Exhibit 10.64
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LEASE AGREEMENT
dated as of May 29, 1998
between
XXXXXX LEASE FINANCE CORPORATION,
Lessor
and
ALOHA ISLANDAIR, INC.
Lessee
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Covering One (1) de Havilland
Dash 8-103 Aircraft (Reflected on the
FAA Records as a DHC-8-102),
Manufacturer's Serial Number 357
---
U.S. Registration No. N854MA,
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Two (2) Xxxxx & Whitney
Model PW 121 Engines (Reflected on the
FAA Records as PW 120 A),
Manufacturer's Serial
Numbers 121298 and 121179
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and
Two (2) Xxxxxxxx Standard
14 SF-7 Propellers,
Manufacturer's Serial
Numbers 921018 and 921211
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THIS LEASE AGREEMENT HAS BEEN EXECUTED IN COUNTERPARTS. TO THE EXTENT THAT THIS
LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE
UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO
SECURITY INTEREST IN THIS LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OR
POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL EXECUTED COUNTERPART
CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE LESSOR ON THE SIGNATURE PAGE
THEREOF.
TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS .................................................. 1
SECTION 2. AGREEMENT TO LEASE: TERM ..................................... 8
2.01 Leasing of Aircraft .......................................... 8
2.02 Acceptance ................................................... 8
2.03 Delivery of Aircraft ......................................... 8
2.04 Term ......................................................... 8
SECTION 3. CONDITIONS PRECEDENT ......................................... 9
3.01 Conditions Precedent to Lessor's Obligations ................. 9
3.02 Conditions Precedent to Lessee's Obligations ................. 11
SECTION 4. LESSEE'S REPRESENTATIONS AND WARRANTIES ...................... 11
4.01 Due Organization, Standing etc. .............................. 11
4.02 Operative Documents .......................................... 12
4.03 No Conflict; Consent ......................................... 12
4.04 Governmental Consents ........................................ 12
4.05 No Adverse Agreements ........................................ 12
4.06 No Defaults or Violations .................................... 13
4.07 Litigation ................................................... 13
4.08 No Event of Default .......................................... 13
4.09 Financial Statements ......................................... 13
4.10 Chief Executive Office ....................................... 13
4.11 Filings Made ................................................. 13
4.12 Certificate .................................................. 14
SECTION 5. LESSOR'S REPRESENTATIONS AND WARRANTIES ...................... 14
5.01 Due Organization, Standing etc. .............................. 14
5.02 Operative Documents .......................................... 14
SECTION 6. COVENANTS OF LESSEE .......................................... 14
6.01 Air Operator's Certificate ................................... 14
6.02 Financial and Other Information to be Supplied ............... 15
6.03 Existence .................................................... 15
6.04 Inspection Rights; Records ................................... 16
6.05 Payment of Taxes and Claims .................................. 16
6.06 Notice of Litigation ......................................... 16
6.07 Merger ....................................................... 17
6.08 Chief Executive Office ....................................... 17
6.09 Certificate .................................................. 17
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SECTION 7. PAYMENTS ..................................................... 17
7.01 Rent ......................................................... 17
7.02 Net Lease; No Set-Off or Deductions .......................... 18
7.03 Immediately Available Funds .................................. 18
7.04 Supplemental Rent; Overdue Rent .............................. 18
7.05 Reserved ..................................................... 19
7.06 Gross Up ..................................................... 19
SECTION 8. LIMITATION OF LESSOR'S LIABILITY ............................. 19
SECTION 9. USE OPERATION AND MAINTENANCE ................................ 19
9.01 General ...................................................... 19
9.02 Operation and Use ............................................ 20
9.03 Maintenance in General ....................................... 20
9.04 Specific Items of Maintenance ................................ 21
9.05 Parts ........................................................ 21
9.06 Airworthiness Directives ..................................... 22
9.07 Service Bulletins: Nondiscrimination ......................... 23
9.08 Corrosion Control ............................................ 23
9.09 Modifications ................................................ 23
9.10 Possession; Subleasing; Equipment Substitution ............... 24
9.11 Repairs ...................................................... 25
9.12 Aircraft Records ............................................. 25
9.13 Warranties ................................................... 26
9.14 Right to Inspect ............................................. 26
9.16 Reporting .................................................... 26
SECTION 10. RETURN OF AIRCRAFT ........................................... 27
10.01 Return ....................................................... 27
10.02 Condition of Aircraft ........................................ 27
10.03 Boroscope Inspection ......................................... 27
10.04 Historical Records; Trend Monitoring Data .................... 27
10.05 Inspection ................................................... 27
10.06 Operational Ground Check ..................................... 28
10.07 Operational Check Flight ..................................... 28
10.08 Acceptance ................................................... 29
10.09 Deferred Discrepancy Correction .............................. 29
10.10 Flight Cost .................................................. 29
10.11 Indemnification .............................................. 29
10.12 Insurance .................................................... 29
10.13 Manuals and Technical Records ................................ 30
10.14 Service Bulletin Kits ........................................ 30
10.15 Lessee's Special Exterior Markings ........................... 30
10.16 Ownership .................................................... 31
10.17 Storage Upon Return .......................................... 31
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SECTION 11. TITLE; REGISTRATION; LIENS ................................... 31
11.01 Title ........................................................ 31
11.02 Registration; Filings; Registration .......................... 31
11.03 Liens ........................................................ 32
11.04 Notice of Ownership .......................................... 32
SECTION 12. INSURANCE .................................................... 32
12.01 All Risk Insurance ........................................... 33
12.02 War Risk Insurance ........................................... 33
12.03 Liability Insurance .......................................... 33
12.04 Deductibles and Self Insurance ............................... 34
12.05 Additional Requirements; Loss Payment ........................ 34
12.06 No Set-Off ................................................... 35
12.07 Notice of Material Alteration or Cancellation ................ 35
12.08 Application of Certain Insurance Proceeds .................... 35
12.09 Insurance for Own Account .................................... 35
12.10 Certificates and Reports ..................................... 36
SECTION 13. LOSS, DAMAGE OR REQUISITION .................................. 36
13.01 An Event of Loss of Airframe ................................. 36
13.02 Engine or Propeller Loss ..................................... 37
13.03 Payments from Governmental Authorities for Requisition of
Title or Use ................................................. 38
13.04 Application of Payments During Existence of Event of Default . 38
SECTION 14. EVENT OF DEFAULT ............................................. 39
14.01 Failure to Make Payments ..................................... 39
14.02 Failure to Obtain or Maintain Insurance ...................... 39
14.03 Failure to Perform Other Obligations ......................... 39
14.04 Representations and Warranties Untrue ........................ 39
14.05 Insolvency or Bankruptcy ..................................... 39
14.06 Loss of Registration or Protection ........................... 40
14.07 Loss of License .............................................. 40
14.08 Other Lease .................................................. 40
14.09 Final Judgment ............................................... 40
14.10 Other Default ................................................ 40
14.11 Contest ...................................................... 40
14.12 Failure to Maintain Letter of Credit ......................... 40
14.13 .............................................................. 41
SECTION 15. REMEDIES ..................................................... 41
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SECTION 16. INDEMNITIES AND EXPENSES ..................................... 43
16.01 General Indemnification and Waiver of Certain Claims ......... 43
16.02 General Tax Indemnity ........................................ 44
16.03 After-Tax Basis; Survival .................................... 49
16.04 Expenses ..................................................... 50
SECTION 17. QUIET ENJOYMENT .............................................. 50
SECTION 18. ASSIGNMENT ................................................... 50
SECTION 19. NOTICES ...................................................... 51
SECTION 20. LESSOR'S RIGHT TO PERFORM FOR LESSEE ......................... 51
SECTION 21. LEASE; SECTION 1110 .......................................... 52
21.01 Lease ........................................................ 52
21.02 Section 1110 ................................................. 52
SECTION 22. MISCELLANEOUS ................................................ 52
22.01 Waivers, Headings ............................................ 52
22.02 Counterparts ................................................. 52
22.03 Governing Law ................................................ 52
22.04 Benefit and Binding Effect ................................... 53
22.05 Further Assurances ........................................... 53
22.06 Service of Process; Waiver of Jury Trial and Immunity ........ 53
22.07 Usury Laws ................................................... 54
22.08 Entire Agreement ............................................. 54
Exhibit A Description of Aircraft
Schedule 1 to Exhibit A - Delivery Conditions
Exhibit B Rent and Other Financial Matters
Schedule 1 to Exhibit B - Letter of Credit
Exhibit C Acceptance Certificate
Schedule 1 to Exhibit C - List Additional Items
Schedule 2 to Exhibit C - Discrepancies
Schedule 3 to Exhibit C - Time, Flight Hours, Cycles
Exhibit D Schedule of Manuals and Technical Records
Exhibit E Return Acceptance Certificate
Exhibit F General Return Conditions of the Aircraft
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LEASE AGREEMENT
THIS LEASE AGREEMENT, dated as of May 29 ,1998 ("Lease"), is between XXXXXX
LEASE FINANCE CORPORATION ("Lessor"), a California corporation having its
principal place of business at 000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxxxxx 00000 and ALOHA ISLANDAIR, INC. ("Lessee"), a Delaware corporation
having its principal place of business at 00 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxx
00000.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Lessor is purchasing the Aircraft from the Seller;
WHEREAS, Lessee desires to lease the Aircraft from Lessor, and Lessor
desires to lease the Aircraft to Lessee, pursuant to the terms and conditions of
this Lease;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
SECTION 1. DEFINITIONS
The following terms shall have the following respective meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined). All definitions of documents shall refer to such documents as
they may now or hereafter be amended or supplemented. All definitions of parties
hereto shall include the successors and permitted assigns of such parties.
"ACCEPTANCE CERTIFICATE" means a certificate in substantially the form of
Exhibit C, to be signed by Lessee on the Delivery Date as required under Section
2.02 hereof.
"AERONAUTICAL AUTHORITY" means as of any time of determination, the FAA or
other governmental airworthiness authority having jurisdiction over the Aircraft
under the laws of the country in which the Aircraft is then registered.
"AFFILIATE" with respect to a specified Person, means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For the purposes of this definition, "control"
when used with respect to any specified Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
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"AIRCRAFT" means (A) the Airframe and Engines and Propellers (or any engine
or propeller substituted for any of said Engines or Propellers pursuant to
Section 13.02 of this Lease), whether or not any of such Engines or Propellers
or engines or propellers may from time to time be installed on such Airframe or
may be installed on any other airframe or on any other aircraft; and (B) where
the context permits, the Manuals and Technical Records.
"AIRCRAFT SALE AGREEMENT" means the Aircraft Sale Agreement dated as of the
date hereof between Seller and Lessor.
"AIRFRAME" means (i) the aircraft (except the Engines or engines and
Propellers or propellers from time to time installed thereon) identified and
described in Exhibit A hereto and (ii) any and all Parts so long as the same
shall be incorporated or installed in or attached to the Airframe, or so long as
title thereto shall remain vested in Lessor in accordance with the terms of
Section 9.05 of this Lease, after removal from the Airframe.
"AIR OPERATOR'S CERTIFICATE" means, the certificate, license or permit
required by the Aeronautical Authority or any other governmental authority
having jurisdiction required for the Lessee to carry passengers in common
carriage as it then does in its operations.
"AIRWORTHINESS DIRECTIVE(S)" has the meaning given in Section 9.06 hereof.
"APPLICABLE LAW" means all applicable laws, treaties, judgments, decrees,
injunctions, writs and orders of any court, governmental agency or authority and
rules, regulations, orders, directives, licenses and permits of any governmental
body, instrumentality, agency or authority and all interpretations,
implementation and enforcement of any of the foregoing, whether or not
enforceable as a matter of law, by any court, government body, instrumentality,
agency or authority.
"BASIC RENT" means the rent payable throughout the Term for the Aircraft
pursuant to Section 7.01 of the Lease in the amount and as set forth in Exhibit
B hereto.
"BUSINESS DAY(S)" means any day other than a Saturday, a Sunday or a day on
which banks are permitted or required to close in San Francisco, California or
Honolulu, Hawaii.
"CERTIFICATE OF AIRWORTHINESS" means, at any time that the FAA is the
Aeronautical Authority, a Standard Certificate of Airworthiness issued by the
FAA and, at any time that the FAA is not the Aeronautical Authority, any
analogous certificate, document or approval required by the Aeronautical
Authority for operation of the Aircraft in the manner that it will be operated
by Lessee.
"CERTIFICATED AIR CARRIER" means any U.S. air carrier holding an air
carrier operating certificate issued by the Secretary of Transportation pursuant
to Chapter 447 of
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Title 49 of the United States Code.
"CYCLE" means one takeoff and landing of an aircraft.
"DEFAULT" means any event or condition which, with the lapse of time or the
giving of notice or both, would constitute an Event of Default.
"DELIVERY DATE" means the date on which the Acceptance Certificate is
delivered by the Lessee pursuant to Section 2.02 hereof.
"DOLLARS" or "dollars" or the symbol "$" means dollars in lawful currency
of the United States of America.
"ENGINE" means: (i) any or all of the engines identified and described in
Exhibit A, whether or not from time to time installed on the Airframe or
installed on any other airframe; (ii) any engine that may from time to time be
substituted, pursuant to Section 9.10 or 13.02 of this Lease, for such Engine
and any and all Parts incorporated or installed in or attached thereto or any
and all Parts removed therefrom so long as title thereto shall remain vested in
Lessor in accordance with the terms of Section 9.05 of this Lease after removal
from such Engine. Each such engine is 750 or more rated takeoff horsepower or
the equivalent thereof.
"EVENT OF DEFAULT" has the meaning given in Section 14 hereof.
"EVENT OF LOSS" with respect to the Aircraft, Airframe or any Engine or
Propeller means any of the following events with respect to such property: (i)
loss of such property or the use thereof due to theft or disappearance for more
than 30 days; (ii) loss of such property or the use thereof due to destruction,
damage beyond repair or rendition of such property permanently unfit for normal
use; (iii) any event which should or does result in the receipt of insurance
proceeds with respect to such property on the basis of a total loss, arranged
total loss or constructive total loss; (iv)(A) the taking, confiscation or
seizure of title to the Aircraft or Airframe or (B) the condemnation, taking,
confiscation or seizure of the use of the Aircraft or Airframe for a period in
excess of 30 days by any government or agency or instrumentality thereof; or
(v) with respect to any Engine or Propeller, the taking of title or requisition
for use by any government and any divestiture of title deemed an Event of Loss
pursuant to Section 9.10 of this Lease. An Event of Loss with respect to the
Aircraft shall be deemed to occur if an Event of Loss occurs with respect to the
Airframe.
"FAA" means the United States Federal Aviation Administration, the
Administrator thereof and any agency or instrumentality of the United States
government succeeding to their functions.
"FLIGHT HOUR" means (i) with respect to the Airframe, any hour, including
calculating by aggregating fractions of an hour, occurring on any flight,
measured from the time the wheels of the Airframe leave the ground until the
wheels next touch the ground,
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or (ii) with respect to any Engine or Propeller, any hour, including calculating
by aggregating fractions of an hour, occurring on any flight, measured from the
time the wheels of any airframe, including the Airframe, on which such Engine or
Propeller is installed leave the ground until the wheels next touch the ground.
"GUARANTOR" means Aloha Airgroup, Inc., a Hawaii corporation.
"GUARANTY" means the Guaranty, dated the date hereof, from the Guarantor in
favor of the Lessor.
"IMPOSITIONS" has the meaning given in Section 16.02 hereto.
"INDEMNITEE" means the Lessor, its Affiliates, any permitted assignee of
the Lessor (whether such assignment is for security or other reasons and, if
such assignment is to an owner trustee, agent, indenture trustee or other Person
acting in a fiduciary or similar capacity for other Persons, such other Persons
shall also be Indemnitees), and each agent, director, employee, representative
and successor thereof.
"INSURED PARTY" means the Lessor, its Affiliates, any permitted assignee of
the Lessor (whether such assignment is for security or other reasons and, if
such assignment is to an owner trustee, agent, indenture trustee or other Person
acting in a fiduciary or similar capacity for other Persons, such other Persons
shall also be Insured Parties) and any successor thereof.
"LEASE" has the meaning given in the Introductory Statement hereof and
includes all Exhibits and Schedules hereto.
"LESSEE" means the Lessee (as defined in the Introductory Statement hereof)
and its successors and permitted assigns.
"LESSOR" means the Lessor (as defined in the Introductory Statement hereof)
and its successors and permitted assigns.
"LESSOR'S LIENS" means any Lien arising as a result of (i) claims against
Lessor or its Affiliates not related to the transactions contemplated by the
Lease, (ii) any act or omission of Lessor or its Affiliates which is not related
to the transactions contemplated by the Lease or is in violation of any of the
terms of the Lease, (iii) claims against Lessor or its Affiliates with respect
to Taxes against which Lessee is not required to indemnify Lessor, (iv) claims
against the Aircraft arising out of events occurring prior to the commencement
of the Term or after the expiration or termination of the Term and the
redelivery of the Aircraft in accordance with this Lease and (v) claims against
the Lessor or its Affiliates for any acts or omissions of Lessor or its
Affiliates related to the transactions contemplated by this Lease; provided that
the same are not the direct or indirect result of any Default or Event of
Default hereunder and provided that the same are not covered by the Lessee's
indemnity obligations hereunder.
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"LETTER OF CREDIT" has the meaning given in Exhibit B hereto.
"LIEN" means any mortgage, pledge, lien, charge or encumbrance, lease,
financing statement, claim, exercise of rights or security interest.
"MAINTENANCE PROGRAM" has the meaning given in Section 9.03 hereof.
"MANUALS AND TECHNICAL RECORDS" means all such manuals, technical data, log
books and other records pertaining to the Aircraft (including, without
limitation, the technical manuals and aircraft records listed in Exhibit D
hereto) to be maintained by Lessee or as shall be required to comply with the
requirements of the Aeronautical Authority from time to time in force. All such
manuals, technical data, log books and other records shall be maintained in
English or with English translations.
"MANUFACTURER" means, with respect to the Airframe, de Havilland, with
respect to the Engines, Xxxxx & Whitney Canada, and, with respect to the
Propellers, Xxxxxxxx Standard.
