.
- 14-2 -
ARTICLE 15. REMEDIES. Upon the occurrence of any Event of Default and at
any time thereafter so long as the same shall be continuing, Lessor may, at its
option, declare this Lease to be in default and Lessor may, in addition to any
other remedies provided herein or by applicable law, exercise one or more of the
following remedies with respect to the Aircraft, or any part thereof, as Lessor
in its sole discretion shall elect:
(a) Demand that Lessee, and Lessee shall upon the written demand of Lessor
and at Lessee's expense, return promptly to Lessor the Aircraft in the manner
and condition required by, and otherwise in accordance with all of the
provisions of, Article 13 hereof as if the Aircraft were being returned at the
end of the Term therefor; or Lessor, at its option, may enter upon the premises
where all or any part of the Aircraft or any Engine is located and take
immediate possession of and remove the same (together with any engine which is
not an Engine but which is installed on the Airframe and any other property in
the Aircraft, subject to all of the rights of the owner, lessor, lienor or
secured party of such engine or other property, provided, however, that the
Airframe with an engine (which is not an Engine) installed thereon or any
property therein may be flown to a location within Europe or the United States,
and such engine or other property shall be held for the account of any such
owner, lessor, lienor or secured party or, in the case of an engine owned by
Lessee free of Liens, may, at the option of Lessor, be exchanged with Lessee for
an Engine in accordance with the terms of Article 13 hereof) by summary
proceedings or otherwise, all without liability accruing to Lessor for or by
reason of such entry or taking of possession, whether for the restoration of
damage to property caused by such taking or otherwise;
(b) Sell the Aircraft, or part thereof, at public or private sale, or
otherwise dispose of, hold, use, operate, lease to others or keep idle the
Aircraft, or part thereof, as Lessor in its sole discretion may determine, all
free and clear of any rights of Lessee and without any duty to account to Lessee
with respect to such action or inaction or for any proceeds with respect
thereto, except to the extent required by paragraph (c) below in the event
Lessor exercises its rights under such paragraph;
(c) In the event Lessor, pursuant to paragraph (b), above, shall have relet
the Aircraft or shall have sold the Aircraft, Lessor, in lieu of exercising its
rights under paragraph (d), below (but without limiting any of its other rights
hereunder or under law), may, if it shall so elect, demand that Lessee pay
Lessor and Lessee shall pay Lessor, as liquidated damages for loss of a bargain
and not as a penalty (in lieu of the Basic Rent for the Aircraft due for the
period commencing as of the commencement of the term of the reletting or the
date of sale, as the case may be) any accrued but unpaid Basic Rent for the
Aircraft due up to and including the date of the commencement of the term of the
reletting or the date of sale plus the excess of: (i) in the case of a
reletting, the aggregate unpaid Basic Rent for the Aircraft which would
otherwise have become due hereunder over the Term but for the Event of Default,
discounted monthly to present value as of the date of the commencement of the
term of the reletting at 6% per annum, over the aggregate basic rental payments
to become due
- 15-1 -
under the reletting from the date of the commencement of the term of the
reletting to the date upon which the Term for the Aircraft would have expired
but for Lessee's default, discounted monthly to present value as of the date
of the commencement of the term of the reletting at 6% per annum, or (ii) in
the case of a sale, the Stipulated Loss Value for the Aircraft, computed as
of the Basic Rent payment date immediately preceding the date of sale, over
the net cash proceeds of such sale. The amounts specified in this paragraph
shall continue to bear interest at the Incentive Rate from the date of the
commencement of the term of the reletting or the date of sale, as the case
may be, until payment is made;
(d) If Lessor shall have obtained possession of the Aircraft as
contemplated in paragraph (a), above, but shall not have relet or sold the
Aircraft as contemplated by paragraph (c), above, Lessor shall have the right
(but without limiting any of its other rights hereunder or under law), by
written notice to Lessee specifying a payment date, to demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor, on the payment date specified in such
notice, all accrued but unpaid Basic Rent for the Aircraft due to and including
the payment date specified in such notice, plus the aggregate unpaid Basic Rent
for the Aircraft which would otherwise have accrued over the remainder of the
Term but for the Event of Default, discounted monthly to present value as of the
payment date specified in such notice at 6% per annum. The amounts referred to
in this paragraph shall continue to bear interest at the Incentive Rate from the
payment date specified in said notice until payment is made;
(e) Proceed by appropriate court action or actions to enforce performance
by Lessee of the applicable covenants of this Lease and to recover damages for
the breach hereof;
(f) Cancel this Lease, which cancellation shall be effective immediately
upon Lessor having given notice of cancellation to Lessee, whereupon Lessee's
right to possess and use the Equipment shall immediately cease, but such
cancellation shall not relieve Lessee of any of its obligations hereunder which
accrued prior to the time of cancellation nor shall such cancellation be deemed
a release or a waiver of Lessee's obligations for the unperformed balance of
this Lease or Lessee's obligation to compensate Lessor for all damages suffered
by Lessor as a result of Lessee's breach of this Lease, including, without
limitation, damages described in clauses (c), (d) or (e), above;
(g) Recover from Lessee any losses, premiums, fees, costs or expense that
are paid or incurred by Lessor in connection with the repayment of funds
obtained to finance or otherwise acquire the Aircraft, if any, or in connection
with the borrowing of funds to refinance the Aircraft, if any.