"MODIFICATIONS" means Optional Modifications and Required Modifications.
"OFFICER'S CERTIFICATE" means as to any company a certificate signed by a
duly authorized officer of the company.
"OPERATIVE DOCUMENTS" means this Lease, the Acceptance Certificate and the
Guaranty.
"OPTIONAL MODIFICATIONS" has the meaning given in Section 9.09(b) hereof.
"OTHER LEASE" means the Lease Agreement, dated as of March 26, 1998,
between the Lessor and Lessee with respect to the Other Aircraft.
"OTHER AIRCRAFT" means that certain de Havilland Dash 8-103 aircraft,
manufacturer's serial number 353, as further identified in the Other Lease.
"OVERDUE RATE" has the meaning given in Exhibit B hereto.
"PARTS" means all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
Engines or engines or Propellers or propellers) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or
Propeller or so long as tide thereto shall remain vested in Lessor in accordance
with Section 9.05 after removal therefrom.
"PERMITTED LIENS" means (i) Lessor's Liens; (ii) the respective rights of
Lessor and Lessee as provided herein; (iii) the rights of others under
agreements or arrangements to the extent expressly permitted in Section 9.10
hereof, (iv) Liens for
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Taxes either not yet due or being contested in good faith (and for the payment
of which adequate reserves have been provided) by appropriate proceedings
conducted in due diligence, so long as such proceedings do not involve any
material danger of the sale, forfeiture or loss of the Airframe or any Engine or
Propeller; (v) material suppliers', mechanics', workers', repairers', employees'
or other like liens arising in the ordinary course of business and for amounts
the payment of which is either not yet delinquent or is being contested in good
faith (and for the payment of which adequate reserves have been provided) by
appropriate proceedings conducted in due diligence, so long as such proceedings
do not involve any material danger of the sale, forfeiture or loss of the
Airframe or any Engine or Propeller; and (vi) Liens arising out of judgments or
awards against Lessee with respect to which at the time an appeal or proceeding
for review is being prosecuted in good faith (and for the payment of which
adequate reserves have been provided) and there shall have been secured a stay
of execution pending such appeal or proceeding for review.
"PERSON" means any natural person, corporation, partnership, joint venture,
firm, association, trust, unincorporated organization, government or
governmental agency or political subdivision or any other entity, whether acting
in an individual, fiduciary or other capacity.
"PROPELLER" means (i) any or all of the propellers identified and
described in Exhibit A, whether or not from time to time installed on an Engine
or any other engine; (ii) any propeller that may from time to time be
substituted, pursuant to Section 9.10 or 13.02 of this Lease, for such
Propeller, and (iii) any and all Parts incorporated or installed in or attached
thereto or any and all Parts removed therefrom so long as such title thereto
shall remain vested in Lessor in accordance with the terms of Section 9.05 of
this Lease after removal from such propeller. Each such propeller is capable of
absorbing 750 or more rated takeoff shaft horsepower or the equivalent thereof.
"REGISTRY" means, at any time that the FAA is the Aeronautical Authority,
the FAA and, at any time that the FAA is not the Aeronautical Authority, the
registry maintained in the country of registration of the Aircraft during the
Term to register and record ownership of and other interests in aircraft.
"RENT" means Basic Rent and Supplemental Rent.
"RENT PAYMENT DATE" means each day on which an installment of Basic Rent is
due throughout the Term as set forth in Exhibit B hereto.
"REPLACEMENT ENGINE" means an engine of the same or an improved model (and
manufactured by the same manufacturer) as an Engine being replaced pursuant to
Section 13.02 hereof, which is suitable for installation and use on the Airframe
without materially impairing the value or utility of the Airframe and having a
time and Cycle status, modification status, value, condition and utility at
least equal to the Engine it is replacing (assuming such Engine was in the time
status, modification status, condition and repair required by the terms hereof
immediately prior to being replaced).
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"REPLACEMENT PROPELLER" means a propeller of the same or an improved model
(and manufactured by the same manufacturer) as a Propeller being replaced
pursuant to Section 13.02 hereof, which is suitable for installation and use on
an Engine and the Airframe and having a time and Cycle status, modification
status, value, condition and utility at least equal to the Propeller that it is
replacing (assuming such Propeller was in the time and Cycle status,
modification status, value, condition and repair required by the terms hereof
immediately prior to being replaced).
"REQUIRED MODIFICATION" has the meaning given in Section 9.09(a) hereof.
"RETURN LOCATION" has the meaning given in Section 10.01 hereof.
"SELLER" means de Havilland Corporation.
"SERVICE BULLETINS" means service bulletins issued by the Manufacturer or
any other manufacturer or vendor setting forth Alert and other service
procedures applicable to the Aircraft or any Engine or Propeller.
"STANDARD CERTIFICATE OF AIRWORTHINESS" means the certificate of
airworthiness issued by the Aeronautical Authority.
"STIPULATED LOSS VALUE" has the meaning given in Exhibit B hereto.
"SUPPLEMENTAL RENT" means all monetary amounts, liabilities and obligations
(other than Basic Rent) that Lessee assumes or agrees to pay or requires any
other person to pay under any Operative Documents to Lessor or others,
including, without limitation, indemnity payments, requisition proceeds and
Stipulated Loss Value.
"TAX" means all license, documentation and registration fees and all taxes,
levies, imposts, duties, charges, assessments or withholdings of any nature
whatsoever together with any penalties, additions to tax, fines or interest
thereon, (including, without limitation, income, gross receipts, rental,
turnover, occupation, sales, use, excise, value added, personal property
(tangible and intangible) and other taxes imposed by any federal, state or local
or governmental taxing authority in the United States or any foreign government
or taxing authority.
"TERM" has the meaning given in Exhibit B hereto.
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SECTION 2. AGREEMENT TO LEASE: TERM
2.01 LEASING OF AIRCRAFT.
Subject to the terms and conditions hereof and to the purchase of the
Aircraft by Lessor pursuant to the Aircraft Sale Agreement, Lessor agrees to
lease the Aircraft to Lessee hereunder on the Delivery Date, such leasing to be
evidenced by Lessee executing and delivering the Acceptance Certificate
hereunder, and (to the extent that it has not already done so) executing and
delivering all documents or certificates and taking such other actions as are
required by Lessor to be executed and delivered or taken on or before the
Delivery Date pursuant to the terms of any Operative Document.
2.02 ACCEPTANCE.
Subject to the terms and conditions hereof and of the other Operative
Documents to which Lessee or Guarantor is a party, Lessee hereby agrees to lease
the Aircraft from Lessor hereunder on the Delivery Date, and (to the extent that
it has not already done so) taking the following action:
(a) Execute and deliver to Lessor the Acceptance Certificate; and
(b) Execute and deliver all other documents and certificates, and take all
other actions as are required to be executed and delivered or taken by Lessee on
or before the Delivery Date pursuant to the terms of any Operative Document to
which Lessee or Guarantor is a party.
2.03 DELIVERY OF AIRCRAFT.
The Aircraft shall be delivered for purposes of this Lease at Wichita,
Kansas, or at a mutually agreed location, which shall be in a jurisdiction that
is intended to avoid any sales, use, transfer and other similar taxes payable
upon the purchase and lease of the Aircraft. The Lessee shall be obligated to
accept delivery of the Aircraft pursuant to this Lease, at the time and place
and in the condition, AS IS, WHERE IS, that the Lessor shall be obligated to
take delivery of the Aircraft pursuant to the Aircraft Sale Agreement; provided,
that the Aircraft satisfies the Delivery Conditions set forth in Schedule I to
Exhibit A hereto, in which connection, the execution and delivery of the
Acceptance Certificate shall, as between Lessor and Lessee, constitute
conclusive evidence that the Aircraft satisfies such conditions without
prejudice, however, to any claim Lessor or Lessee may have against Seller or any
Manufacturer.
2.04 TERM.
Except as otherwise provided herein, the Aircraft shall be leased for the
Term, which shall commence on the Delivery Date.
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SECTION 3. CONDITIONS PRECEDENT.
3.01 CONDITIONS PRECEDENT TO LESSOR'S OBLIGATOINS.
The Lessor's obligation to Lease the Aircraft to Lessee hereunder is
subject to the prior satisfaction, as determined by Lessor, of the following
conditions precedent, including the determination by Lessor that each document,
certificate, opinion or other writing referred to below is in form and substance
satisfactory to Lessor:
(a) Lessor shall have purchased the Aircraft pursuant to the Aircraft Sale
Agreement and each condition precedent therein to Lessor's obligation to
purchase the Aircraft shall have been satisfied.
(b) the Letter of Credit shall have been established and delivered to
Lessor.
(c) Lessor shall have received the following:
(i) the Chattel Paper counterpart of the Lease, duly executed by Lessee;
(ii) the Acceptance Certificate, duly executed by Lessee;
(iii) original copies of the other Operative Documents, each duly executed
by each of the parties thereto;
(iv) evidence that the Lessor has been duly registered with the FAA as
owner of the Aircraft, or that application for such registration has been duly
filed;
(v) evidence that the Lease and FAA Xxxx of Sale have been duly filed for
cecordation with the FAA;
(vi) evidence that "precautionary" or other financing statements or other
instruments covering the Lease and Aircraft have been duly filed in a form
acceptable to Lessor under the Uniform Commercial Code or other applicable law
of all jurisdictions in which Lessor reasonably deems it necessary or desirable
in order to perfect and protect its interest in the Aircraft;
(vii) copies of the resolutions of the boards of directors of Lessee and of
the Guarantor approving the execution, delivery and performance by the Lessee
and the Guarantor of the Lease and other Operative Documents to which either is
a party, certified by the Lessee's and Guarantor's secretaries, together with
such other evidence of corporate action as Lessor shall reasonably request;
(viii) certificates of the Lessee's and Guarantor's secretaries
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certifying as to the incumbency and signatures of the persons authorized to
execute and deliver the Lease and other Operative Documents;
(ix) copies, certified by the Lessee's and Guarantor's secretaries, of
Lessee's and Guarantor's charter documents and bylaws;
(x) a certificate signed by an officer of Lessee to the effect that no
default or event which, with notice or the lapse of time, or both, would
constitute a default has occurred and is continuing or will exist under any of
the Operative Documents to which Lessee or Guarantor is a party upon delivery of
the Aircraft to the Lessee hereunder and that the representations and warranties
of Lessee in this Agreement are true and correct with the same force and effect
as if made on and as of the Delivery Date;
(xi) certificates of corporate good standing for Lessee and Guarantor;
(xii) an insurance report of an independent insurance broker and
certificates of insurance as to Lessee's due compliance with the terms of
Section 8 of this Lease;
(xiii) opinions from Xxxx Xxxxxxxx Ishii Lum & Ching, counsel for Lessee
and Guarantor, addressed to Lessor and covering such matters incident to the
transactions hereto as Lessor may reasonably request;
(xiv) an opinion of McAfee & Xxxx, special FAA counsel, addressed to Lessor
and covering such matters incident to the transactions hereto as Lessor may
reasonably request;
(xv) a letter from CT Corporation Systems accepting appointment as Lessee's
and Guarantor's agent for service of process in California;
(xvi) a copy of Lessee's Air Operator Certificate; and
(xvii) a copy of the Summary of Lessees Aeronautical Authority approved
Maintenance Program.
(d) No material adverse change in Lessee's or Guarantor's financial or
operational condition or its ability to meet its obligations under the Operative
Documents shall have occurred, as determined by Lessor, since September 30,
1997.
(e) No change shall have occurred in Applicable Law after the date of this
Agreement that in the opinion of Lessor would make it illegal or inadvisable to
consummate the transactions contemplated hereunder.
(f) Lessor shall have received the first Basic Rent payment and the
Security Deposit.
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(g) Lessee shall have paid the fees and expenses of Lessor's FAA counsel as
to which invoices have been presented to Lessee and any other expenses payable
by Lessee pursuant to this Lease as to which invoices have been presented to
Lessee, which invoices are then due and owing.
(h) Lessee and Guarantor shall have taken such other actions, or delivered
such other documents, as may be reasonably requested by Lessor in connection
with the transactions contemplated herein.
3.02 CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS.
The Lessee's obligations to Lessor hereunder are subject to the prior
satisfaction of the following conditions precedent:
(a) Lessee shall have received copies of the following:
(i) original copies of the Operative Documents, each duly executed by the
parties thereto;
(ii) copies of the resolutions of the Board of Directors of Lessor
approving the execution, delivery and performance by the Lessor of this Lease
and any other Operative Documents to which the Lessor is a party, certified by
the Lessors secretary, together with such other evidence of corporate action as
Lessee may reasonably request; and
(iii) a certificate of the Lessor's Secretary certifying as to the
incumbency and signatures of the persons authorized to execute and deliver the
Lease and any other Operative Documents to which the Lessor is a party.
SECTION 4. LESSEE'S REPRESENTATIONS AND WARRANTIES.
Lessee represents and warrants to Lessor on the date hereof and on the
Delivery Date as follows:
4.01 DUE ORGANIZATION, STANDING ETC.
Each of Lessee and Guarantor is a corporation duly organized and validly
existing in good standing under the laws of its jurisdiction of incorporation
and has the power and authority to enter into and to perform its obligations
under the Operative Documents to which either is a party. Each of Lessee and
Guarantor is duly qualified and in good standing in all of the jurisdictions in
which the character of the properties owned or leased by it or the business
conducted by it makes such qualification necessary and the failure to so qualify
would adversely effect Lessee's or Guarantor's ability to perform its
obligations under the Operative Documents to which it is a party.
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4.02 OPERATIVE DOCUMENTS.
The Operative Documents to which each is a party have been duly authorized,
executed and delivered by Lessee and Guarantor, and, assuming due authorization,
execution and delivery by the other parties thereto, are legal, valid and
binding agreements of Lessee and Guarantor, enforceable in accordance with their
respective terms.
4.03 NO CONFLICT; CONSENT.
The execution and delivery by Lessee and Guarantor of the Operative
Documents to which either is a party are not, and the performance by Lessee and
Guarantor of their respective obligations under each will not be, inconsistent
with its charter or bylaws or other organizational documents, do not and will
not contravene any law, governmental rule or regulation, judgment or order
applicable to it, and do not and will not contravene the provisions of, or
constitute a default or result in the creation of any Lien upon any property of
Lessee or Guarantor under any indenture, mortgage, contract, agreement or other
instrument to which either is a party or by which either is bound or require the
consent or approval of, the giving of notice to, the registration with or the
taking of any action in respect of or under any federal, state or local
governmental authority or agency in the United States or any foreign country,
except such as has been obtained, given or accomplished.
4.04 GOVERNMENTAL CONSENTS.
Neither the execution and delivery of any of the Operative Documents to
which Lessee or Guarantor is a party nor performance of any of the transactions
contemplated thereby by either Lessee or Guarantor, or, to the knowledge of
Lessee, Lessor, requires the consent or approval of, the giving of notice to,
the registration with, or the taking of any other action with respect to the
Aeronautical Authority or any other governmental authority or agency, including
any judicial body, in the United States or any other country, except for the
filings for recording and registration with the Registry referred to in Section
3.01(c)(iv) and (v) hereof and the other filings and consents referred to in
Section 3.01 (c)(vi) and (xvi) hereof.
4.05 NO ADVERSE AGREEMENTS.
Neither Lessee nor Guarantor is a party to any agreement or instrument or
subject to any charter or any corporate restriction which, if performed in
accordance with its terms, would materially and adversely affect Lessee's or
Guarantors financial condition, business or operations or the ability of Lessee
or Guarantor to perform its obligations under any of the Operative Documents to
which it is a party.
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4.06 NO DEFAULTS OR VIOLATIONS.
Neither Lessee nor Guarantor is in default under any mortgage, deed of
trust, indenture or other instrument or agreement to which it is a party or by
which it or any of its properties or assets may be bound, or in violation of any
Applicable Law, which default or violation would have a material adverse effect
on the financial condition, business or operations of Lessee or Guarantor or its
ability to perform any of its obligations under any of the Operative Documents
to which it is a party.
4.07 LITIGATION.
Except as the Lessee has otherwise disclosed to the Lessor in writing on or
before the date hereof there are no pending or threatened actions, proceedings
or investigations (or any basis therefore known to Lessee) that would either
individually or in the aggregate materially and adversely affect the financial
condition, business or operations of Lessee or Guarantor or the ability of
Lessee or Guarantor to perform its obligations under any of the Operative
Documents to which it is a party.
4.08 NO EVENT OF DEFAULT.
No event exists attributable to Lessee's or Guarantors acts or omissions
Which, upon delivery and leasing of the Aircraft hereunder, would be an Event of
Default or Default.
4.09 FINANCIAL STATEMENTS.
The consolidated audited financial statements of the Guarantor and its
Affiliates delivered to Lessor, each prepared in accordance with generally
accepted accounting principles and practices, fairly present the financial
position of the Guarantor and its Affiliates as of the dates covered thereby.
Since the date of such financials there has been no material adverse change in
the overall financial condition business or operations of the Guarantor and its
Affiliates.
4.10 CHIEF EXECUTIVE OFFICE.
The chief executive office of Lessee and its records with respect to the
Aircraft are located at 00 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxx, 00000.
4.11 FILINGS MADE.
Except for the filing and recording of the Lease with the Registry, the
"precautionary" UCC Financing Statement in Hawaii and Delaware and the filings
referred to in the opinion required by Section 3.01(c)(xiv) hereof, no further
action (including filing any financing statement in respect thereof under the
Uniform Commercial Code of any
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applicable jurisdiction) is necessary in order to establish and perfect
Lessor's interest in the Aircraft and Lease in any jurisdiction in the United
States or elsewhere.
4.12 CERTIFICATE.
Lessee holds an air carrier operating certificate issued by the U.S.
Secretary of Transportation pursuant to Chapter 447 of Title 49 of the United
States Code.
SECTION 5. LESSOR'S REPRESENTATIONS AND WARRANTIES.