Except as otherwise specifically provided above, Lessee shall also be
liable for all unpaid Rent due hereunder before, during or after the exercise of
any of the foregoing remedies and for all legal fees and other costs and
expenses incurred by reason of the occurrence of any Event of Default or the
exercise of any of Lessor's rights or remedies with respect thereto, including
all costs and expenses incurred in connection with the repossession or return of
the Aircraft in accordance with tile terms of Article 13 hereof, in placing the
- 15-2 -
Aircraft in the condition and airworthiness as required by such Article, and
for the cost of storage, insurance, and re-leasing or sale of the Aircraft.
Except as otherwise expressly provided above, no remedy referred to in this
Article 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 of such other remedies. No express or implied
waiver by Lessor of any Event or Event of Default shall in any way be, or be
construed to be, a waiver of any future or subsequent Event or Event of Default.
To the extent permitted by applicable law, Lessee hereby waives any rights now
or hereafter conferred by statute or otherwise which may require Lessor to sell,
lease or otherwise use the Aircraft or any Engine in mitigation of Lessor's
damages as set forth in this Article or which may otherwise limit or modify any
of Lessor's rights or remedies hereunder.
- 15-3 -
ARTICLE 16. EXCUSABLE DELAY.
(a) GENERAL. Lessor shall not be responsible for nor be deemed to be in
default under this Agreement on account of any delay in delivery of the Aircraft
or other performance hereunder due to any of the following causes: acts of God;
war, warlike operations, insurrections or riots; fires; floods or explosions;
serious accidents; epidemics or quarantine restrictions; any act of government,
governmental priorities, allocation regulations or orders affecting materials,
facilities or completed aircraft; strikes or labor troubles causing cessation,
slow-down or interruption of work; delay in transportation; delay or default by
Manufacturer under the Purchase Agreement or any manufacturer or vendor in
respect of the modifications referred to in Article 2(h) hereof; or inability
after due and timely diligence to procure materials, accessories, equipment or
parts; or due to any other cause to the extent it is beyond Lessor's control or
not occasioned by Lessor's fault or negligence. Delays resulting from any of the
foregoing causes are referred to herein as "Excusable Delays." Lessor shall
promptly notify Lessee of any delay or anticipated delay in delivery of the
Aircraft.
(b) FOUR (4) MONTHS' EXCUSABLE DELAY.
(i) TERMINATION FOR ACTUAL DELAY. If, due to Excusable Delays, delivery
of the Aircraft is delayed for a period of more than four (4) months after the
end of the calendar month in which delivery is otherwise required hereunder in
accordance with the Scheduled Aircraft Delivery, either Lessor or Lessee may
terminate this Lease by giving written notice to that effect to the other within
ten (10) days after the expiration of such four month period.
(ii) TERMINATION FOR ANTICIPATED DELAY. If the Manufacturer concludes,
based on its appraisal of the facts, that due to Excusable Delays, delivery of
the Aircraft will be delayed for a period of more than four (4) months after the
Scheduled Aircraft Delivery, and as a result thereof in good faith and in
accordance with its normal scheduling procedures, Manufacturer internally
reschedules delivery of the Aircraft to a date reflecting such delay and
notifies Lessor thereof, Lessor shall notify Lessee in writing of such delay and
rescheduling, in which event either Lessor or Lessee may terminate this
Agreement by giving written notice to that effect to the other within ten (10)
days after receipt by Lessee of such notice of anticipated delay.