Lessor represents and warrants to Lessee on the date hereof and on the
Delivery Date as follows:
5.01 DUE ORGANIZATION, STANDING ETC.
Lessor is a corporation duly organized and validly existing in good
standing under the laws of its jurisdiction of incorporation and has the power
and authority to enter into and to perform its obligations under the Operative
Documents to which it is a party. Lessor is duly qualified and in good standing
in all of the jurisdictions in which the character of the properties owned or
leased by it or the business conducted by it makes such qualification necessary
and the failure to so qualify would adversely effect Lessor's ability to perform
its obligations under the Operative Documents to which it is a party.
5.02 OPERATIVE DOCUMENTS.
The Operative Documents to which Lessor is a party have been duly
authorized, executed and delivered by Lessor, and, assuming due authorization,
execution and delivery by the other parties thereto, are legal, valid and
binding agreements of Lessor, enforceable in accordance with their respective
terms.
SECTION 6. COVENANTS OF LESSEE.
From the Delivery Date and until the return of the Aircraft pursuant to
Section 10 hereof, Lessee covenants to Lessor that Lessee shall:
6.01 AIR OPERATOR'S CERTIFICATE.
Maintain its Air Operator's Certificate and any other required licenses and
permits from the Aeronautical Authority and any other governmental authority
having jurisdiction required to enable Lessee to carry passengers in common
carriage.
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6.02 FINANCIAL AND OTHER INFORMATION TO BE SUPPLIED.
Furnish to Lessor:
(a) as soon as possible and in any event within 10 days after the
occurrence of an Event of Default, an Officer's Certificate setting forth in
detail the nature of such Event of Default and the action which Lessee proposes
to take with respect thereto;
(b) as soon as available, and in any event within 60 days after the end of
each of the first three fiscal quarters in each fiscal year of Guarantor,
consolidated balance sheets of Guarantor and its Affiliates as of the end of
such quarter and related statements of income and shareholders' equity and
changes in financial condition of Guarantor and its Affiliates for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding period in such other preceding fiscal year, all in
reasonable detail and duly certified (subject to year-end audit adjustments) by
a financial officer of Guarantor as having been prepared in accordance with
generally accepted accounting principles and practices, together with detailed
information regarding any Event of Default as may have occurred in the relevant
period and the action taken or proposed to be taken with respect thereto;
(c) as soon as available, and in any event within 90 days after the end of
each fiscal year of Guarantor, a copy of the annual report for such year for
Guarantor and the affiliated group of which Guarantor is a member on a
consolidated basis, including therein consolidated balance sheets of Guarantor
as of the end of such fiscal year and related statement of income, shareholders'
equity and changes in financial condition of Guarantor and its Affiliates for
such fiscal year, in comparative form with the preceding fiscal year, in each
case certified by independent certified public accountants of national standing
as having been prepared in accordance with generally accepted accounting
principles and practices consistently applied (except as noted therein; PROVIDED
that any changes in accounting principle or practices must be disclosed, by such
accountants), together with detailed information regarding any Event of Default
as may have occurred in the relevant period and the action taken or proposed to
be taken with respect thereto;
(d) from time to time, such other information relating to its financial,
operational or business affairs or conditions as Lessor may reasonably request
by written notice including, but not limited to, correspondence with any
Manufacturer and with Lessee's insurance carrers or brokers.
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6.03 EXISTENCE.
At all times maintain its corporate existence and do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
rights, powers, privileges and franchises except for any corporate right, power,
privilege or franchise that it determines is no longer necessary or desirable in
the conduct of its business as a common carrier for the commercial transport of
passengers and the loss of which will not materially adversely affect or
diminish the rights of Lessor under the Operative Documents.
6.04 INSPECTION RIGHTS; RECORDS.
(a) Permit any duly authorized representative or designee of Lessor (which
may be a manufacturer's representative, an outside consultant or representative
of Lessor or of a lender secured by the Aircraft) to inspect the Aircraft, to
examine Lessee's technical books and Aircraft records, to take memoranda and
extracts therefrom and to make copies thereof, and to discuss the affairs,
finances and accounts of Lessee. Such inspections shall be at Lessor's expense
unless an Event of Default exists, in which case inspections shall be at
Lessee's expense. Unless an Event of Default exists, such inspections may only
take place at any reasonable time. Lessee shall notify Lessor in writing when
"C" and "D" Checks, if Lessee shall no longer be utilizing the de Havilland
Equalized Maintenance Program, are scheduled to take place and if Lessee shall
be utilizing the de Havilland Equalized Maintenance Program, when structural
inspections required by the Maintenance Program and not included in the de
Havilland Equalized Maintenance Program are scheduled to take place and if
Lessor advises Lessee in writing that it or its designee will be inspecting
during such check, the parties will use reasonable efforts to coordinate
regarding the exact time and place thereof. Lessee shall also provide Lessor,
quarterly, with scheduling information regarding the performance of the various
segments of the de Havilland Equalized Maintenance Program required to be
performed or performed during each such quarter and if Lessor advises Lessee in
writing that it or its designee will be inspecting during ring such segments,
the parties will use reasonable efforts to coordinate regarding the exact time
and place thereof.
(b) Maintain or cause to be maintained at all times records adequate to
identify the Aircraft and to disclose its location, use and maintenance.
6.05 PAYMENT OF TAXES AND CLAIMS.
Pay when due all Lessee's Taxes, assessments and other liabilities except
as contested in good faith and by appropriate proceedings, provided that
adequate reserves have been established with respect thereto to the extent
required by generally accepted accounting principles as established in the
United States.
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6.06 NOTICE OF LITIGATION.
Give prompt written notice to Lessor of any litigation or governmental
proceeding pending or, to its knowledge, overtly threatened against Lessee or
Guarantor which, if determined adversely to Lessee, might materially adversely
affect the financial condition of Lessee or adversely affect the ability of
Lessee or Guarantor to perform its obligations under the Operative Agreements to
which either is a party.
6.07 MERGER.
Not, without prior written consent of Lessor, merge into or with any
Person, or be acquired by any Person, or sell or agree to sell all or
substantially all of its assets (whether directly or through a series of
transactions) unless (a) the successor to Lessee or purchaser in such
transaction enters into an agreement acceptable to Lessor to assume all
obligations of Lessee under the Operative Documents unless such successor or
purchaser succeeds to such obligations by operation of law and provides an
opinion of counsel acceptable to Lessor with respect thereto in form and
substance acceptable to Lessor and (b) such transaction shall not give rise to a
Default or Event of Defauft; provided, however, the written consent of Lessor
shall not be required if such successor or purchaser shall be an Affiliate of
Guarantor of which Guarantor is the owner of all of the outstanding capital
stock or other ownership interests and the consolidated net worth of the
Guarantor and its Affiliates after giving effect to such transaction shall be
equal to or greater than such net worth immediately prior to giving effect to
such transaction.
6.08 CHIEF EXECUTIVE OFFICE.
Lessee shall provide Lessor with not less than 30 days prior written notice
of any change in its chief executive office or office where records pertaining
to the Aircraft are kept, if moved, to any place or location outside of the
State of Hawaii and will file such financing statements or other filings as may
be reasonably requested by Lessor with respect to such change.
6.09 CERTIFICATE.
Lessee shall maintain the certificate described in Section 4.12.
SECTION 7. PAYMENTS
7.01 RENT.
During the Term, Lessee shall pay Basic Rent as follows:
(a) BASIC RENT. On each Rent Payment Date during the Term, Lessee shall pay
to Lessor Basic Rent with respect to the Aircraft in the amount and as provided
in Exhibit B hereto.
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(b) REPORTS. At least quarterly during the Term and on the 10th day of the
first calendar month following termination of the Term, Lessee shall deliver to
Lessor internally generated reports setting forth the number of Flight Hours and
Cycles flown by the Airframe and each Engine during the preceding calendar
quarter.
7.02 NET LEASE: NO SET-OFF OR DEDUCTIONS.
This Lease is a net lease, and Lessee acknowledges and agrees that Lessee's
obligation to pay all Rent and the rights of Lessor in and to such Rent shall be
ABSOLUTE AND UNCONDITIONAL UNDER ALL CIRCUMSTANCES and shall not be subject to
any abatement, reduction, set-off, defense, counterclaim or recoupment
("ABATEMENTS") for any reason whatsoever, including without limitation,
Abatements due to any present or future claims of Lessee against Lessor under
this Lease or otherwise or against the Seller, and Manufacturer or against any
other Person for whatever reason. Except as otherwise expressly provided herein,
this Lease shall not terminate for any cause, nor shall the obligations of
Lessee be affected, by reason of any invalidity of title or any defect in the
title, condition, design, merchantability or fitness for use of, or operation of
the Aircraft or any Engine or Propeller or Part thereof as a result of damage
to, or any loss, or destruction of the Aircraft or any Engine or Propeller or
any Part thereof from whatsoever cause, or the interference with the use thereof
by Lessor or any Person, the invalidity or unenforceability of this Lease or any
other Operative Document, the insolvency, bankruptcy or reorganization of any
Person, or for any other cause, whether similar or dissimilar to the foregoing,
any present or future law or regulation to the contrary notwithstanding. Lessee
hereby waives, to the extent permitted by Applicable Law, any and all rights
which it may now or hereafter have, by statute or otherwise, to terminate,
cancel, quit or surrender the Lease and the leasing thereunder of the Aircraft,
it being the express intention of Lessor and Lessee that all Rent payable by
Lessee hereunder shall be, and continue to be, payable in all events unless the
obligation to pay the same shall be terminated pursuant to the express
provisions of this Lease. Notwithstanding the foregoing, Lessee shall retain
separate rights of action with respect to any present or future claims against
Lessor under this Lease.
7.03 IMMEDIATELY AVAILABLE FUNDS.
All Rent shall be paid by wire transfer in immediately available funds by
1:00 p.m. San Francisco, California time on the day in question to the Lessor at
the account listed on Exhibit B hereto or at such other account as shall be
designated in writing by Lessor to Lessee. Funds not received by such time on
such day shall be deemed to have been received on the next Business Day. If any
Rent is due on a day which is not a Business Day, it shall be due on the next
succeeding Business Day. All payments hereunder shall be in United States
Dollars.
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7.04 SUPPLEMENTAL RENT; OVERDUE RENT.
Lessee also agrees to pay to Lessor or to whomsoever shall
be entitled thereto any and all Supplemental Rent when the same shall become
due and owing, and in the event of any failure on the part of Lessee to pay any
Supplemental Rent, Lessor shall have all rights, powers and remedies provided
for herein or by law or equity in the case of nonpayment of Basic Rent. Without
limitation of the foregoing, Lessee shall pay interest at the Overdue Rate on
any payment of Rent not paid when due hereunder for the period in which such
Rent remains overdue and not paid.
7.05 RESERVED.
7.06 GROSS UP.
All Rent shall be paid free and clear of, and without
deduction for, any taxes, levies, imposts, charges, duties, fees or
withholdings of any nature whatsoever now or hereafter imposed by or within any
governmental authority or pursuant to any governmental rule or regulation or
any administrative subdivision or taxing authority thereof or therein,
respectively, unless Lessee is compelled by law to deduct or withhold such
taxes, levies, imposts, charges, duties or fees, in which event Lessee shall
pay such additional amounts as shall result in the effective receipt by Lessor
of the Rent due to Lessor or any other Person had no such deduction or
withholding been made.
SECTION 8. LIMITATION OF LESSOR'S LIABILITY
LESSOR LEASES THE AIRCRAFT HEREUNDER "AS-IS", "WHERE-IS" AND
LESSOR HAS NOT MADE, AND SHALL NOT BE DEEMED TO HAVE MADE ANY REPRESENTATION OR
WARRANTY, EXPRESSED OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, CONDITION,
DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE OR PARTICULAR PURPOSE OF
THE AIRCRAFT, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT,
OR AS TO ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE AIRCRAFT, INCLUDING, WITHOUT LIMITATION, ANY LIABILITY IN
TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT LIABILITY, ANY
IMPLIED WARRANTY FROM COURSE OF PERFORMANCE OR DEALING OR USAGE OR TRADE, OR
LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR OTHER CONSEQUENTIAL
DAMAGES, except that on the Delivery Date, Lessor (a) warrants that the
Aircraft shall be free of Lessor's Liens and (b) agrees that it will not
directly or indirectly create, incur, assume or suffer to exist any Lessor's
Lien on or with respect to the Airframe or any Engine or Propeller.
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SECTION 9. USE OPERATION AND MAINTENANCE
9.01 GENERAL.
Lessee, at its own cost and expense shall (i) service,
repair, maintain and overhaul or cause the same to be done to the Airframe and
each Engine and Propeller under the Maintenance Program in the same manner and
with the same care as used by Lessee with similar aircraft and engines and
propellers operated by Lessee and so as to keep the Airframe and each Engine
and Propeller in as good operating condition as when delivered to the Lessee
hereunder, ordinary wear and tear excepted, and (ii) maintain the Manuals and
Technical Records in the English language in accordance with the Maintenance
Program.
9.02 0PERATION AND USE.
(a) Lessee agrees not to operate or locate the Airframe or
any Engine or Propeller, or suffer the Airframe or any Engine or Propeller to
be operated or located by any other Person, in any area (i) excluded from
coverage by any insurance policy required to be maintained hereunder with
respect to the Airframe or Engines or Propellers or (ii) in any recognized or
threatened area of hostilities. Lessee agrees not to operate the Airframe or
any Engine or Propeller, or suffer the Airframe or any Engine or Propeller to
be operated by any other Person (1) unless the Airframe and Engine and
Propeller are covered by insurance as required by the provisions of Section 12
hereof or (2) contrary to the terms of such insurance as required by the
provisions of Section 12 hereof.
(b) Lessee agrees not to (i) operate the Airframe or any
Engine or Propeller except in a passenger configuration, in commercial
operations for which Lessee is duly authorized by the Aeronautical Authority or
(ii) use the Aircraft for a purpose for which the Aircraft is not designed or
reasonably suitable. Lessee will not maintain, use or operate the Aircraft in
violation of any Applicable Law, or contrary to any manufacturer's operating
manuals or instructions.
9.03 MAINTENANCE IN GENERAL.
Lessee agrees that until the Aircraft is redelivered to
Lessor pursuant to Section 10, it has the sole obligation to, and shall
maintain and repair or to cause to be maintained and repaired the Airframe and
the Engines and Propellers under Lessee's Aeronautical Authority approved
maintenance program as in effect on the Delivery Date as the same may be
amended from time to time in accordance with the second sentence of this
paragraph with respect to the Airframe and the Engines and Propellers (the
"Maintenance Program") and so as to keep them in as good a condition as on the
Delivery Date, ordinary wear and tear excepted. If any material changes
(including without limitation, time limit changes) shall be made to such
Maintenance Program, including without limitation, any change from the de
Havilland Equalized Maintenance Program, Lessee shall give Lessor not less than
30 days' advance written notice thereof
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and no such changes shall be implemented until approved by the Aeronautical
Authority. Included within the obligation of maintenance and repair is the
obligation and affirmative undertaking by Lessee to replace or cause to be
replaced from time to time all unserviceable or defective Parts, to the extent
required to cause the Aircraft to be in an airworthy condition in all respects,
and covered by a valid Certificate of Airworthiness at all times.
9.04 SPECIFIC ITEMS OF MAINTENANCE.
Lessee agrees that maintenance and repairs shall include,
but shall not be limited to, the following specific items:
(a) to perform or have performed in accordance with the
Maintenance Program all routine maintenance work, including on-line maintenance
on the Aircraft, and to ensure that all such maintenance shall be in accordance
with the regulations and directives of the Aeronautical Authority. Lessee shall
cause all maintenance and repairs to be performed at repair facilities approved
by the Aeronautical Authority;
(b) to maintain or cause to be maintained all Aircraft
documentation, including, without limitation, the Manuals and Technical
Records, in compliance with Aeronautical Authority regulations and in
up-to-date status (if necessary, through manufacturers' revision service) and
to make these available for review by Lessor on reasonable notice at Lessee's
principal maintenance base;
(c) if required by Aeronautical Authority regulations, to
notify the Manufacturer promptly (with a copy to Lessor) of any modifications
or configuration changes to the Airframe which would have a material effect on
or be a material change to the type design and/or the manuals relating to the
Airframe (such as flight, operations and maintenance); and
(d) on Lessor's request to furnish Lessor promptly with
copies of any written communications with manufacturers with respect to
material defects or malfunctions of the Aircraft.
9.05 PARTS.
(a) Lessee, at its own cost and expense, will promptly
replace all Parts that may from time to time become unserviceable, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use for any reason whatsoever. In addition, in the ordinary
course of maintenance, service, repair, overhaul or testing, Lessee may remove
any Parts, whether or not unserviceable, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered unfit for use,
provided that Lessee shall replace such Parts as promptly as practicable with
replacement parts. All replacement parts shall be made by the same manufacturer
and shall be of the same or an improved model number and modification status or
substitutes (whether or not the same manufacturer is involved) approved by the
Aeronautical
21
Authority and normally used by Lessee, shall be free and clear of all Liens
except Permitted Liens and shall be in as good operating condition as, and
shall have a value, utility and a remaining useful life at least equal to that
of the Parts replaced assuming such replaced Parts were in the condition and
repair required to be maintained by the terms hereof.
(b) Except as provided in Section 9.05(d), all Parts at any
time removed from the Airframe or any Engine or Propeller shall remain the
property of Lessor and subject to this Lease, no matter where located, until
such time as such Parts shall be replaced by parts that have been incorporated
or installed in or attached to such Airframe or Engine or Propeller and that
meet the requirements for replacement Parts specified in clause (a) of this
Section 9.05. Immediately upon any replacement part becoming incorporated or
installed in or attached to such Airframe or Engine or Propeller as provided in
clause (a) hereof, without further act, (i) title to such replacement part
shall thereupon vest in Lessor and it shall become a Part for all purposes
hereof to the same extent as the Part originally incorporated or installed in
or attached to such Airframe or Engine or Propeller; and (ii) title to the
replaced Part shall thereupon vest in Lessee, free and clear of all rights of
Lessor and free and clear of Lessor Liens (other than Lessor Liens arising out
of events occurring after the transfer which are not attributable to actions of
the Lessor or omissions by the Lessor of actions which the Lessor is legally
obligated to take) and such replaced Part shall no longer be deemed a Part
hereunder.
(c) Title to all parts incorporated or installed in or
attached or added to the Airframe or any Engine or Propeller as the result of
any alteration, modification or addition effected by Lessee shall, without
further act, vest in Lessor and become subject to this Lease and such part
shall be deemed to be a Part for all purposes hereof.
(d) Lessee may remove Parts which Lessee determines in its
reasonable judgment to be obsolete or no longer suitable or appropriate for use
by Lessee on the Airframe or any Engine or Propeller ("Obsolete Parts"),
provided that (i) such removal is being applied by Lessee on a fleet-wide basis
and does not discriminate against the Aircraft and (ii) removal of any such
Part shall not diminish the fair market value, utility or remaining useful life
of the Airframe or such Engine or Propeller, or materially impair the condition
or impair the airworthiness thereof, below the fair market value, utility,
condition, airworthiness or remaining useful life thereof immediately prior to
such removal assuming the Airframe or such Engine or Propeller was then of the
fair market value and utility and in the condition and airworthiness required
to be maintained by the terms of this Lease.
9.06 AIRWORTHINESS DIRECTIVES.
(a) Lessee agrees to carry out or cause to be carried out in
accordance with the requirements thereof on the Aircraft any airworthiness
directive or any other mandatory regulation or directive ("Airworthiness
Directive") which the Aeronautical Authority from time to time may issue and
which becomes due during the Term or if later prior to return of the Aircraft
to the Lessor pursuant to Section 10. All Airworthiness Directives shall be
timely accomplished in accordance with all applicable bulletins and
22
manuals published by the Manufacturer of the Airframe or Engines or Propellers
or Parts or data approved by the Aeronautical Authority to the extent the same
are incorporated in or by reference into the Airworthiness Directive.
(b) Title to any parts installed on the Aircraft pursuant to
an Airworthiness Directive issued after the Delivery Date shall vest in Lessor
free and clear of any Liens except Permitted Liens and such parts shall be
deemed to be Parts for all purposes hereof.
(c) Lessee shall pay the cost of complying with all
Airworthiness Directives.
9.07 SERVICE BULLETINS: NONDISCRIMINATION.
Lessee agrees, at its sole cost and expense to incorporate
Service Bulletins into the Aircraft which Lessee has accomplished on 30% of
its Aircraft fleet during the Term of this Lease. It is not the intent of the
parties that the Aircraft shall be discriminated from the rest of the Lessee's
Aircraft fleet in Service Bulletin compliance or other maintenance, provided,
however, the foregoing shall not be interpreted to expand Lessee's obligations
beyond the express requirements of Section 10 and Exhibit "F".
9.08 CORROSION CONTROL.
Lessee shall carry out such work as may be required for the
control of corrosion, including without limitation, periodic inspections by
penetration of fuel tanks, periodic inspection and clean-up under galleys,
forward and aft cargo pit areas and lavatories, periodic treatment of all mild
corrosion and correcting of all moderate and severe or exfoliation corrosion in
accordance with the Maintenance Program.
9.09 MODIFICATIONS.
(a) Lessee, at its own expense, shall make such alterations
and modifications in and additions to the Airframe or any Engine or Propeller
as may be required to be made from time to time by Applicable Law during the
Term regardless upon whom such requirements are, by their terms, nominally
imposed ("Required Modifications").
(b) Lessee shall not, without Lessor's prior written
consent, make any major modifications, alterations or additions (collectively,
"Optional Modifications") to the Aircraft, other than Required Modifications,
including, without limitation, Optional Modifications which will result in
changes to the Aircraft structure or performance, or which could adversely
affect spare parts, interchangeability or irreplaceability.
(c) NOTWITHSTANDING ANY OTHER PROVISION OF THIS LEASE, NO
OPTIONAL MODIFICATION SHALL BE MADE WHICH HAS THE EFFECT OF DECREASING THE
UTILITY, VALUE OR REMAINING USEFUL LIFE OF THE
23
AIRCRAFT OR ADVERSELY AFFECTING ITS AIRWORTHINESS OR USE FOR TRANSPORTING
PASSENGERS OR CARGO IN COMMERCIAL SERVICE.
(d) All Modifications shall be accomplished at Lessee's
expense and only by a Person approved by the FAA. Lessee shall provide copies
of all drawings and data to be used by Lessee in accomplishing such Optional
Modifications for Lessor's consent prior to such work.
9.10 POSSESSION; SUBLEASING; EQUIPMENT SUBSTITUTION.
Lessee shall not sublease the Aircraft or otherwise in any
manner deliver, relinquish or transfer possession of the Airframe or any Engine
or Propeller to any Person or install any Engine, or permit any Engine to be
installed, on any airframe other than the Airframe or install any Propeller, or
permit any Propeller to be installed, on any engine other than an Engine or
permit any other Person to do any of the foregoing during the Term, without the
prior written consent of Lessor, provided, however, that so long as Lessee
shall comply with the provisions of Section 12 hereof, Lessee, without the
prior written consent of Lessor (except as specified below) may:
(a) deliver possession of the Airframe or an Engine or
Propeller to the Manufacturer thereof for testing or other similar purposes or
to any qualified organization for service, repair, maintenance or overhaul work
on such Airframe or such Engine or Propeller or for alterations or
modifications in or additions to such Airframe or such Engine or Propeller, to
the extent required or permitted by the terms of this Lease;
(b) with the prior consent of Lessor, subject any Engine or
Propeller to normal interchange or pooling agreements or arrangements, entered
into with any Certificated Air Carrier consented to in advance of such
arrangement in writing by the Lessor (a "Permitted Air Carrier"), provided that
(i) no such agreement or arrangement contemplates or requires the transfer of
title to such Engine or Propeller, and (ii) if Lessor's title to any Engine or
Propeller shall be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with respect to such Engine
or Propeller and Lessee shall comply with Section 13 hereof in respect of such
Engine or Propeller;
(c) install an Engine on an airframe owned by Lessee free
and clear of all Liens, except (i) Permitted Liens, and (ii) those which apply
only to the engines (other than Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment (other than Parts)
installed on such airframe (but not to the airframe as an entirety), and (iii)
those created by the rights of other Permitted Air Carriers under normal
interchange or pooling agreements or arrangements customary in the airline
industry which do not contemplate, permit or require the transfer of title to
such engines installed thereon; or
(d) install an Engine on an airframe leased to Lessee or
owned by Lessee subject to a conditional sale or other security agreement,
provided that (i) such
24
airframe is free and clear of all Liens except (A) the rights of the parties to
the lease, conditional sale or other security agreement and (B) Liens of the
type permitted by clause (c) above, and (ii) such lease, conditional sale or
other security agreement effectively provides that such Engine shall not become
subject to the Lien of such lease, conditional sale or other security
agreement, notwithstanding the installation thereof on such airframe in which
particular connection, a provision contained in such lease, conditional sale or
other security agreement substantially to the effect of clause (e) of this
Section 9.10 shall be deemed to so effectively provide;
PROVIDED that the rights of a transferee who receives possession by reason of a
transfer permitted by this Section 9.10 shall be subject and subordinate to all
the terms of this Lease and the rights of the Lessor hereunder to repossess
such property and any such arrangement shall expressly state it is so
subordinate or contain a provision substantially to the effect of clause (e) of
this Section 9.10, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
transfer had not occurred.
(e) The Lessor agrees, for the benefit of the Lessee and any
mortgagee or holder of any other security interest in any engine (other than an
Engine) or propeller (other than a Propeller) owned by the Lessee, any lessor
of any engine (other than an Engine) or propeller (other than a Propeller)
leased to the Lessee and any conditional vendor of any engine (other than an
Engine) or propeller (other than a Propeller) purchased by the Lessee subject
to a conditional sale agreement or any other security agreement, that no right,
title to or interest in any such engine or propeller shall be exercised or
asserted by the Lessor and the Lessor acknowledges and confirms that it will
not acquire any right, title or interest to or in any such engine or propeller
as a result of its installation on the Airframe.
9.11 REPAIRS.
Any repair to the Aircraft accomplished prior to return of
the Aircraft to Lessor pursuant to Section 10 hereof shall be accomplished
where applicable pursuant to the appropriate Manufacturer's repair manual
instructions (if any) and the Maintenance Program. All such repairs, inclusive
of corrosion control repairs, are to be documented and mapped identifying the
location, dimensions and repair procedure.
9.12 AIRCRAFT RECORDS.
All records maintained by Lessee prior to return of the
Aircraft pursuant to Section 10 hereof relating to the location, service,
inspection, maintenance, modification, repair and overhaul of the Airframe,
Engines and Parts installed therein, will at all times be maintained in
accordance with all applicable requirements of the Aeronautical Authority and
any other governmental authority having jurisdiction with respect thereto and
shall be kept current, up to date, in English, accurate and complete.
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9.13 WARRANTIES.
Lessor agrees that during the Term, so long as no Default or
Event of Default has occurred and is continuing, Lessee shall have the right to
enforce all manufacturer and vendor warranties with respect to the Aircraft,
provided, however, that (i) all such rights shall immediately revert to the
Lessor upon expiration of the Term or upon the occurrence and continuance of a
Default or Event of Default, (ii) Lessee shall not attempt to enforce any such
warranties by legal proceedings without Lessor's approval and (iii) Lessee
shall indemnify Lessor and each other Indemnitee against any Impositions with
respect to any warranties or enforcement of warranties pursuant to Section
16.01 hereof and (iv) Lessor makes no warranties or representations whatever to
Lessee as to the existence or enforceability of any such warranties. Lessee
agrees that it shall maintain the Aircraft in such a manner so as not to
knowingly void any available warranties.
9.14 AIRPORT CHARGES.
Lessee shall as the same become due, pay and discharge, or
procure the payment and discharge of any and all charges, fees, taxes, imposts
and levies of whatsoever nature which are incurred by Lessee or Lessee's
sublessees in the course of the operation of the Aircraft under this Lease or
of any other aircraft under the management or control of Lessee or Lessee's
sublessees, including without limitation all charges, of airport authorities
(whether relating to landing fees, parking fees, handling charges or
otherwise), all charges imposed by air navigation authorities whatsoever and
all charges of aviation authorities whether relating to navigation or otherwise
and will upon written request therefore by Lessor supply evidence of payment of
any such charges.
9.15 RIGHT TO INSPECT.
The Lessor or its designee(s) shall have the right, but not
the obligation, after ten (10) Business Days written notice to the Lessee,
periodically to inspect the Aircraft, Technical Records and Manuals, for
condition and compliance with this Lease. Except as otherwise provided in
Section 6.04, such inspections shall be at the cost of the Lessor.
9.16 REPORTING.
Lessee agrees to provide to the Lessor no less frequently
than quarterly such operational data as may be requested by the Lessor to
maintain a record of the Aircraft maintenance and parts status including the
Engines, Propellers and landing gear.
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SECTION 10. RETURN OF AIRCRAFT
10.01 RETURN.
At the end of the Term or upon termination of this Lease
pursuant to Section 15 hereof, Lessee, at Lessee's expense, shall return the
Aircraft to Lessor at an airport located in the western continental United
States selected by Lessor (the "Return Location"). The Aircraft at the time of
its return shall be free and clear of all Liens other than Lessor's Liens. At
the time of return of the Aircraft to Lessor, Lessor shall execute a return
acceptance certificate (the "Return Acceptance Certificate") in the form
attached hereto as Exhibit E.
10.02 CONDITION OF AIRCRAFT.
The Aircraft at the time of its return to Lessor shall have
been maintained and repaired in accordance with the Maintenance Program and
this Lease, and shall meet the requirements set forth, in Exhibit F hereof.
10.03 BOROSCOPE INSPECTION.
A boroscope inspection shall be performed by Lessor at
Lessee's expense at the time of the Aircrafts return to Lessor and Lessee shall
provide evidence satisfactory to Lessor reflecting the correction of any
discrepancies found during such inspection and determined not to have been in
compliance with the Maintenance Program.
10.04 HISTORICAL RECORDS: TREND MONITORING DATA.
If the Engine historical and maintenance records or trend
monitoring data indicate a rate of acceleration in performance deterioration of
any Engine which is outside of the parameters permitted by the Xxxxx & Xxxxxxx
maintenance manual, Lessee shall, prior to the Aircraft's return, correct or
cause to be corrected such conditions which are determined to have caused such
increased deterioration, such correction to be made in compliance with the
Xxxxx & Whitney maintenance manual.
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10.05 INSPECTION.
(a) During the last twelve (12) months of the Term, Lessor,
from time to time, may wish to make the Aircraft available for inspection to
designated representatives or technical teams evaluating the Aircraft for use
after the Term. Lessor agrees to give Lessee not less than 10 Business Days'
advance written notice of such inspection and Lessee agrees to cooperate fully
with Lessor's requests in making the Aircraft and the Manuals and Technical
Records available to such authorized technical teams and Lessor agrees that
such requests will be reasonable and will be coordinated with Lessee so as to
minimize disturbance to Lessee's operations and its personnel, provided,
however, the parties agree that such inspections shall be scheduled in such
manner that scheduled flights shall not be delayed or cancelled.
(b) The Aircraft (including the Manuals and Technical
Records to be returned therewith as set forth in this Section 10 and Exhibit F)
shall be made available to Lessor or its designee for ground inspection by
Lessor or its designee at Lessee's facilities or where the heavy maintenance
check or its equivalent, if required by Exhibit F hereto, is being performed,
while such heavy maintenance check or its equivalent is being performed. Lessee
shall remove the Aircraft from scheduled service and open the areas of the
Aircraft as required by the Maintenance Program for such heavy maintenance
check, and shall allow Lessor or its designee to accomplish its inspection in
order to determine that the Aircraft (including the Manuals and Technical
Records) is in the condition required by the provisions of this Section 10 and
Exhibit F hereto. Lessee shall promptly correct any discrepancies from the
condition required by the provisions of this Section 10 and Exhibit F hereto
which are observed during such inspection.
10.06 OPERATIONAL GROUND CHECK.
Promptly after completion of any corrections required under
Section 10.05(b) above, Lessee shall conduct an operational ground check in
accordance with the requirements of the Maintenance Program and shall correct
any discrepancies disclosed by such check.
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10.07 OPERATIONAL CHECK FLIGHT.
Promptly after completion of all corrections required under
Section 10.05 and 10.06 above, the Aircraft shall be check flown by Lessee at
Lessee's risk and expense, using qualified flight personnel, for not more than
two (2) hours on a noncommercial flight, for the purpose of demonstrating to
Lessor the satisfactory operation of the Aircraft and its equipment and
systems. If no major discrepancy is found, the Aircraft may proceed to the
Return Location. Lessor's representatives may participate in such flight as
observers. Lessee's pilot shall be in command of the Aircraft. Such flight
shall be flown using de Havilland's operational check flight procedures
sufficient to demonstrate the proper operation of all systems for normal
passenger use. Upon completion of such operational check flight, the
representatives of Lessee and Lessor participating in such flight shall agree
in writing upon any discrepancies in such Aircraft required to be corrected by
Lessee in order to comply with the provisions of this Section 10 and Exhibit F
hereto and Lessee shall promptly correct or cause to be corrected at Lessee's
expense any such discrepancies. If any of the discrepancies referred to in
Sections 10.05 and 10.06 or 10.07 continue to persist, Lessor may (but shall
not be obligated to) accept delivery of the Aircraft and apply the procedure
set forth in Section 10.9 for such discrepancies.
10.08 ACCEPTANCE.
Unless otherwise mutually agreed, the operational check
flight shall take place at the location in the United States where the final
maintenance to put the Aircraft into the required return condition is being
performed ("Maintenance Location"). Upon completion of the operational check
flight or after Lessee has corrected the discrepancies as required to comply
with this Section, the Aircraft shall be technically accepted at the
Maintenance Location and be ferried by Lessee at its risk and expense,
including accumulation of Basic Rent, to the Return Location. To the extent
possible, the operational check flight will be combined with the ferry flight
to the Return Location. Lessee shall remedy or correct any defects or
deficiencies that may be discovered during such flight.
10.09 DEFERRED DISCREPANCY CORRECTION,.
Any discrepancies found during the ground inspection,
operational ground check and operational check flight set forth in Sections
10.05, 10.06 and 10.07 above, which were not corrected by Lessee prior to
return of Aircraft to Lessor, may be corrected by Lessor or its designee after
return of the Aircraft and Lessee shall reimburse Lessor for all reasonable
direct costs and expenses paid by Lessor or its designee for accomplishing such
discrepancy corrections. Lessee shall pay Lessor or its designee for all such
costs and expenses incurred within 10 days of the date of receipt of an invoice
therefor.
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10.10 FLIGHT COST.
All flights pursuant to Section 10.07 and 10.08 shall be
made at Lessee's expense and Lessee shall pay for any and all reasonable costs
associated with such flights including, but not limited to, costs for crew,
oil, airport fees, insurance, takeoff/landing fees, airway communication fees,
ground handling fees and customs duties, if any. All obligations and risks with
respect to the Aircraft under this Lease or otherwise shall be Lessor's from
and after technical acceptance by Lessor under Section 10.08, except as
otherwise expressly provided herein.
10.11 INDEMNIFICATION.
Section 16 hereof shall apply to all activity pursuant to
this Section 10 and shall cover Lessor's representatives with regard to the
return of the Aircraft.
10.12 INSURANCE.
To the extent not covered by the existing insurance
certificates, with respect to Lessee's aviation liability insurance, Lessee
shall (i) cause Lessor to be named as an additional insured under Lessee's
aviation liability insurance policies to the extent of Lessee's undertaking set
forth in Section 10.11 and (ii) shall furnish to Lessor not later than 7
Business Days prior to the start of Lessor's ground inspection of the Aircraft
certificates from Lessee's aviation liability insurance carriers in a form
reasonably satisfactory to Lessor stating the limits and terms of Lessee's
liability insurance coverage, and showing that Lessor has been named as an
additional insured and specifically referring to Section 10.11. With respect
to Lessee's hull insurance, Lessee shall (i) cause Lessee's hull and war risk
insurance carriers to waive all rights of subrogation against Lessor and Lender
to the extent of Lessee's undertaking set forth in Section 10.11 and (ii)
shall furnish to Lessor, not later than 7 Business Days prior to the start of
Lessor's ground inspection on the Aircraft, certificates from Lessee's hull and
war risk insurance carriers, in a form acceptable to Lessor (such approval not
to be unreasonably withheld), stating that such carriers have so waived all
rights of subrogation against Lessor and specifically referring to Section
10.11.