(c) CONSEQUENCE OF TERMINATION. Termination under Article 16(b) shall
terminate and discharge all obligations and liabilities of Lessee and Lessor
hereunder and all undelivered items and services to be furnished hereunder which
are related thereto, and Lessor shall promptly return the Security Deposit and
$100,000 payment theretofore paid by Lessee to Lessor, except that, if Lessee
and not Lessor terminates this Lease pursuant to this Article 16, Lessor shall
reduce the payment to Lessee and/or, as the case may be, be entitled to draw on
the Letter of Credit (and for this purpose an Event of Default shall be deemed
to exist hereunder so that Lessor may certify the existence of an Event of
Default hereunder) for the
- 16-1 -
amount necessary to compensate Lessor for the value of any training or other
goods or services received by Lessee in connection with this Lease and the cost
of any modifications to the Aircraft or equipment or other items purchased by
Lessor at the request of Lessee in connection with this Lease.
(d) FAILURE TO TERMINATE. If, following notice of an anticipated delay
under Article 16(b)(ii), this Lease is not terminated in accordance with the
provisions of such Article, then the Scheduled Aircraft Delivery for the
Aircraft otherwise required hereunder shall be extended by a period equal to the
resulting delay.
(e) DAMAGE TO OR DESTRUCTION OF AIRCRAFT - DELIVERY DELAY. In the event
that prior to delivery the Aircraft is, due to any cause, lost, destroyed or
damaged beyond repair (and this Agreement has not been terminated in accordance
with this Article 16), or is damaged to the extent that it cannot be repaired to
new condition by replacement parts and delivered in accordance with the
Scheduled Aircraft Delivery, the time reasonably required to furnish a
replacement for the Aircraft or to accomplish such repairs shall be deemed an
Excusable Delay.
(f) TERMINATION RIGHTS EXCLUSIVE. The termination rights of Lessee set
forth in this Article 16 are in substitution for any other rights of termination
or contract lapse which Lessee might have arising by operation of law by virtue
of delays in performance for which Lessor is not deemed to be in default or to
have breached its duties hereunder.
- 16-2 -
ARTICLE 17. MISCELLANEOUS.
(a) CONSTRUCTION AND APPLICABLE LAW. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining such provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, Lessee hereby waives any provision of law which renders any
provision hereof prohibited or unenforceable in any respect. 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 whom the
enforcement of the change, waiver, discharge or termination is sought. This
Lease shall constitute an agreement of lease, and nothing herein shall be
construed as conveying to Lessee any right, title or interest in the Aircraft or
any Engine except as a lessee only. The captions in this Lease are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof. This Lease shall in all respects be governed by, and
construed in accordance with, the internal laws of the State of California,
United States of America (without regard to any conflict of laws rule that might
result in the application of the laws of any other jurisdiction), including all
matters of construction, validity and performance.
(b) NOTICES. All notices, demands and other communications required or
permitted under the terms hereof shall be in writing (which shall include telex
and telecopy), and shall be deemed given or received: (i) if sent by registered
or certified mail, on the third Business Day after deposit in the national mail
service of the country from which it is sent, postage prepaid, return receipt
requested, (ii) if sent by any other means of physical delivery, e.g., hand
delivery or courier service, when delivered to the appropriate address provided
below, (iii) if sent by telecopier, when transmitted to the appropriate
telecopier number provided below and the sender's telecopy machine produces a
confirmation report confirming that such transmission has been sent. All such
notices, demands and other communications shall be addressed and/or telecopied
to the appropriate party at its address and/or telecopier number set forth
below, or at such other address or telecopier number as such party may from time
to time hereafter designate to such other parties in writing:
If to Lessee: Aloha Airlines, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Senior Vice President - Finance & Planning
& Chief Financial Officer
- 17-1 -
If to Lessor: Wilmington Trust Company, Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Administration
With a copy to: Ansett Worldwide Aviation, U.S.A.
c/o Kummer, Kaempfer, Xxxxxx & Xxxxxxx
0000 Xxxxxx Xxxxxx Xxxxxxx, 0xx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Chief Executive Officer
and to: Ansett Worldwide Aviation, U.S.A.
c/o Ansett Worldwide Aviation Services
TNT Plaza, Tower 0, Xxxxxx Xxxxxx
Xxxxxxx, XXX 0000, Xxxxxxxxx
Attention: Chief Executive Officer
Lessor's telefax number is (000) 000-0000, with a copy to (00-0) 0000-0000.
Lessee's telefax number is (000) 000-0000.
(c) LESSOR'S RIGHT TO PERFORM FOR LESSEE. If Lessee fails to make any
payment of Supplemental Rent required to be made by it hereunder or fails to
perform or comply with any of its agreements contained herein, Lessor may itself
make such payment or perform or comply with such agreement, and the amount of
such payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance of or compliance with such
agreement, as the case may be, together with interest thereon at the Incentive
Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand.