10.13 MANUALS AND TECHNICAL RECORDS.
(a) Lessee shall return to Lessor, at the time the Aircraft
is returned to Lessor, all of the Manuals and Technical Records and other data
previously provided to Lessee at delivery as described in Exhibit D hereto, as
updated and maintained by Lessee through the date of return of the Aircraft
subject to retention time limits of the Aeronautical Authority. In addition,
Lessee shall also provide Lessor at the time the Aircraft is returned to
Lessor, all records, documents, manuals, authorizations, drawings and data in
English which were developed or caused to be developed by Lessee or required by
the Aeronautical Authority, updated and maintained by Lessee for the Aircraft
and through the date of return of the Aircraft in an accurate and correct
condition.
30
(b) All Manuals and Technical Records which have been
supplied by Lessor to Lessee shall be returned in accordance with United States
FAA F.A.R. 91.417 and 121.380.
10.14 SERVICE BULLETIN KITS.
All vendors' and manufacturers' Service Bulletin kits
ordered and received by Lessee at the time of redelivery of the Aircraft and
which Lessee obtained free of charge from such vendors or manufacturers for the
Aircraft but not installed therein shall be returned with the Aircraft, as part
of the Aircraft at the time of return, free of charge to Lessor and shall be
loaded by Lessee on board the Aircraft as cargo.
10.15 LESSEE'S SPECIAL EXTERIOR MARKINGS.
At the time of the return of the Aircraft, Lessee shall
paint over exterior markings painted on such Aircraft by Lessee and the area
where such markings were painted over shall be refurbished by Lessee as
necessary to blend in with the surrounding surface. In the event that,
notwithstanding Lessee's obligation to do so, Lessee does not remove such
markings, Lessor shall have no obligation to remove such markings prior to the
sale, lease, or other disposition of the Aircraft by Lessor after its return;
however, if Lessor elects to remove such markings, Lessee shall pay Lessor's
reasonable direct costs and expenses paid for such removal within 10 days of
the date of Lessor's invoice therefor.
10.16 OWNERSHIP.
Any documents, equipment and any other items returned to
Lessor pursuant to this Section 10 which are not already owned by Lessor shall
thereupon become the property of Lessor.
10.17 STORAGE UPON RETURN.
Upon request of Lessor received at least 30 days prior to
the end of the Term, Lessee will store the Aircraft at its expense in Honolulu,
Hawaii for a period not exceeding 60 days. Lessee shall at its expense maintain
liability and hull insurance with respect to the Aircraft during such storage
period that meet industry standards for a stored aircraft and Lessor shall be
named an additional insured and loss payee under such insurance.
31
SECTION 11. TITLE: REGISTRATION; LIENS
11.01 TITLE.
Lessee acknowledges that during the Lease Term full legal
title to the Aircraft shall remain vested in Lessor notwithstanding the
possession and use thereof by Lessee, and Lessee shall take all actions,
subject to Section 18, where applicable, at its expense that Lessor may
reasonably require to evidence the interest of Lessor in the Aircraft or to
protect such interest against the claims of any other Person (other than
claimants under Lessor Liens). Lessee shall not attempt to hold itself out as
having any power to sell or dispose of the Aircraft or any Engine or Propeller.
11.02 REGISTRATION: FILINGS: REGISTRATION.
(a) The Aircraft shall be registered at the FAA in the name
of Lessor throughout the Term and Lessee shall not do, and shall further use
its best endeavors to ensure that no third party (except with regard to Lessor
Liens) does, any act or thing which might prejudice or cancel such
registration.
(b) Lessee shall take or cause to be taken, at Lessee's cost
and expense, such actions as are necessary or requested by Lessor and
appropriate to maintain, so long as this Lease is in effect, (i) registration
of the Aircraft at the FAA, in the name of the Lessor including, without
limitation, the filing of all reports and applications and the payment of all
fees and (ii) maintaining the ownership interest of Lessor in the Aircraft,
provided, however, the foregoing shall not be deemed to impose upon Lessee any
obligation with respect to Lessor Liens. Lessee shall take such actions at
Lessee's expense as are necessary or reasonably requested by Lessor to maintain
the perfection of any security interest that may be claimed to be created by
this Lease, including without limitation, the recording, filing, re-recording,
and refiling of this Lease, any other Operative Document, any financing
statements or other instruments. Lessee shall take no action adversely
affecting the due registration of the Aircraft with the FAA in the name of the
Lessor.
11.03 LIENS.
Lessee shall not directly or indirectly create, incur,
assume or suffer to exist any Lien on or with respect to the Airframe or any
Engine or Propeller other than Permitted Liens. Lessee promptly, at its own
expense, shall take such action as may be necessary to duly discharge any Lien
other than a Permitted Lien if the same shall arise at any time and shall
indemnify Lessor with respect to any charge or cost incurred in connection with
such Lien.
32
11.04 NOTICE OF OWNERSHIP.
As soon as practicable after the Delivery Date but in any
event within 5 Business Days of the Delivery Date, Lessee shall affix in a
reasonably prominent position on the flight deck or cockpit, and on each of the
Engines, a reasonably legible notice which shall be provided by Lessor, reading
as follows:
"[XXXXXX LEASE FINANCE CORPORATION],
Owner and Lessor,
Leased to ALOHA ISLANDAIR,INC., Lessee"
Once affixed as aforesaid, such notice shall not be defaced, covered or removed
during the Term, unless the Lessor instructs Lessee by notice hereunder to
change such notice. Lessee will not allow the name of any person other than
Lessor or a lender designated in writing by Lessor to be placed on the Airframe
or any Engine or Propeller as a designation that might be interpreted as a
claim of ownership or any security or other interest therein.
SECTION 12. INSURANCE.
On or before the Delivery Date and until the Aircraft is
returned to Lessor in accordance with Section 10 hereof, Lessee, at its cost
and expense, shall obtain, maintain and keep in full force and effect the
following insurance with respect to the Aircraft (Lessor recognizes that such
insurances may not cover the Manuals and Technical Records), carried with
insurers and re-insurers of recognized standing who normally participate in
aviation insurances in the leading international insurance markets:
12.01 ALL-RISK INSURANCE.
All-risk hull, ground and flight insurance on the Aircraft
(with flight, taxiing and ingestion coverages) in an amount not less than the
Stipulated Loss Value. Such hull insurance shall cover Engines or engines,
Propellers or propellers and Parts temporarily removed from the Airframe
pending installation of the same or similar Engines, engines, Propellers or
propellers or Parts on the Airframe in an amount not less than their
replacement cost.
12.02 WAR RISK INSURANCE.
War risk and allied perils insurance on the Aircraft in an
amount not less than the Stipulated Loss Value covering the perils of:
(a) war, invasion, acts of foreign enemies, hostilities
(whether war be declared or not), civil war, rebellion, revolution,
insurrection, martial law, military or usurped power, or attempts at usurpation
of power,
33
(b) strikes, dots, civil commotions or labor disturbances;
(c) any act of one or more persons, whether or not agents of
a sovereign power, for political or terrorist purposes and whether the loss or
damage therefrom is accidental or intentional;
(d) any malicious act or act of sabotage;
(e) confiscation, nationalization, seizure, restraint,
detention, appropriation, requisition of title or use by or under the order of
any government (whether civil, military or de facto) or public or local
authority other than the government or any public or local authority of the
country of registration; and
(f) hijacking or any unlawful seizure or wrongful seizure or
wrongful exercise of control of the Aircraft or crew in flight (including any
attempt at such seizure or control) made by any person or persons on board this
Aircraft acting without the consent of Lessee.
12.03 LIABILITY INSURANCE.
Public liability insurance for a combined single limit of
not less than the amount set forth in Exhibit B hereto for public liability
insurance, which shall:
(a) include public liability insurance, passenger liability
insurance and property damage liability insurance; and
(b) provide that all the provisions thereof, except the
limits of liability, shall operate in the same manner as if there were a
separate policy covering each such insured.
12.04 DEDUCTIBLES AND SELF INSURANCE.
Any insurance carried in accordance with this Section 12 may
contain a provision for a deductible or self insurance in an amount not to
exceed the amount set out in Exhibit B hereto as the permitted insurance
deductible.
12.05. ADDITIONAL REQUIREMENTS: LOSS PAYMENT.
The insurance required under this Section 12 shall be
provided on an agreed value basis and the policies shall, where applicable:
(a) name Lessor and each other Insured Party as additional
insureds as its interests may appear;
(b) provide that the insurance shall not be invalidated by
any action or inaction by Lessee or any other Insured Party and insure the
interest of Lessor and each
34
other Insured Party regardless of any breach or violation by Lessee or any
other Insured Party of any warranty, declaration or condition contained in such
policies;
(c) provide that the insurers shall waive any right of
subrogation against Lessor and any other Insured Party;
(d) provide that in the event of separate insurance being
arranged to cover the all-risk hull insurance and the war risk and allied
perils insurance, the underwriters subscribing to such insurance agree to a
50/50 claim funding arrangement in the event of any dispute as to which
insurance is applicable;
(e) be of the type usually carried by major airlines owning
and operating similar aircraft, engines and propellers, and covering risks of
the kind customarily insured against by such airlines;
(f) be primary and without right of contribution from other
insurance which may be available to Lessor and any other Insured Party;
(g) provide that Lessor and each other Insured Party shall
have no liability for premiums, commissions, calls or assessments with respect
to such policies; and
(h) subject to Section 12.09 hereof, name Lessor (or any
lender or other assignee designated by Lessor) as sole loss payee and provide
that losses will be adjusted with such loss payee to the extent of coverage
required herein by Section 12.
(i) contain a "cut through" clause satisfactory to Lessor.
12.06 NO SET-OFF.
Each insurance policy to be maintained under this Section 12
shall contain a waiver of any right of the insurers to any set-off or
counterclaim or any other deduction against Lessee, and Lessor and each other
Insured Party other than with respect to unpaid premiums then due and owing
with respect to the Aircraft (and not any other aircraft).
12.07 NOTICE OF MATERIAL ALTERATION OR CANCELLATION.
Each insurance policy to be maintained under this Section 12
shall provide that no cancellation or lapse of coverage for nonpayment of
premium or otherwise, and no substantial change of coverage which adversely
affects Lessor or any other Insured Party shall be effective as to Lessor or
any other Insured Party until not less than thirty (30) days (seven (7) days in
the case of war risk policies) after issuance to Lessor or such other Insured
Party (as the case may be) of written notice from the insurers of such
cancellation, lapse or change.
35
12.08 APPLICATION OF CERTAIN INSURANCE PROCEEDS.
As among Lessor and Lessee, any payments received under
policies of insurance required to be maintained by Lessee pursuant to Sections
12.01 or 12.02, shall be applied as follows:
(a) if such payments are received with respect to loss or
damage (including an Event of Loss with respect to an Engine or Propeller) not
constituting an Event of Loss with respect to the Airframe, such payments shall
be paid over to Lessee or at Lessee's election, to the repair facility jointly
with Lessee, upon performance by Lessee of the Lessee's repair obligations or
(if applicable) replacement obligations under this Lease pursuant to Section
13.02 hereof to the reasonable satisfaction of Lessor and, where appropriate,
Lessor shall issue any necessary payment orders with respect to such payments;
(b) if such payments are received with respect to an Event
of Loss with respect to the Aircraft, so much of such payments as shall not
exceed the amount required to be paid by Lessee pursuant to Section 13.01
hereof shall be applied by Lessor in reduction of Lessee's obligation to pay
such amount if not already paid by Lessee, and to reimburse Lessee if it shall
have paid all or part of such amount; and the balance, if any, of such payments
shall be paid over to or retained by Lessee.
12.09 INSURANCE FOR OWN ACCOUNT.
Nothing in this Section 12 shall prohibit Lessee, Lessor or
any other Insured Party (in that order of priority should insurance capacity in
excess of the insurances required in this Section 12 be limited as to
availability or amount), at its cost, from obtaining insurance for its own
account and any proceeds payable thereunder shall be payable as provided in the
insurance policy relating thereto, provided that no such insurance may be
obtained which would limit or otherwise adversely affect the coverage or
payment of any insurance required to be obtained or maintained pursuant to this
Section 12.
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12.10 CERTIFICATES AND REPORTS.
Lessee shall furnish to Lessor and any other Insured Party
not later than the Delivery Date certificates of insurance satisfactory to
Lessor and such other Insured Party and a report signed by a firm of
independent insurance brokers satisfactory to Lessor and such other Insured
Party, such report stating the opinion of such firm that the insurance then
carried and maintained on the Aircraft complies with the terms of this Section
12. Lessee will prior to the renewal dates of the insurance policies required
pursuant to this Section 12 (but in any event prior to the cancellation, lapse
or expiration of such insurance policies) provide additional certificates and a
report to Lessor and any other Insured Party meeting the terms of the preceding
sentence. Lessee will cause such firm to advise Lessor and any other Insured
Party (of which such firm has actual knowledge) in writing promptly of any
default in the payment of any premium and of any other act or omissions on the
part of Lessee of which they have knowledge and which would in such firm's
opinion invalidate or render unenforceable, in whole or in any material part,
any insurance on the Aircraft. Lessee will also cause such firm to advise
Lessor and any other Insured Party in writing at least thirty (30) days (seven
(7) days in the case of war risk insurance) prior to the termination or
cancellation of, or material adverse change in, such insurance carried and
maintained on the Aircraft pursuant to this Section 12.
SECTION 13. LOSS, DAMAGE OR REQUISITION
13.01 AN EVENT OF LOSS OF AIRFRAME.
(a) Upon the occurrence of an Event of Loss with respect
to the Aircraft during the Term, Lessee shall give Lessor written notice of
such Event of Loss as soon as is practicable but in no event later than ten
(10) Business Days after such occurrence. Lessee shall thereafter pay or
cause to be paid to the Lessor in immediately available funds upon the
earlier of (i) receipt of insurance proceeds with respect to such Event of
Loss or (ii) 60 days following the Event of Loss, an amount equal to (A) the
Basic Rent, if any, due and payable pursuant to the terms of Section 7.01
and Exhibit B hereto due on or before such date of payment, plus (B) all
unpaid Supplemental Rent (other than Stipulated Loss Value) due on or before
such date of payment, plus (C) the Stipulated Loss Value for the Aircraft
determined as of the date of payment.
(b) In the event of a payment in full of the Stipulated Loss
Value for the Aircraft and other Rent payable as provided in Section 13.01(a)
above, (i) this Lease and the obligations of Lessee to pay Basic Rent and
Supplemental Rent shall terminate; and (ii) Lessor shall convey to Lessee all
of Lessor's right, title and interest, AS-IS, WHERE-IS WITHOUT RECOURSE OR
WARRANTY, EXPRESS OR IMPLIED except for a warranty against Lessor's Liens, in
and to (1) the Airframe and Engines and Propellers and (2) all claims for
damage to the Airframe and Engines and Propellers, if any, against third
persons arising from the Event of Loss (unless any insurance carrier requires
that such claims be assigned to it).
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13.02 ENGINE OR PROPELLER LOSS.
Upon the occurrence during the Term of an Event of Loss with
respect to an Engine or Propeller not then installed on the Airframe or an
Event of Loss with respect to an Engine or Propeller installed on the Airframe
not involving an Event of Loss with respect to the Airframe, Lessee shall give
Lessor and Lender written notice thereof as soon as is practicable but in no
event later than ten (10) Business Days after such occurrence and shall within
45 days of the occurrence of such Event of Loss and on at least 5 days' prior
written notice to Lessor substitute a Replacement Engine for such Engine or a
Replacement Propeller for such Propeller. In such event, immediately upon the
effectiveness of such substitution on the date set forth in such notice and
without further act, (i) title to the Replacement Engine or Replacement
Propeller shall thereupon vest in Lessor (subject only to Permitted Liens),
(ii) title to the replaced Engine or Propeller shall thereupon vest in Lessee,
in AS-IS, WHERE-IS CONDITION, free and clear of all rights of Lessor and free
and clear of Lessor Liens (other than Lessor Liens arising out of events
occurring after the transfer which are not attributable to actions of the
Lessor or omissions by the Lessor of actions which the Lessor is legally
obligated to take) and shall no longer be deemed an Engine or Propeller
hereunder, and (iii) such Replacement Engine or Replacement Propeller shall
become subject to this Lease and be deemed part of the Aircraft for all
purposes hereof to the same extent as the Engine or Propeller originally
installed on or attached to the Airframe. Upon such substitution, Lessee shall
execute and deliver to Lessor such bills of sale, opinions and other documents
and instruments as Lessor shall reasonably request by notice hereunder to
evidence the interest of Lessor and conveyance to Lessor of good and marketable
title to such Replacement Engine or Replacement Propeller. Upon such
substitution, (x) Lessor shall execute and deliver to Lessee such bills of sale
and other documents and instruments, prepared at Lessee's expense, as Lessee
shall reasonably request to evidence such transfer and vesting of title in and
to the replaced Engine or Propeller in Lessee, free and clear of all rights of
Lessor and (y) Lessee shall receive all insurance proceeds and proceeds in
respect of any Event of Loss causing such replacement No Event of Loss with
respect to an Engine or Propeller under the circumstances contemplated by this
Section 13.02 shall result in any reduction of Lessee's obligations to pay Rent
hereunder. Lessee agrees that it shall at all times during the Term maintain or
cause to be maintained one (1) Engine, or other aircraft engine and one (1)
Propeller or other aircraft propeller suitable and available for use on the
Airframe and/or the airframe included with the Other Aircraft.
13.03 PAYMENTS FROM GOVERNMENTAL AUTHORITIES FOR REQUISITION
OF TITLE OR USE.