(d) CORPORATE EXISTENCE; MERGER. Lessee will preserve and maintain its
corporate existence and all its rights, privileges and franchises in every
jurisdiction in which the character of its property or the nature of its
business makes licensing or qualification necessary. Lessee will not or sell,
lease or otherwise dispose of all or substantially all of its properties nor
will it merge with or consolidate with or into or be acquired by any other
corporation or entity, unless:
(i) the corporation formed by such consolidation or into which Lessee
is merged (the "Successor"): (a) shall be organized and existing under the laws
of the United States of America or any State thereof or the District of
Columbia, (b) shall be a Certificated Air Carrier, (c) shall execute and
deliver to Lessor an agreement in form and substance reasonably satisfactory to
Lessor containing an assumption by the Successor of each covenant and condition
of this Lease, (d) immediately after giving effect to such transaction, shall
have at least the tangible net worth and credit worthiness that Lessee had
immediately prior to giving effect to such transaction, and (e) shall make such
filings and recordings,
- 17-2 -
including any filing or recording with the FAA, as shall be necessary or
desirable to evidence such consolidation or merger with the Successor;
(ii) Immediately prior to and after giving effect to such transaction,
no Event or Event of Default shall have occurred and be continuing, and the
ability of the Successor (or Lessee if Lessee is the Successor) to perform its
obligations under this Lease shall not be adversely affected by such
transaction; and
(iii) the Successor (or Lessee if Lessee is the Successor) shall have
delivered to Lessee an officer's certificate and an opinion of counsel
satisfactory to Lessor, each stating that such consolidation or merger and the
assumption agreement described above comply with this Article and that the
agreements entered into to effect such consolidation or merger and such
assumption agreement are legal, valid and binding obligations of the Successor
(or Lessee if Lessee is the Successor), enforceable in accordance with their
respective terms.
(e) TRAINING AND CUSTOMER SUPPORT. Pursuant to Customer Support Document to
the Purchase Agreement, a copy of which has heretofore been provided by Lessor
to Lessee, Manufacturer has agreed to provide certain training, support services
and technical data and documents. Provided no Event or Event of Default has
occurred and is continuing hereunder, Lessor agrees to assign to Lessee the
training, support services, data, documents and other rights available under
such Customer Support Document in respect of the Aircraft. Lessor shall not have
any liability or responsibility for the adequacy of such training, support
services or technical data and documents or for Manufacturer's performance or
nonperformance in respect thereof, all of which is, as to Lessor, without
recourse, representation or warranty, express or implied. Lessee hereby agrees
to be bound by all the provisions of the Customer Support Document.
(f) SUBJECT AND SUBORDINATE. THIS LEASE AND LESSEE'S RIGHTS HEREUNDER AND
IN THE AIRCRAFT ARE SUBJECT AND SUBORDINATE TO ALL THE TERMS OF THE MORTGAGE,
INCLUDING, WITHOUT LIMITATION, MORTGAGEE'S RIGHT TO TAKE IMMEDIATE POSSESSION OF
THE AIRCRAFT UPON THE OCCURRENCE OF AN EVENT OF DEFAULT UNDER THE MORTGAGE.
Without limiting the foregoing, solely as between Lessor and Lessee, Lessor
covenants that if, and so long as, no Event of Default shall have occurred and
be continuing, Lessor shall not (and Lessor shall not provide a basis for
Mortgagee or any other person lawfully claiming through Lessor or Mortgagee to)
disturb Lessee's quiet enjoyment of the Aircraft hereunder. If Lessor breaches
the foregoing covenant or if Mortgagee improperly repossesses, seizes or
attaches the Aircraft, Lessee acknowledges and agrees that Lessee's sole right
and remedy shall be the right to seek to recover resulting damages from Lessor,
but Lessee shall have no right to recover any damages from or otherwise xxx
Mortgagee in connection therewith or otherwise to retain possession or use of
the Aircraft in contravention of the rights, interests, benefits or remedies of
Mortgagee.
- 17-3 -
(g) ASSIGNMENT. THIS LEASE AND ALL OR ANY PART OF LESSEE'S RIGHTS
HEREUNDER, INCLUDING, WITHOUT LIMITATION, ITS RIGHTS IN RESPECT OF THE SECURITY
DEPOSIT AND TO THE RETURN THEREOF, SHALL NOT BE ASSIGNED, NOVATED, HYPOTHECATED
OR OTHERWISE TRANSFERRED BY LESSEE WITHOUT LESSOR'S PRIOR WRITTEN CONSENT, AND
ANY PURPORTED ASSIGNMENT, NOVATION, HYPOTHECATION OR TRANSFER SHALL BE VOID.