(a) Any payments on account of an Event of Loss (other than
insurance proceeds or other payments the application of which are provided for
in this Section 13, or elsewhere in this Lease, as the case may be) received at
any time by Lessor or by Lessee from any governmental authority or other Person
will be applied as follows:
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(i) if such payments are received with respect to an
Engine or Propeller, such payments shall be paid over to, or
retained by, the Lessor, and upon completion of (or, if
requested by Lessee, simultaneously with) Lessee's
replacement obligation, shall be paid over to, or retained
by, Lessee; and
(ii) if such payments are received with respect to
the Aircraft, (A) so much of such payments as shall not
exceed the Stipulated Loss Value and any other amount
required to be paid by Lessee pursuant to Section 9.01
hereof, shall be applied in reduction of Lessee's obligation
to pay such Stipulated Loss Value and other amounts, to the
extent not already paid by Lessee, and, to the extent
already paid by Lessee shall be applied to reimburse Lessee
for such payment, (B) the balance, if any, of such payment
remaining thereafter shall be retained by Lessor, and
(b) In the event of a requisition for use by any govenment,
so long as it does not constitute an Event of Loss of the Airframe and the
Engine or engines or Propellers or propellers installed thereon during the
Term, Lessee shall promptly notify Lessor of such requisition and all Lessee's
obligations under this Lease shall continue to the same extent as if such
requisition had not occurred. Any payments received by Lessor or Lessee from
such government with respect to such requisition shall be paid over to or
retained by, Lessee.
13.04 APPLICATION OF PAYMENTS DURING EXISTENCE OF EVENT
OF DEFAULT.
Any amount referred to in Section 13 or Section 12 hereof
which is payable to Lessee shall not be paid to Lessee, or, if it has been
previously paid directly to Lessee, shall not be retained by Lessee if at the
time of such payment an Event of Default shall have occurred and be continuing,
but shall be paid to and held by the Lessor as security for the obligations of
Lessee under this Lease and/or applied to any unpaid Rent hereunder then due,
and at such time as there shall not be continuing any such Event of Default,
such remaining amount shall be paid over to Lessee.
SECTION 14. EVENT OF DEFAULT
Each of the following events shall be an Event of Default:
14.01 FAILURE TO MAKE PAYMENTS.
If Lessee or Guarantor shall fail to pay in full in the
manner provided in, and at the place required by the terms of, Section 7 and
Exhibit B hereof, any payment of Rent when due and such failure shall continue
for five (5) Business Days.
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14.02 FAILURE TO OBTAIN OR MAINTAIN INSURANCE.
If Lessee fails to obtain or maintain any insurance pursuant
to the provisions of Section 12 of this Lease or operates or locates or permits
operation or location of the Aircraft in violation of Section 9.02 hereof.
14.03 FAILURE TO PERFORM OTHER OBLIGATIONS.
If Lessee or Guarantor fails to duly observe or perform any
of its other obligations or agreements under any Operative Document and such
failure shall not have been remedied within a period of ten (10) Business Days
after delivery of written notice to Lessee or Guarantor, as the case may be,
specifying the same from Lessor unless such failure is curable and Lessee or
Guarantor, as the case may be, shall after the delivery of such notice, be
diligently proceeding to correct such failure and shall in fact correct such
failure within thirty (30) days after the delivery of such notice.
14.04 REPRESENTATIONS AND WARRANTIES UNTRUE.
If any representation or warranty made by Lessee in any
Operative Document or in any document or certificate furnished to Lessor or
Lender in connection therewith shall be untrue, inaccurate or incomplete in any
material respect.
14.05 INSOLVENCY OR BANKRUPTCY.
(a) If Lessee or Guarantor shall become insolvent or shall
generally not pay its debts as they mature or acknowledges that it cannot pay
its debts as they mature or Lessee or Guarantor shall apply for, shall consent
to, or acquiesce in the appointment of a trustee, custodian, liquidator or
receiver of Lessee or Guarantor or its property; or, in the absence of such
application, consent or acquiescence, a trustee, custodian, liquidator or
receiver shall be appointed for Lessee or Guarantor by a court of competent
jurisdiction or for a material part of its property; or any bankruptcy,
reorganization, debt arrangement or other proceedings under any bankruptcy or
insolvency law shall be instituted by or against Lessee or Guarantor.
(b) If any bankruptcy, reorganization, dissolution or
liquidation proceeding shall be instituted (i) by Lessee or Guarantor or (ii)
against Lessee or Guarantor and not be vacated within 60 days of the initiation
of such preceding.
14.06 LOSS OF REGISTRATION OR PROTECTION.
If the Aircraft is no longer registered in compliance with
Section 11.02(a) hereof.
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14.07 LOSS OF LICENSE.
If Lessee shall fail to remain a Certificated Air Carrier or
Lessee shall suspend all or substantially all of its airline operations or
Lessee shall fail to retain a valid Air Operator's Certificate.
14.08 OTHER LEASE.
If an "Event of Default" (as defined therein) shall occur
under the Other Lease or any other lease between the Lessor and the Lessee.
14.09 FINAL JUDGMENT.
Final judgment for the payment of money in excess of
$500,000 or final judgments for the payment of money in excess of $500,000 in
the aggregate shall be rendered against Lessee or Guarantor unless such
judgment(s) shall have been stayed, insured against or adequate reserves for
the payment thereof shall have been set aside in accordance with generally
accepted accounting principles.
14.10 OTHER DEFAULT.
Any event of default shall have been declared under any
agreement relating to Lessee's or Guarantor's debt or lease obligations in an
amount exceeding $500,000 individually or in the aggregate (and determined, in
the case of lease obligations, by the present value of the remaining lease
payments).
14.11 CONTEST.
The existence, validity or enforceability of the rights of
the Lessor under the Lease are contested by Lessee.
14.12 FAILURE TO MAINTAIN LETTER OF CREDIT.
If Lessee fails to deliver to Lessor and keep in full force
and effect an acceptable Letter of Credit at the times and in the form and
amounts required under Exhibit B hereto.
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14.13 IF, FOR ANY REASON, THE GUARANTY CEASES TO BE IN FULL
FORCE AND EFFECT.
SECTION 15. REMEDIES
Upon the occurrence of any Event of Default and at any time
thereafter so long as the same shall be continuing, Lessor, at its option, may
declare this Lease to be in default; and at any time thereafter so long as
Lessee shall not have remedied all outstanding Events of Default, Lessor may
do, and Lessee shall comply with, one or more of the following with respect to
all or any part of the Airframe and the Engines and Propellers, as Lessor in
its sole discretion shall elect, to the extent permitted by, and subject to
compliance with any mandatory requirements of, Applicable Law then in effect:
(a) Cause Lessee, upon notice hereunder to Lessee by Lessor
and at Lessee's expense, to, and Lessee shall, promptly return all or such part
of the Airframe or the Engines or Propellers as Lessor may demand to Lessor at
such location in the United States as selected by Lessor in the manner and
condition required by, and otherwise in accordance with all of the provisions
of, Section 10 hereof, or Lessor, at its option, may enter upon the premises
where the Airframe or any or all Engines or Propellers are located or believed
to be located and take immediate possession of and remove such Airframe or
Engines or Propellers without the necessity for first instituting proceedings,
or by summary proceedings or otherwise, in which connection, to the extent
permitted by Applicable law, Lessee waives and agrees to waive any requirement
that Lessor post any bond or other security in connection with any such
proceedings, and Lessee shall comply therewith, all without liability to Lessor
for or by reason of such entry or taking possession, whether for the
restoration or damage to property caused by such taking or otherwise;
(b) Sell or otherwise dispose of any or all of the Aircraft,
at public or private sale and with or without notice to Lessee or
advertisement, as Lessor may determine or hold, use, operate, lease to others
or keep idle all or any part of the Airframe or any Engine or Propeller as
Lessor, in its sole discretion, may determine, in any such case free and clear
of any rights of Lessee except as hereinafter set forth in this Section 15 and
without any duty to account to Lessee with respect to such action or inaction
or for any proceeds with respect thereto and the proceeds of any such sale
shall be applied by Lessor to reduce Lessee's obligations under 15(d) below or
otherwise due hereunder,
(c) Whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) above with respect to all or any part of the Aircraft, (i) if
Lessor shall have succeeded in repossessing the Aircraft as a result of the
exercise of such rights within thirty (30) Business Days following such
declaration of default, Lessor shall have the right to recover from Lessee any
amounts which may be then due and unpaid or which may become due for the use of
the Aircraft (including, without limitation, any Basic Rent and other
obligations accruing hereunder after the date of the occurrence of the Event of
Default through the date the Lessor is revested with possession of the Aircraft
as a result of the exercise of such
42
rights) and also to immediately recover from Lessee any damages, costs and
expenses, including reasonable Attorney's fees which Lessor shall have
sustained by reason of such Event(s) of Default or any other breach by Lessee
of its obligations hereunder; or (ii) if Lessor shall not have succeeded in
repossessing the Aircraft as a result of the exercise of such rights within
thirty (30) Business Days following such declaration of default, Lessor, by
written notice to Lessee specifying a payment date not earlier than ten (10)
days from the date of such notice, may demand that the Lessee pay to Lessor,
and Lessee shall pay Lessor, on the payment date specified in such notice, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of the
Basic Rent due for periods commencing on or after the payment date specified in
such notice), any unpaid Basic Rent due for periods prior to the period
commencing with the payment date specified in such notice, plus whichever of
the following amounts Lessor, in its sole discretion, shall specify in such
notice: (aa) an amount equal to the excess, if any, of the Stipulated Loss
Value for the Aircraft, computed as of the payment date specified in such
notice, over the aggregate fair market rental value (computed as hereafter in
this Section provided) of the Aircraft for the remainder of the scheduled Term,
after discounting such aggregate fair market rental value to present worth
using a discount rate equal to 1/2 of 1% per annum above the prime rate as
announced from time to time by Citibank, N.A. in effect on the date of
computation; or (bb) an amount equal to the excess, if any, of the Stipulated
Loss Value for the Aircraft on the payment date specified as the payment date
in such notice over the fair market sales value of the Aircraft (computed as
hereafter in this Section provided) as of the payment date specified in such
notice;
(d) In the event Lessor, pursuant to paragraph (b) above,
shall have sold the Aircraft, Lessor, in lieu of exercising its rights under
paragraph (c) above with respect to the Aircraft, may, if it shall so elect,
demand that Lessee pay Lessor, and Lessee shall pay to Lessor, on the date of
such sale, as liquidated damages for loss of a bargain and not as a penalty (in
lieu of the Basic Rent due for periods commencing on or after such date of
sale), any unpaid Basic Rent due for periods up to and including the period in
which such sale occurs, plus the amount of any deficiency between the net
proceeds of such sale (after deduction of all costs of sale including, without
limitation, costs of overhaul, maintenance, brokers fees, preparation and
moving to sale) and the Stipulated Loss Value; and/or
(e) Terminate this Lease as to the Airframe or any or all of
the Engines or Propellers, or exercise any other right or remedy which may be
available under Applicable Law or proceed by appropriate court action to
enforce the terms hereof or to recover damages for the breach hereof, provided,
however, that this Lease shall be deemed to be terminated automatically and
immediately upon the occurrence of any Event of Default under Section 14.05. In
addition, Lessee shall be liable for any and all Rent due hereunder before or
after any termination hereof, including all costs and expenses (including
reasonable attorneys' fees and disbursements) paid by Lessor as a result of the
occurrence of any Event of Default or the exercise of remedies with respect
thereto including all costs and expenses incurred in connection with the return
of the Airframe or any Engine or Propeller in accordance with the terms of
Section 10 hereof and such obligation shall survive any termination of the
Lease. Except as otherwise
43
expressly provided above, no remedy referred to in this Section 15 is intended
to be exclusive, but each shall be cumulative and in addition to any other
remedy referred to above or otherwise available to Lessor at law or in equity;
and the exercise or beginning of exercise by Lessor of any one or more of such
remedies shall not preclude the simultaneous or later exercise by Lessor of any
or all such other remedies. No express or implied waiver by Lessor of any
Default or Event of Default hereunder shall in any way be, or be construed to
be, a waiver of any future or subsequent Default or Event of Default.
For the purposes of paragraph (c) above, the "aggregate fair
market rental value" or the "fair market sales value" of the Aircraft shall be
the rental value or sales value, as the case may be, which would be obtained in
an arm's-length transaction between an informed and willing lessee or
purchaser, as the case may be, under no compulsion to lease or purchase, as the
case may be, and an informed and willing lessor or seller, as the case may be,
in each case based upon the actual condition and location of the Aircraft,
which value shall be determined by mutual agreement or, in the absence of
mutual written agreement, pursuant to an appraisal prepared and delivered in
the United States by a nationally recognized firm of independent aircraft
appraisers selected by Lessor. The cost of such appraisal shall be borne by
Lessee.
(f) To the extent permitted by applicable law, Lessee waives
any and all rights and remedies conferred upon a lessee by UCC Sections 2A-508
through 2A-522 (where applicable), including (without limitation) any rights to
(i) cancel or repudiate this Lease, (ii) reject or revoke acceptance of any
Aircraft, (iii) recover damages from Lessor for breach of warranty or for any
other reason, (iv) claim a security interest in any rejected property in
Lessee's possession or control, (v) deduct from the Rent or other sums due and
payable under this Lease all or any part of any claimed damages resulting from
Lessor's alleged defaults under this Lease, (vi) recover from Lessor any
general, special, incidental or consequential damages for any reason
whatsoever, and (vii) specific performance, replevin or the like for the
Aircraft. Lessee further waives its rights under Section 2A-401 and 2A-402 to
suspend performance of any of its obligations under this Lease with respect to
the Aircraft. Lessee waives any and all rights to notice and to a judicial
hearing with respect to the repossession of the Aircraft by Lessor Upon the
occurrence of an Event of Default hereunder.
SECTION 16. INDEMNITIES AND EXPENSES
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16.01 GENERAL INDEMNIFICATION AND WAIVER OF CERTAIN CLAIMS.
(a) INDEMNIFICATION. Lessee assumes liability for, and
hereby agrees to indemnify, protect, save and keep harmless each Indemnitee
from and against any and all liabilities, obligations, losses, damages,
injuries, penalties, claims (including, without limitation, claims involving
or alleging any Indemnitee's negligence and claims involving strict or absolute
liability in tort), demands, actions, penalties, suits, costs, expenses and
disbursements (including, without limitation, legal fees and expenses,
consultation fees and costs of environmental investigation and remediation) of
any kind and nature whatsoever (collectively, a "CLAIM") which may be imposed
on, incurred by or asserted against an Indemnitee, whether or not such
Indemnitee shall also be indemnified as to any such Claim by any other Person,
in any way relating to or arising out of this Lease, any Operative Document to
which Lessee or Guarantor is a party, or any other document contemplated
hereby, or the performance or enforcement of any of the terms hereof or
thereof, or in any way relating to or arising out of the manufacture, purchase,
acceptance, rejection, ownership, delivery, lease, sublease, possession, use,
operation, maintenance, condition, registration, sale, return, storage or other
disposition of each Aircraft or any Engine or Part thereof or any accident in
connection therewith (including, without limitation, latent and other defects,
whether or not discoverable and any claim for patent, trademark or copyright
infringement), regardless of where, how and by whom operated, the failure of
Lessee to perform or comply with any law or any provision of the Operative
Documents to which Lessee or Guarantor is a party or the breach by Lessee of
its obligations or representations and warranties hereunder or the failure of
Lessee to comply with any law; provided, however, that Lessee shall not be
required to indemnify any Indemnitee for any Claim in respect of any Aircraft
arising from acts or events which occur prior to commencement of the Term of
this Lease or after possession of such Aircraft has been re-delivered to Lessor
in accordance with Section 10 hereof. Further provided that Lessee shall not be
required to indemnify (i) an Indemnitee for any Claim resulting from acts which
would constitute the willful misconduct or gross negligence of such Indemnitee,
(ii) Lessor or its Affiliates for any Claim resulting from acts which would
constitute the willful misconduct or gross negligence of any respective agent,
director, employee or representative, if acting within the scope of their
employment or duties, of Lessor or its Affiliates, or (iii) any other
Indemnitee for any Claim resulting from acts which would constitute the willful
misconduct or gross negligence of any agent, director, employee or
representative, if acting within the scope of their employment or duties, of
such Indemnitee.
(b) WAIVER OF CERTAIN CLAIMS. Lessee hereby waives and
releases any Claim now or hereafter existing against any Indemnified Person
arising out of death or personal injury to personnel of the Lessee, loss or
damage to property of Lessee, or the loss of use of any property of Lessee,
which may result from or arise out of the condition, use or operation of the
Aircraft during the Term, including without limitation any latent or patent
defect whether or not discoverable.
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16.02 GENERAL TAX INDEMNITY.