Subject to the foregoing, this Lease shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties hereto.
Lessor's interest in this Lease Agreement and in the Aircraft are freely
saleable, novateable and assignable by Lessor in whole or in part without
restriction, and upon such sale, novation or assignment (unless the assignment
is solely for collateral security purposes), Lessor shall be discharged from all
further obligations hereunder in respect of such interest or Equipment sold or
assigned and Lessor's assignee or transferee shall succeed to all of Lessor's
rights, interests and obligations in respect thereof as though such assignee or
transferee had been the initial owner or lessor, as the case may be, in respect
thereof. Lessor may also assign for collateral security purposes or otherwise
mortgage its fixed or contingent rights to receive money hereunder or its
interests in this Lease or in the Aircraft, in whole or in part. Lessee shall
comply with all reasonable requests of Lessor, its successors, transferees and
assigns in respect of the sale, assignment, novation, hypothecation or other
transfer (including, if requested, execution of a consent thereto, reaffirming
its representations, warranties and obligations hereunder in favor of such
assignee, successor or transferee or execution of a lease agreement on terms
substantially identical to this Lease Agreement substituting the name of such
transferee, successor or assignee for Lessor, and in either case providing the
assignee, successor or transferee with an insurance certificate and broker's
report, addressed to such assignee, successor or transferee, in compliance with
the requirements of Article 10 hereof). No such sale, assignment, novation or
other transfer by Lessor shall materially expand the obligations of Lessee
hereunder. Notwithstanding any such sale, assignment, novation or other
transfer, Lessor and the Participants shall continue to be Indemnitees pursuant
to Article 8(a) and shall continue to be named as additional insureds on all
liability policies carried by Lessee pursuant to Article 10 hereof. Without
limiting any of the foregoing, Lessor may, and at Lessor's request Lessee shall,
take any action reasonably required for the purpose of causing the Aircraft to
be subjected to an equipment trust, conditional sale, leveraged lease or other
arrangement for the financing by Lessor or Lessor's transferee or assignee of
the Aircraft.
(h) EXPENSES. The prevailing party in any action or proceeding between
Lessor and Lessee to enforce the terms of this Lease shall be entitled to
recover from the other party all its costs and expenses, including reasonable
attorneys' fees incurred by such prevailing party in such action or proceeding.
In addition, Lessee shall also reimburse Lessor for all out-of-pocket costs and
expenses, including reasonable attorneys fees, incurred by Lessor in connection
with any approvals, consents, waivers, modifications or amendments hereto
requested by Lessee.
(i) SURVIVAL. The representations, warranties and indemnities of Lessee in
this Lease shall survive the delivery of the Aircraft and the expiration or
other termination of
- 17-4 -
this Lease and are expressly made for the benefit of, and shall be enforceable
by Lessor and its successors and assigns.
(j) INTEGRATION. This Lease Agreement contains the entire agreement of the
parties hereto with respect to the subject matter hereof and supersedes all
prior written and oral agreements and understandings between the parties hereto
with respect to the subject matter hereof.
(k) FEDERAL BANKRUPTCY CODE. In accordance with Section 1110 of Title 11 of
the United States Bankruptcy Code, or any superseding statute, as amended from
time to time, Lessee hereby agrees that the title of Lessor to the Aircraft and
Engines and any right of Lessor to take possession of the Aircraft and Engines
in compliance with the provisions of this Lease shall not be affected by the
provisions of Section 105, 362, 363 or any other Section of Title 11, as amended
and in effect from time to time. In the event Section 1110 is amended, or if it
is repealed and another statute is enacted in lieu thereof, Lessor and Lessee
agree to amend this Lease and take such other action as Lessor deems necessary
so as to afford to Lessor the rights and benefits as such amended or substituted
statute confers upon owners and lessors of aircraft.
(l) COUNTERPARTS. This Lease may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(m) EXECUTION BY TELECOPY. Delivery by Lessor or Lessee to the other by
telecopy of an executed counterpart of this Lease or of any other document
executed pursuant hereto shall be deemed as effective as delivery of an
originally executed counterpart thereof. Such party shall promptly deliver to
the other party an originally executed counterpart thereof, but the failure of
such party to deliver an executed counterpart shall not affect the validity or
effectiveness of this Lease or such other document.
- 17-5 -
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease to be duly executed by their authorized officers or representatives as of
the day and year first above written.
LESSOR:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely in its
capacity as Owner Trustee
WITNESS: By: /s/ [Illegible]
___________________________________
/s/ Xxxx Xxx Xxxxxxx Title: AVP
______________________________ ________________________________
LESSEE:
ALOHA AIRLINES, INC.
WITNESS: By: /s/ X. X. Xxxxxx
______________________________________
________________________________
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
______________________________________
WITNESS: By: /s/ Xxxxx X. Xxxx
______________________________________
________________________________
Title: VICE PRESIDENT PLANNING & DEVELOPMENT
______________________________________
- 17-6 -
SCHEDULE "1"
This schedule has been omitted as confidential information, and is separately
filed with the Commission.
Exhibit "A"
LEASE SUPPLEMENT
THIS LEASE SUPPLEMENT, dated _________, 1999, between Wilmington Trust
Company, a Delaware banking corporation, acting not in its individual capacity
but solely as Owner Trustee (herein called "Lessor"), and Aloha Airlines, Inc.
(the "Lessee").
Lessor and Lessee have heretofore entered into a Lease Agreement dated as
of August 4, 1999 (herein the "Lease Agreement" and the terms defined therein
being herein used with the same meaning), which Lease Agreement provides for the
execution and delivery of a Lease Supplement, substantially in the form hereof
for the purpose of leasing a specific Aircraft under the Lease Agreement as and
when delivered by Lessor to Lessee in accordance with the terms thereof.
The Lease Agreement relates to the Airframe and Engines described below,
and a counterpart of the Lease Agreement is attached hereto and made a part
hereof and this Lease Supplement, together with such attachment, is being filed
for recordation on the date hereof with the Federal Aviation Administration as
one document.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
(1) Lessor hereby delivers and leases to Lessee, and Lessee hereby accepts
and leases from Lessor, under the Lease Agreement, the following described
Boeing Model 737-73A aircraft and engines (hereafter, the "Delivered
Equipment"):
(i) Airframe: Identification Number_____; Manufacturer's Serial
No._____; and
(ii) Engines: Two CFM International Model CFM56-7B20 engines (to be
upgraded to CFM56-7B24 engines prior to or promptly following delivery) bearing,
respectively, manufacturer's serial numbers _________ and _________ (each of
which engines has 750 or more rated takeoff horsepower or the equivalent of such
horsepower).
(2) The Delivery Date of the Delivered Equipment is the date of this Lease
Supplement set forth in the opening paragraph hereof.
(3) The Term for the Delivered Equipment shall commence on the Delivery
Date therefor and shall end on ___________ 2009.
(4) Lessee hereby confirms its agreement to pay Lessor Rent with respect to
the Delivered Equipment throughout the Term therefor in accordance with the
terms of the Lease Agreement.
- A-1 -
(5) The fuel in the fuel tanks of the Aircraft on the Delivery Date is
________.
(6) Lessee hereby confirms to Lessor that the Airframe and Engines
described above have been duly marked as showing Lessor's title thereto and
Mortgagee's mortgage interest therein in accordance with the terms of the Lease
Agreement and that Lessee has accepted the Delivered Equipment for all purposes
of the Lease Agreement, including its being airworthy, in accordance with
specifications, in good working order and repair and without defect or inherent
vice in title, condition, design, operation or fitness for use, whether or not
discoverable by Lessee as of the date hereof, and free and clear of all Liens;
provided, however, that nothing contained herein or in the Lease Agreement shall
in any way diminish or otherwise affect any right Lessee or Lessor may have with
respect to the Delivered Equipment as against Manufacturer or any other person,
whether under the Purchase Agreement or otherwise.
(7) All of the terms and provisions of this Lease Supplement are hereby
incorporated by reference into the Lease Agreement to the same extent as if
fully set forth therein.
(8) This Lease Supplement 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.
- A-2 -
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement to
be duly executed by their authorized officers or agents as of the date and year
first above written.
LESSOR:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely in its
capacity as Owner Trustee
WITNESS: By: _____________________________________
Title: __________________________________
______________________________
LESSEE:
ALOHA AIRLINES, INC.
WITNESS: By: _____________________________________
Title: __________________________________
______________________________
WITNESS: By: _____________________________________
Title: __________________________________
______________________________
- A-3 -
LEASE SUPPLEMENT
----------------
THIS LEASE SUPPLEMENT, dated November 12, 1999, between Wilmington Trust
Company, a Delaware banking corporation, acting not in its individual
capacity but solely as Owner Trustee (herein called "Lessor"), and Aloha
Airlines, Inc. (the "Lessee").
Lessor and Lessee have heretofore entered into a Lease Agreement dated
as of August 4, 1999 (herein the "Lease Agreement" and the terms defined
therein being herein used with the same meaning), which Lease Agreement
provides for the execution and delivery of a Lease Supplement, substantially
in the form hereof for the purpose of leasing a specific Aircraft under the
Lease Agreement as and when delivered by Lessor to Lessee in accordance with
the terms thereof.