(a) INDEMNITY. Lessee agrees to pay and to indemnify each
Indemnitee for, and hold each Indemnitee harmless from and against, all license
and registration fees, income, franchise, gross receipts, sales, use, excise
(including without limitation, any excise tax imposed by the State of Hawaii),
personal property, ad valorem, value added (except as indicated in subclause
16.02(a)(i) below), leasing, leasing use, stamp, documentary, landing, airport
use or other taxes, and all levies, imposts, duties, charges, or withholdings
of any nature, each of the foregoing together with any penalties, forfeitures,
fines or interest thereon ("Impositions"), arising out of the transactions
contemplated by this Lease and imposed against an Indemnitee, Lessee or the
Aircraft or any part thereof by any Federal, state, local or foreign government
or other taxing authority upon or with respect to the Aircraft or any part
thereof or upon the sale, purchase, ownership, delivery, leasing, possession,
use, operation, return, transfer or other disposition thereof or based on or
measured by the rentals, receipts or earnings arising therefrom, or upon or
with respect to this Lease. Notwithstanding the provisions of the above
paragraph, Lessee's obligations under this Section 16.02 shall not include any
of the following:
(i) Impositions on, based on, or measured by, net income of
any Indemnitee (other than taxes in the nature of sales, use, property
or value added tax but including within this exclusion, any value
added tax, consumption tax or similar tax in the event such tax is
enacted by a taxing jurisdiction, as a complete substitute or
replacement of an Imposition on, based on, or measured by, net income
as a revenue source for that jurisdiction), imposed by the United
States of America or any United States federal taxing authority or
imposed by any state or local political subdivision or taxing
authority in any jurisdiction where the Lessor maintains an office or
other place of business (and for this purpose the ownership or leasing
of the Aircraft in any such jurisdiction shall not be deemed to
constitute the maintenance of a place of business) and in which the
Lessor would have been subject to taxation without regard to the
transactions contemplated by this Lease;
(ii) any Impositions imposed as a result of a voluntary
sale, transfer of title, mortgaging, pledging, financing, or other
voluntary disposition by any Indemnitee of the Aircraft or part
thereof or interest therein, or any interest in the Rent or part
thereof or any interest in the Lease or part thereof, unless such
sale, transfer, mortgage, pledge or disposition occurs by reason of
the occurrence of a Default or an Event of Default or the exercise of
Lessor's remedies under this Lease upon an Event of Default;
(iii) any Impositions imposed on any Indemnitee to the
extent caused by the gross negligence or willful misconduct of such
Indemnitee;
(iv) Impositions relating to the Aircraft or any part
thereof, or interest therein, for any taxable period or portion
thereof, relating to events occurring prior
46
to commencement of the Term of this Lease or after the expiration of
the Term of this Lease and the redelivery of the Aircraft in
accordance with this Lease;
(v) indemnification of the Lessor, but without prejudice to
the rights of indemnification of any other Indemnitee, with respect to
any Impositions imposed as a direct result of the willful misconduct
or gross negligence of the Lessor or its affiliates or, if acting
within the scope of their employment or duties, of Lessors officers,
directors, employees, agents or representatives or as a direct result
of a breach by Lessor of its express obligations under this Lease or
as a direct result of an express representation or warranty given by
Lessor in this Lease not being true and correct at the date when, or
when deemed to have been, given or made;
(vi) indemnification of any lender to Lessor or any
permitted successor or assign thereof, but without prejudice to the
rights of indemnification of any other Indemnitee, (aa) with respect
to any Impositions imposed on such lender, successor or assign as a
direct result of its own willful misconduct or gross negligence or, if
acting within the scope of their employment or duties, the willful
misconduct or gross negligence of the officers, directors, employees,
agents or representatives of such lender, successor or assign
otherwise asserting the right to indemnification hereunder, or (bb) in
the event any such lender, its successor or assign shall, in the
course of the exercise of rights and remedies under the relevant
security agreement or other assignment, exercise the rights and
remedies of the Lessor under this Lease, (I) with respect to any
Impositions imposed on such lender, successor or assign as a direct
result of its own breach of its own obligations expressly undertaken
in its own capacity (and not merely as successor in interest to Lessor
under the relevant security agreement or other assignment); or (II)
with respect to any Imposition imposed as a direct result of an
express representation or warranty given by such lender, successor or
assign in its own capacity (and not merely as successor in interest to
Lessor under the relevant security agreement or other assignment) not
being true and correct at the date when, or when deemed to have been,
given or made; or
(vii) Impositions imposed on an Indemnitee by a taxing
jurisdiction (other than the United States or any jurisdiction in
which the Lessee is organized, maintains a place of business or from
which the Lessee may make payments under this Lease or where the
Aircraft may be located or operated) which would not have been imposed
on such Indemnitee but for such Indemnitee engaging in transactions
unrelated to the transactions contemplated by this Lease.
(b) REPORTS. In case of any report or return to be made with
respect to any Imposition or possible Imposition, Lessee will either make such
report or return in such manner as will show the ownership in Lessor of the
Aircraft, and when requested by an Indemnitee send a copy of such report or
return to the Indemnitee, or will notify the Indemnitee of such requirement and
make such report or return in such manner as shall be satisfactory to the
Indemnitee. Lessee shall, at its own expense, duly file all required reports
and returns respecting all Impositions paid or indemnified against by Lessee
47
pursuant to this Section 16.02 to the extent Lessee is permitted by Applicable
Law to do so. If the same must be filed by an Indemnitee, Lessee will advise
such Indemnitee of the necessity of filing the same and, in sufficient time
before the same is due, furnish such Indemnitee with a completed copy thereof.
Lessee shall hold each Indemnitee harmless from and against any liabilities,
obligations, losses, damages, penalties, claims, actions, suits and costs
arising out of any insufficiency or inaccuracy in any information in such
report or return filed or supplied by Lessee, except to the extent that the
same is attributable to an Indemnitee's failure to timely provide Lessee
accurate information which Lessee has requested, in writing, with specificity
and which Lessee needs to fulfill its reporting or return obligations, an
Indemnitee's failure to timely and properly file returns which have been timely
prepared by Lessee and timely delivered to such Indemnitee or with respect to
which Lessee has provided such Indemnitee the necessary information which would
enable such Indemnitee to do so. If actual notice is given by any authority to
an Indemnitee that a report or return is required to be filed with respect to
any such Impositions referred to in this Section 16.02 and Lessor has actual
notice thereof, Lessor shall cause that Indemnitee to promptly notify Lessee of
such required report or return. Lessor agrees to cause each Indemnitee to
respond to any reasonable request, of which Lessor has actual notice, of Lessee
for information within the control of such Indemnitee with respect to the
filing of any such report or return. Lessee agrees to pay any reasonable costs,
fees or other charges of independent counsel or independent accountants
incurred by Lessor or such Indemnitee in connection with any such response or
request contemplated by this subsection.
(c) Contests. If claim is made against an Indemnitee for any
Imposition with respect to which Lessee has an obligation under this Section
16.02 and Lessor has actual notice thereof, Lessor shall cause such Indemnitee
to promptly notify the Lessee but failure to so notify the Lessee shall not
reduce the Lessee's obligations hereunder, except to the extent that Lessee is
thereby precluded from contesting such claim or Imposition. If reasonably
requested by the Lessee in writing and provided no Default or Event of Default
shall have occurred and is continuing, Lessor, at the sole expense of the
Lessee, shall itself (or shall cause such Indemnitee to) in good faith and
diligently contest (and not settle without Lessee's written consent) or shall
(or shall cause such Indemnitee to) permit the Lessee, if desired by the
Lessee, to contest in the name of the Lessee the validity, applicability or
amount of such Imposition. Lessee may contest, or require that Lessor or such
Indemnitee contest, by (a) resisting payment thereof if practicable, (b) not
paying the same except under protest with funds advanced by Lessee on an
interest-free basis, if protest is necessary and proper, and (c) if payments be
made, using reasonable efforts to obtain a refund thereof in appropriate
administrative and judicial proceedings; provided, however, that, in each such
instance, the Lessor and such Indemnitee shall not be required to undertake any
contest unless:
(i) Lessee shall have provided Lessor with an opinion of
legal counsel reasonably acceptable to Lessor to the effect that a
reasonable basis exists to contest such claim and, prior to the
commencement of any appeal of an adverse judicial decision, with an
opinion of such legal counsel to be effect that a reasonable basis
exists to appeal such adverse judicial decision (which opinions
48
shall be obtained at Lessee's sole cost and expense);
(ii) such proceedings do not involve any material risk or
danger of the sale, forfeiture or loss of the Aircraft or any part
thereof or interest therein or the imposition of civil or criminal
fines, penalties, forfeitures or sanctions against Lessor or such
Indemnitee or the creation of any Lien other than a Lien for
Impositions not yet due or being contested in good faith by
appropriate proceedings, and for payment of which such reserves if
any, as are required to be provided under generally accepted
accounting principles have been made unless Lessee has provided to
Lessor a bond or other security reasonably satisfactory to Lessor
(provided that in the case of civil or criminal fines, penalties,
forfeitures or sanctions such bond or other security shall be
satisfactory to Lessor in its sole discretion) to protect against such
risk or danger;
(iii) in the event that the subject matter of the contest is
of a continuing nature and has previously been decided adversely
pursuant to the contest provisions of this Section 16.02 by the
highest court to which an appeal could be taken (other than the
U.S. Supreme Court), there has been a change in the law (including,
without limitation, amendments to statutes or regulations,
administrative rulings and court decisions) after such claim shall
have been so previously decided and Lessor shall have received an
opinion of independent tax counsel selected by the Lessee and
reasonably acceptable to Lessor, which opinion shall be obtained at
the Lessee's sole expense, to the effect that, as a result of such
change, it is more likely than not that the position which Lessor, an
Indemnitee or the Lessee, as the case may be, had asserted in such
previous contest would prevail;
(iv) no Default or Event of Default shall have occurred and
be continuing;
(v) prior to the commencement of any contest undertaken by
the Lessee or any contest undertaken by Lessor or any Indemnitee with
respect to which Lessor or such Indemnitee is required to follow the
direction of the Lessee, the Lessee shall have delivered to Lessor a
written acknowledgement of its obligations to indemnify fully Lessor
and such Indemnitee to the extent that the contest is not successful;
(vi) if such contest is to be initiated by the payment of,
and the claiming of a refund for, such Imposition, Lessee shall have
advanced to Lessor or such Indemnitee sufficient funds (on an
interest-free basis) to make such payments, provided, however, that
Lessee shall indemnify Lessor and such Indemnitee for any adverse tax
consequences resulting from such advance; and
(vii) such contest does not involve any Imposition or taxes
of any Indemnitee not indemnified hereunder.
Lessee shall not be deemed to be in default under any of the
above indemnification provisions of this Section 16.02 so long as
Lessee shall diligently
49
prosecute a contest in conformity with the requirements of this
Section 16.02(c), or in the case where the Lessor or an Indemnitee
shall be prosecuting such contest pursuant to this Section 16.02(c),
Lessee has fulfilled all of its obligations under this Section
16.02(c) with respect to such contest. Notwithstanding the foregoing,
if a claim is made against an Indemnitee which, if successful, would
result in an Imposition under circumstances which would require the
Lessee to indemnity such Indemnitee, such Indemnitee shall be released
from its responsibility to contest such claim, or part thereof, if it
agrees in writing with Lessee not to seek indemnification from Lessee
in respect of the claim, or such part thereof to be contested. In the
event an Indemnitee fails diligently to contest, or refuses to permit
the Lessee to contest, a claim or part thereof which such Indemnitee
has the obligation to contest or to permit Lessee to contest under
this Section 16.02, then Lessee shall not be obligated to indemnify
such Indemnitee for such claim or such part thereof to the extent that
Lessee is precluded thereby from contesting any such claim and Lessor
shall cause such Indemnitee to refund to Lessee to such extent any
amounts paid or advanced by Lessee in connection with such Imposition
that were the subject of such claim (plus interest from the date
payment is due at the rate established for refunds by the authority
imposing such Imposition).
(d) Refunds. If an Indemnitee shall obtain a refund of all or
any part of such Imposition paid by Lessee, Lessor shall cause such Indemnitee
to pay the Lessee the amount of such refund less the amount of any Impositions
payable by such Indemnitee in respect of the receipt of such refund; provided
that such amount shall not be payable (x) before such time as the Lessee shall
have made all payments or indemnities then due to Lessor under the Lease, or
(y) while any Default or Event of Default is outstanding and continues
unremedied. If in addition to such refund, such Indemnitee shall receive an
amount representing attorneys fees, interest or other amount with respect to of
such refund, the Lessee shall be paid that proportion of such amounts (net of
any Impositions imposed on the receipt of such amounts by such Indemnitee)
which is fairly attributable to Impositions paid by the Lessee prior to the
receipt of such refund.
16.03 AFTER-TAX BASIS; SURVIVAL. It is understood and agreed
that all payments for which Lessee is obligated hereunder are to be made on an
"after tax basis" so that the amount the Lessee shall be required to pay with
respect to any Claim or Imposition indemnified against hereunder shall be an
amount sufficient to restore the Indemnitee(s) to the same position such
Indemnitee(s) would have been in had such Claim not been asserted or such
Imposition not been incurred taking into account, INTER ALIA, Impositions, fees
and other charges, however imposed, required to be paid on the receipt of an
indemnity under this Section 16 and further taking into account any tax
benefits realized by such Indemnitee(s) that is attributable to such
indemnifiable Imposition. The Lessee's obligations hereunder shall survive the
expiration or earlier termination of this Lease and return of the Aircraft to
Lessor.
16.04 EXPENSES. Lessee shall pay its own legal fees and
disbursements
50
and its other fees and expenses incurred in connection with documenting and
negotiating this transaction, together with the fees and disbursements of
Lessor's FAA counsel. Lessor shall pay all of Lessor's other fees and expenses
including the fees and disbursements of its outside counsel.
SECTION 17. QUIET ENJOYMENT
The Lessor agrees that unless a Default or Event of Default
hereunder has occurred and is continuing, neither the Lessor nor any Person
claiming through or under any of them will interfere with the quiet enjoyment,
use and operation of the Aircraft by the Lessee as provided hereunder,
including, without limitation, Lessee's possession and use of the Aircraft.
SECTION 18. ASSIGNMENT
Lessee shall not assign or transfer any of its rights or
obligations under this Lease or in the Aircraft without. the prior written
consent of Lessor. Lessor may assign all or any portion of its rights or
obligations in the Aircraft and Lease without consent of the Lessee, for
security or for any other purpose, and Lessee shall take such actions in
connection therewith as Lessor shall reasonably request, including, but not
limited to, (i) delivering an estoppel certificate causing such assignee to be
named as an additional insured and loss payee under the insurances required
hereunder, naming such assignee as an indemnified party under the indemnities
provided hereunder and addressing such additional matters as Lessor may
reasonably request, (ii) causing an insurance report and certificates to be
issued confirming that the assignee has been named as additional insured and
loss payee under the insurances required hereunder, (iii) delivering an opinion
of counsel to Lessee and (iv) taking such additional action, and delivering
such additional documents as Lessor may reasonably request. Without limitation
of the foregoing, any assignment by Lessor may (but shall not be required to
be) be to an owner trustee, indenture trustee, agent or other Person acting in
a fiduciary or similar capacity on behalf of other Persons and such other
Persons (as well as such trustee, agent or other Person acting on behalf of
such Persons) shall be entitled to be Indemnitees and Insured Persons
hereunder. No assignment by Lessor hereunder shall release Lessor from its
obligations hereunder except that if, pursuant to any assignment, Lessor
assigns all of its right, title and interest to the Aircraft and Lease, the
assignee thereof shall assume, in a written agreement reasonably satisfactory
to Lessee, all of the Lessor's obligations under the Lease from and after such
assignment, the Lessor shall be released from all such obligations and such
assignee shall be the "Lessor" hereunder for all purposes of this Lease. Lessor
will pay the reasonable out-of-pocket expenses of the Lessee in connection with
an assignment by the Lessor hereunder. No assignment by Lessor hereunder shall
result in an increase in Lessees obligations under this Lease.
51
SECTION 19. NOTICES
Unless otherwise specifically provided herein, all notices
required or permitted by the terms hereof shall be in writing. Any written
notice shall become effective when received. Any written notice shall be sent
by telecopy, commercial courier service or delivered by hand. Any notice shall
be addressed as follows:
If to Lessor:
Xxxxxx Lease Finance Corporation
0000 Xxxxxxxxx Xxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Lessee:
Aloha Islandair, Inc.
00 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: President
Telephone:
Telecopy: (000) 000-0000
Such persons and addresses may be changed, from time to time, by means of a
notice given in the manner provided in this Section 19.
SECTION 20. LESSOR'S RIGHT TO PERFORM FOR LESSEE
If Lessee fails to perform or comply with any of its payment
or other obligations herein, Lessor may itself pay or perform such obligation,
and the amount of such payment and the amount of the reasonable expenses of
Lessor incurred in connection with such payment or the performance of such
obligation, as the case may be, together with interest thereon at the Overdue
Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand by
notice hereunder. No such payment or performance by Lessor shall be deemed to
waive any Default or Event of Default or relieve Lessee of any of its
obligations hereunder.
52
SECTION 21. LEASE; SECTION 1110
21.01 LEASE.
Lessee and Lessor agree that this Lease is to be treated as a
Lease for Federal income tax purposes, that the Lessor is the owner of the
Aircraft for Federal income tax purposes and all other purposes and that the
interest of the Lessee in the Aircraft is that of a lessee only.
21.02 SECTION 1110.
TO THE EXTENT PROVIDED THEREBY (OR TO THE FULLEST EXTENT IT
MAY LAWFULLY SO AGREE, WHETHER OR NOT PROVIDED THEREBY), LESSEE HEREBY AGREES
THAT ANY RIGHT OF LESSOR TO TAKE POSSESSION OF THE AIRCRAFT OR ENGINES OR
PROPELLERS IN COMPLIANCE WITH THE PROVISIONS OF THIS LEASE AND IN ACCORDANCE
WITH SECTION 0000 XX XXXXX 00 XX XXX XXXXXX XXXXXX CODE OR ANY SIMILAR
PROVISION OF ANY SUPERSEDING STATUTE, AS AMENDED FROM TIME TO TIME, SHALL NOT
BE AFFECTED BY THE PROVISIONS OF SECTIONS 362, 363 OR 1129 OF SAID TITLE, OR
OTHER ANALOGOUS PART OF ANY SUPERSEDING STATUTE, AS AMENDED FROM TIME TO TIME,
AND ACCORDINGLY, IT IS THE INTENTION OF THE PARTIES HERETO THAT TO THE FULLEST
EXTENT THAT THE PARTIES HERETO MAY LAWFULLY SO AGREE THIS AGREEMENT BE AFFORDED
THE BENEFITS OF SAID SECTION 1110.
SECTION 22. MISCELLANEOUS
22.01 WAIVERS, HEADINGS.
No term or provision of this Lease may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought. The headings contained herein are for convenience of
reference only and are not intended to define or limit the scope of any
provisions of this lease.
22.02 COUNTERPARTS.
This Lease may be signed in one or more counterparts with the
same effect as if the signatures to each counterpart were upon a single
instrument. All counterparts shall be considered an original of this Lease.
53
22.03 GOVERNING LAW.
THIS LEASE HAS BEEN DELIVERED IN THE STATE OF CALIFORNIA AND
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF CALIFORNIA, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF. THIS LEASE SHALL BE EFFECTIVE FOR ALL PURPOSES AS OF THE DATE FIRST
ABOVE WRITTEN.
22.04 BENEFIT AND BINDING EFFECT.
The terms and provisions of this Lease shall inure to the
benefit of and be binding on Lessor and Lessee and their respective successors
and permitted assigns.