The Lease Agreement relates to the Airframe and Engines described below,
and a counterpart of the Lease Agreement is attached hereto and made a part
hereof and this Lease Supplement, together with such attachment, is being
filed for recordation on the date hereof with the Federal Aviation
Administration as one document.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
(1) Lessor hereby delivers and leases to Lessee, and Lessee hereby accepts
and leases from Lessor, under the Lease Agreement, the following described
Boeing Model 737-73A aircraft and engines (hereafter, the "Delivered
Equipment"):
(i) Airframe: U.S. Registration Number N739AL; Manufacturer's Serial
No. 28500; and
(ii) Engines: Two CFM International Model CFM56-7B24 engines bearing,
respectively, manufacturer's serial numbers 875976 and 875977 (each of which
engines has 750 or more rated takeoff horsepower or the equivalent of such
horsepower).
(2) The Delivery Date of the Delivered Equipment is the date of this Lease
Supplement set forth in the opening paragraph hereof.
(3) The Term for the Delivered Equipment shall commence on the Delivery
Date therefor and shall end on November 11, 2009.
(4) Lessee hereby confirms its agreement to pay Lessor Rent with respect to
the Delivered Equipment throughout the Term therefor in accordance with the
terms of the Lease Agreement.
(5) The fuel in the fuel tanks of the Aircraft on the Delivery Date is
1,695 gallons.
(6) The Lease Agreement is amended and supplemented in the following
respects:
(i) The "Mortgage" referred to in Article 1 is more specifically
defined as the Mortgage Agreement dated October 1999 between
Lessor and Mortgagee;
(ii) The "Mortgagee" referred to in Article 1 is more specifically
defined as Citibank International Plc, and its successors,
transferees and assigns; and
(iii) Citibank International Plc and Citibank, N.A. are lenders in
connection with the Mortgage and are therefore included in the
definition of "Participants" in Article 1.
(7) Lessee hereby confirms to Lessor that the Airframe and Engines
described above have been duly marked as showing Lessor's title thereto and
Mortgagee's mortgage interest therein in accordance with the terms of the Lease
Agreement and that Lessee has accepted the Delivered Equipment for all purposes
of the Lease Agreement, including its being airworthy, in accordance with
specifications, in good working order and repair and without defect or inherent
vice in title, condition, design, operation or fitness for use, whether or not
discoverable by Lessee as of the date hereof, and free and clear of all Liens;
provided, however, that nothing contained herein or in the Lease Agreement shall
in any way diminish or otherwise affect any right Lessee or Lessor may have with
respect to the Delivered Equipment as against Manufacturer or any other person,
whether under the Purchase Agreement or otherwise.
(8) All of the terms and provisions of this Lease Supplement are hereby
incorporated by reference into the Lease Agreement to the same extent as if
fully set forth therein.
(9) This Lease Supplement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(10) This Lease Supplement 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.
- 2 -
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement to
be duly executed by their authorized officers or agents as of the date and year
first above written.
LESSOR:
WILMINGTON TRUST COMPANY, not
in its individual capacity but solely in
its capacity as Owner Trustee
WITNESS: By: /s/ Xxxxxxxx X. Xxxxx
----------------------------
/s/ [ILLEGIBLE] XXXXXXXX X. XXXXX
------------------------
Title: Financial Services Officer
----------------------------
LESSEE:
ALOHA XXXXXXXX.XXX.
WITNESS: By:
----------------------------
----------------------- Title:
----------------------------
WITNESS: By:
----------------------------
----------------------- Title:
----------------------------
- 3 -
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement to
be duly executed by their authorized officers or agents as of the date and year
first above written.
LESSOR:
WILMINGTON TRUST COMPANY, not
in its individual capacity but solely in
its capacity as Owner Trustee
WITNESS: By:
----------------------------
------------------------ Title:
----------------------------
LESSEE:
ALOHA XXXXXXXX.XXX.
WITNESS: By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------
XXXXXX X. XXXXXXXXX
Title: SR. VICE PRESIDENT FINANCE &
/s/ [ILLEGIBLE] PLANNING AND CFO
----------------------- ----------------------------
WITNESS: By: /s/ Xxxxx X. Xxxx
----------------------------
XXXXX X. XXXX
Title: VICE PRESIDENT PLANNING &
/s/ [ILLEGIBLE] DEVELOPMENT
----------------------- ----------------------------
- 3 -
(CERTIFIED COPY TO BE RETURNED)
RECORDED
Federal Aviation Administration
Date 1-24-02 Time am 9:0
-------------- ----------
Conveyance Number QQ024260
-----------------
By /s/ X. Xxxxxx
---------------------
AMENDMENT NO. 1
TO LEASE AGREEMENT
This Amendment No. 1 to Lease Agreement ("Amendment No. 1"), dated as of
November 29, 2001, is entered into by and between Wilmington Trust Company not
in its individual capacity but solely as Owner Trustee (herein called "Lessor"),
and Aloha Airlines, Inc., a Delaware corporation (herein called "Lessee").
RECITALS
A. Lessor and Lessee have heretofore entered into a Lease Agreement dated
as of August 4, 1999,* as supplemented to the date hereof (collectively referred
to as the "Lease"), pursuant to which Lessor has leased to Lessee one Boeing
Model 737-73A aircraft bearing manufacturer's serial number 28500 and United
States Registration Marks N739AL, equipped with two CFM 56-7B24 engines bearing,
respectively, manufacturer's serial numbers 875976 and 875977.
X. Xxxxxx and Lessee wish to amend certain terms of the Lease and to extend
the Term of the Lease all on the terms and conditions set forth below.
C. Capitalized terms used herein and not otherwise defined herein shall
have the meaning assigned to such terms in the Lease and reference to "Articles"
herein shall be construed to refer to Articles of the Lease.
TERMS AND CONDITIONS
Therefore, in consideration of the premises, and for good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. Article 3(a) of the Lease is hereby amended and restated in its entirety
as follows:
"(a) TERM. Except as otherwise provided herein, the Aircraft shall be
leased to Lessee hereunder for a Term that commences on the Delivery Date
and ends on November 11, 2010."
2. Schedule 1 to the Lease Agreement shall be amended in accordance with
the Amendment to Schedule 1 attached hereto.
* as more particularly described in Annex I attached hereto (the "Lease"),
3. This Amendment No. 1, when executed by Lessor and Lessee, shall become
effective as of the date first written above.
4. On and after the effective date of this Amendment No. 1, each reference
in the Lease to "the Lease", "this Lease", "hereunder", "hereof", or words of
like import referring, shall mean and be a reference to the Lease as amended by
this Amendment No. 1. The Lease, except to the extent amended by this Amendment
No. 1, remains in full force and effect and is hereby in all respects ratified
and confirmed.
5. This Amendment No. 1 may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
6. This Amendment No. 1 shall be governed by and construed in accordance
with the laws of California.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to
be duly executed by their respective authorized officers or representatives as
of the date first written above.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
By: /s/ [ILLEGIBLE]
----------------------------------------
Title: AVP
----------------------------------------
ALOHA AIRLINES, INC.
By:
----------------------------------------
Title:
----------------------------------------
By:
----------------------------------------
Title:
----------------------------------------
2
3. This Amendment No. 1, when executed by Lessor and Lessee, shall become
effective as of the date first written above.
4. On and after the effective date of this Amendment No. 1, each reference
in the Lease to "the Lease", "this Lease", "hereunder", "hereof", or words of
like import referring, shall mean and be a reference to the Lease as amended by
this Amendment No. 1. The Lease, except to the extent amended by this Amendment
No. 1, remains in full force and effect and is hereby in all respects ratified
and confirmed.
5. This Amendment No. 1 may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
6. This Amendment No. 1 shall be governed by and construed in accordance
with the laws of California.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to
be duly executed by their respective authorized officers or representatives as
of the date first written above.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
By:
----------------------------------------
Title:
----------------------------------------
ALOHA AIRLINES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------------
Title: EXECUTIVE VICE PRESIDENT & CFO
----------------------------------------
By: /s/ Xxxxx X. Xxxx
----------------------------------------
Title: SENIOR VICE PRESIDENT PLANNING
AND BUSINESS DEVELOPMENT
----------------------------------------
AMENDMENTS TO SCHEDULE "1"
[This amendment has been omitted as confidential information, and is separately
filed with the Commission.]
Annex I
to Amendment No. 1 to Lease Agreement
DESCRIPTION OF LEASE
Lease Agreement dated as of August 4, 1999 between Wilmington Trust
Company, as owner trustee under Trust Agreement No. 2 dated November 12, 1999,
as lessor, and Aloha Airlines, Inc., as lessee, which was recorded by the
Federal Aviation Administration on December 9,1999 and assigned Conveyance No.
I64454, as supplemented by the following described instrument:
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
---------- ---------- -------------- --------------
Lease Supplement 11/12/99 12/09/99 I64454