22.05 FURTHER ASSURANCES.
Lessor and Lessee, from time to time, shall do and perform
such other and further acts and execute and deliver any and all such other and
further instruments as may be required by law or reasonably requested by notice
hereunder by the other party to establish, maintain and protect the respective
rights and remedies of the other party, to carry out the intent and purpose of
this Lease and the other Operative Documents to which either is a party.
22.06 SERVICE OF PROCESS; WAIVER OF JURY TRIAL AND IMMUNITY.
(a) LESSEE HEREBY IRREVOCABLY AGREES THAT ANY LEGAL ACTION OR
PROCEEDING AGAINST IT WITH RESPECT TO THE OPERATIVE DOCUMENTS MAY BE BROUGHT IN
ANY STATE OR FEDERAL COURT LOCATED IN SAN FRANCISCO, CALIFORNIA AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, LESSEE HEREBY IRREVOCABLY SUBMITS TO
EACH SUCH JURISDICTION AND HEREBY IRREVOCABLY WAIVES ANY AND ALL OBJECTIONS
WHICH IT MAY HAVE AS TO VENUE IN ANY OF THE ABOVE COURTS.
(b) Lessee hereby irrevocably appoints CT Corporation Systems
(the "Process Agent") as agent for service of process in California. Lessee
hereby authorizes and directs the Process Agent to accept service on its
behalf. In the event that Lessee does not maintain the Process Agent as its
validly appointed agent for service of process, Lessee hereby agrees that
service of process may be made on it by certified or registered mail, return
receipt requested, at its address for notices specified or determined in
accordance with Section 15 hereof. Nothing herein shall affect the right to
serve process in any other manner permitted by law. Any judicial proceeding by
Lessee against the Lessor involving, directly or indirectly, any matter in any
way arising out of, related to, or connected with any of the Operative
Documents shall be brought only in a court located in the State of California.
THE LESSEE AND LESSOR HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
BROUGHT BY THE LESSEE OR BY THE
54
LESSOR OR LENDER INVOLVING DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THE OPERATIVE DOCUMENTS.
22.07 USURY LAWS.
The parties intend to contract in strict compliance with the
usury laws of the State of California and, to the extent applicable, the United
States. Notwithstanding anything to the contrary in the Operative Documents,
Lessee will not be obligated to pay interest at the Overdue Rate on overdue
payments of Rent or other interest in excess of the maximum non-usurious
interest rate, as in effect from time to time, which may by Applicable Law be
charged, contracted for, reserved, received or collected by Lessor in
connection with the Operative Documents. During any period of time in which the
thenapplicable highest lawful rate is lower than the Overdue Rate, interest on
overdue payments of Rent will accrue and be payable at such highest lawful
rate. However, if at later times such highest lawful rate is greater than the
Overdue Rate, then Lessee will pay interest on overdue payments of Rent at the
highest lawful rate until the interest on overdue payments of Rent which is
paid by Lessee equals the amount of interest that would have been payable at
the Overdue Rate.
22.08 ENTIRE AGREEMENT.
This Lease and the other Operative Documents embody the
entire agreement and understanding among the parties thereto and supersede all
prior agreements and understandings relating to the subject matter thereof.
[This space intentionally left blank.]
55
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease to be duly executed by their authorized officers as of the day and year
first above written.
XXXXXX XXXXXX LEASE FINANCE CORPORATION
By: /s/ [ILLEGIBLE]
----------------------------------------
Name:
Title:
LESSEE ALOHA ISLANDAIR, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------------
Name: XXXXXX X. XXXXXXXXX
Title: SR. VICE PRESIDENT FINANCE &
PLANNING AND CFO
By: /s/ Xxxx Xxxxxxxx
----------------------------------------
Name: XXXX XXXXXXXX
Title: STAFF VICE PRESIDENT - FINANCE
& CONTROLLER
THIS COUNTERPART IS THE "CHATTEL PAPER" COUNTERPART OF THE LEASE.
XXXXXX LEASE FINANCE CORPORATION
By: /s/ [ILLEGIBLE]
----------------------------------------
Name:
Title:
Lease of de Havilland Dash 8-103 Aircraft
MSN 357
56
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease to be duly executed by their authorized officers as of the day and year
first above written.
XXXXXX XXXXXX LEASE FINANCE CORPORATION
By: /s/ Xxxxx X. XxXxxxx
------------------------------------------
Name: XXXXX X. XxXXXXX
Title: EXECUTIVE VICE PRESIDENT
CHIEF FINANCIAL OFFICER
LESSEE ALOHA ISLANDAIR, INC.
By:
-------------------------------------------
Name:
Title:
By:
-------------------------------------------
Name:
Title:
Lease of de Havilland Dash 8-103 Aircraft
MSN 357
57
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease to be duly executed by their authorized officers as of the day and year
first above written.
XXXXXX XXXXXX LEASE FINANCE CORPORATION
By:
-------------------------------------------
Name:
Title:
LESSEE ALOHA ISLANDAIR, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------------
Name: XXXXXX X. XXXXXXXXX
Title: SR. VICE PRESIDENT FINANCE &
PLANNING AND CFO
By: /s/ Xxxx Xxxxxxxx
------------------------------------------
Name: XXXX XXXXXXXX
Title: STAFF VICE PRESIDENT - FINANCE
& CONTROLLER
Lease of de Havilland Dash 8-103 Aircraft
MSN 357
57
EXHIBIT A
DESCRIPTION OF AIRCRAFT
Model Mfr's Serial Number and Type
Mfr. Configuration Number Registration of Engines*
---- ------------- ------ ------------ -----------
DeHavilland Dash-103 Aircraft 357 N854MA Two (2) Xxxxx &
(reflected on the Whitney 121 (reflected
FAA Records as a on the FAA Records as
DHC-8-102) PW 120 A) Engines
MSN 121298
MSN 121179
Number and Type
of Propellers**
---------------
Two (2) Xxxxxxxx
Standard 14 SF-7
Propellers
MSN 921018
MSN 921211
The Aircraft is to be delivered and redelivered without APU.
* Each of the engines is of 750 or more rated takeoff horsepower or the
equivalent of such horsepower.
** Each such propeller is capable of absorbing 750 or more rated takeoff shaft
horsepower or the equivalent thereto.
A-1
SCHEDULE 1 TO EXHIBIT A
DELIVERY CONDITIONS
(1) The Aircraft engines shall have completed an engine overhaul in accordance
with Xxxxx and Whitney overhaul maintenance practices. The life limited
components will have a minimum of 5,000 cycles remaining.
(2) The Aircraft engines shall be upgraded from Model 120 to Model 121 engines.
(3) All Aircraft propeller components that have more than 7,000 hours shall be
overhauled in accordance with Xxxxxxxx Standard maintenance practices.
(4) The Aircraft shall have completed a bridging inspection to Aloha's
equalized maintenance program ("EMP").
(5) The Aircraft will be stripped and painted to Aloha's paint scheme.
(6) Prior to delivery, the Aircraft will be weighed and a weight and balance
statement shall be provided.
(7) The Aircraft shall be delivered with serviceable passenger life vests
installed in under seat stowage pockets.
(8) A "3M" randome boot shall be installed.
(9) The Aircraft shall be delivered with the existing ground spoilers
de-activated.
(10) The Aircraft will be delivered with leather passenger seat covers
installed. Lessee shall pay to, or as directed by Lessor, the
difference in price between fabric seat covers and leather seat
covers.
(11) The Aircraft will be delivered with the existing APU removed from the
Aircraft.
(12) Any de-ice boots that have deterioration or more than 3 patches shall be
replaced prior to the delivery of the Aircraft.
(13) The main landing gear shall, at the time of delivery to Buyer, have at
least fifty (50%) cycles remaining prior to the required time for removal
for overhaul or refurbishment.
The nose landing gear at the time of delivery shall have remaining, for
Aircraft Serial Number 353 at least 7,500 cycles and for Aircraft Serial
Number 357 at least 7,800 cycles, prior to the required time for removal
for overhaul or refurbishment.
A-2
(14) The propellers shall have modification AD95-22-12 Paragraph "B" to the
secondary damper quills ("SDQ") installed.
(15) The next structural inspection shall be due no sooner than twelve (12)
months, 3,500 flight hours or cycles as appropriate after delivery of the
Aircraft to Lessee.
(16) The Aircraft shall be delivered to Lessee with no deferred maintenance. All
airworthiness directives shall be in compliance without waiver or
deviation.
(17) A power assurance run shall be completed and any discrepancies corrected
prior to the delivery of the Aircraft to Lessee.
(18) The interior of the Aircraft shall be refurbished including the replacement
of the carpet.
(19) At the time of technical acceptance the condition of N854MA will be
substantially the same or better than the condition of the Aircraft as
inspected by Lessee's designees on May 25, 1998.
(20) The Aircraft shall have a valid FAA Standard United States Certificate of
Airworthiness.
(21) The Aircraft shall have cleared U.S. Customs.
(22) The Aircraft shall have been registered in the name of the Lessor, as
owner, or application for such registration shall have been filed, with the
FAA.
A-3
EXHIBIT B
RENT AND OTHER FINANCIAL MATTERS
1. STIPULATED LOSS VALUE
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]
2. PAYMENT ACCOUNT
All payments of Rent shall be paid to Lessor's bank account at:
Xxxxx Fargo Bank
San Francisco, California USA
ABA No. 121 000 248
To the Account of
Xxxxxx Lease Finance Corporation
Account No. 4518-101423
until Lessee is advised by Lessor in writing to pay such amounts to another
account.
3. TERM.
The Term shall commence on the Delivery Date and expire on the same
calendar date as the Delivery Date sixty (60) months thereafter unless earlier
terminated in accordance with the terms of the Lease.
4. BASIC RENT
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]
5. PUBLIC LIABILITY INSURANCE.
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]
B-1
6. LETTER OF CREDIT.
Lessee shall establish a Letter of Credit in favor of the Lessor in
compliance with Schedule 1 hereto.
7. EXTENSION OF TERM.
Provided no Event of Default shall have occurred and be continuing, Lessee
shall have the option, exercisable once, to extend the Term of the Lease for an
additional two years at the same Rent and on the same terms and conditions as
provided for in the Lease, exercisable by written notice given to the Lessor no
later than one year prior to the end of the Term. Upon such notice of extension,
the Term shall be deemed extended and such extension shall be irrevocable once
such notice shall have been given. Failure to give such notice shall constitute
an irrevocable undertaking on the part of the Lessee to return the Aircraft
pursuant to Section 10 of the Lease at the end of the Term, without extension.
8. OVERDUE RATE.
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]
B-2
SCHEDULE 1 TO EXHIBIT B
LETTER OF CREDIT
Lessee shall provide Lessor, on the Closing Date, with an irrevocable
transferable Letter of Credit in the amount of U.S. * in a form and drawn on
a U.S. bank acceptable to Lessor, which Letter of Credit shall be valid
during the Term of this Lease and the Other Lease and for ninety (90) days
after the later of the last day of the Term under this Lease and the last day
of the Term under the Other Lease, guaranteeing payment of Rent due and all
other obligations of Lessee to Lessor hereunder and under the Other Lease,
which may be drawn by Lessor upon demand in the event of Lessee's failure to
fulfill any of its obligations hereunder or under the Other Lease. Lessor
may, but shall not be obliged to, apply the proceeds of the Letter of Credit
in whole or in part, to the payment of any rent, indemnities, attorneys fees
and other expenses, insurance and other casualty payments and any other
amount owing from time to time by Lessee hereunder or under the Other Lease,
or under any other agreement between Lessor or its associate, subsidiary or
affiliate companies, and Lessee, for the payment of any loss or damage
suffered by Lessor as a result of any other Event of Default or utilize the
proceeds of the Letter of Credit in whole or in part to perform any of
Lessee's obligations under this Lease and the Other Lease or otherwise remedy
any other Event of Default hereunder or thereunder, including, without
limitation, in the redelivery condition for the Aircraft or the Other
Aircraft, without prejudice to any other remedy of Lessor.
In the event Lessor draws upon the Letter of Credit during the Term, then in
such event Lessee shall, upon demand, restore the amount of the Letter of Credit
to the full amount thereof. Failure to so restore promptly the amount of the
Letter of Credit to the full amount thereof shall constitute an Event of
Default.
Notwithstanding the foregoing, in the event that:
(i) the Letter of Credit provided for pursuant to this Lease shall not
have been drawn upon during the Term of this Lease; and
(ii) the Guarantor and its consolidated affiliates shall have a
combined net worth of not less than $* as of the last day of the
Term of this Lease as evidenced by the then most recent financial
statements required to be delivered to the Lessor pursuant to this Lease,
then the Lessor shall release the Letter of Credit provided pursuant to this
Lease on the later of:
(x) the date the Aircraft is redelivered to the Lessor and accepted by
the Lessor in full compliance with Section 10 of this Lease and Exhibit F
thereto, and
(y) the date on which Lessee shall have satisfied all of its
obligations under this Lease, including its obligations with respect to the
return condition of the Aircraft and the payment of any adjustments to the
Lessor in connection therewith.
B-3
EXHIBIT C
ACCEPTANCE CERTIFICATE
ALOHA ISLANDAIR, INC. ("LESSEE"), a corporation organized under the laws of
Delaware, hereby represents, acknowledges, warrants and agrees as follows:
1. Lessee has received this _____ day of ____________, 1998 (Time:
__________ C.D.T.), at Wichita, Kansas, from XXXXXX LEASE FINANCE CORPORATION
("Lessor") possession of:
A. One (1) de Havilland Model Dash 8-103 (reflected on the FAA Records as
a DHC-8-102) Aircraft, bearing Manufacturers Serial Number 357, U.S.
Registration No. N854MA, together with two (2) Xxxxx & Xxxxxxx 121
(reflected on the FAA Records as PW 120 A) Engines, Manufacturer's
Serial Numbers 121298 and 121179, two (2) Xxxxxxxx Standard 14 SF-7
Propellers, Manufacturer's Serial Numbers 921018 and 921211 and all
appliances, instruments, accessories, equipment (not including an APU)
and parts attached thereto and thereon, in an airworthy condition;
B. Fuel on board the Aircraft, ________________________;
C. All manuals, logbooks flight records and historical information
regarding the Aircraft, the engines and the accessories and equipment,
including, without limitation, those listed on Exhibit D to the Lease,
as received from the Seller, and
D. The items listed on Schedule 1 hereto.
2. All of the foregoing were delivered and accepted to Lessee's full
satisfaction and pursuant to the terms and provisions of the Aircraft Lease
Agreement between Lessor and Lessee, dated as of ____________________, 1998 (the
"Lease"), except as set forth on Schedule 2 hereto. For purposes of the Lease,
Lessor and Lessee agree that the installed hard time components have, as of the
Delivery Date, the time, Flight Hours and Cycles operating time remaining as set
forth on Schedule 3 hereto.
3. The Aircraft, Engines, Propellers and Parts as described in the Lease
have been fully examined by Lessee and have been received in a condition fully
satisfactory to Lessee and in full conformance with the Lease in every respect
except as set forth in Schedule 2 hereto.
4. The Lease and Operative Documents (as defined therein) are in full force
and effect; Lessor has fully, duly and timely performed all of its obligations
of every
C-1
kind or nature under the Lease and other operative Documents; and Lessee has no
claims; deductions, set-offs or defenses of any kind or nature in connection
with the Lease and other Operative Documents.
5. Prior to the Delivery Date, Lessee has obtained all required permits,
authorizations, and licenses required, and has paid all required fees and taxes
relating to the Lease imposed by the United States or any other government
and/or any political subdivision thereof and any agencies and departments
thereof to allow Lessee to operate the Aircraft as permitted by the terms of the
Lease.
6. Lessor and its successors and assigns shall be entitled to rely upon
this Acceptance Certificate.
7. The Delivery Date (as defined in the Lease) is the date written in
paragraph 1 herein.
ALOHA ISLANDAIR, INC.
(LESSEE)
By:
-------------------------------------------
Name:
Title:
By:
-------------------------------------------
Name:
Title:
Lease Acceptance Certificate
Lease of de Havilland Dash 8-103
MSN 357
C-2
SCHEDULE 1 TO EXHIBIT C
[List Additional Items of Equipment]
C-3
SCHEDULE 2 TO EXHIBIT C
[Discrepancies]
C-4
SCHEDULE 3 TO EXHIBIT C
[Time, Flight Hours, Cycles]
C-5
EXHIBIT D
Schedule of Manuals/Maintenance Records
QTY. DESCRIPTION
---- -----------
1 Aircraft Journey Log Book
1 Aircraft Technical Log Book, Record of
Installations and Modifications
1 Engine Log Books for each Engine
Propeller Log Books for each Propeller
1 Component Serialization Record
1 Aircraft Technical Log for Airframe
1 APU Log Book
1 Safe Life Component Replacement
Schedule
1 Flight Manual (FAA-311)
1 Operating Data Manual
1 Weight & Balance Manual
1 Quick Reference Handbook
3 Maintenance Program
3 Equalized Maintenance Manual
1 Maintenance Manual
1 Customized Maintenance Manual
1 Engine Rigging Manual
1 Ramp Servicing Manual
1 Tools & Equipment Manual
1 Wiring Diagrams Manual
1 Customized Wiring Manual
1 Structural Repair Manual
1 Illustrated Parts Catalogue
D-1
QTY. DESCRIPTION
---- -----------
1 Component Maintenance Manual
1 Non-Destructive Testing Man.
1 Cargo Loading Manual
1 Power Plant Build Up Manual
1 Crash-Fire-Rescue Information
1 Vendors Warranties Manual
1 Master Minimum Equipment List
1 Min. Equip. List Proc.
1 Modifications & Options Manual
1 Service Bulletins Manual
1 Service Letters Manual
1 Warranty Claim Forms
1 Engine Maintenance Manual
1 Engine Illustrated Parts Catalogue
1 Propeller Maintenance Manual
1 Emergency Locator Transmitter
1 Battery Manual
1 APU Maintenance Manual]
D-2
EXHIBIT E
RETURN ACCEPTANCE CERTIFICATE
[XXXXXX LEASE FINANCE CORPORATION] ("LESSOR"), a corporation organized
under the laws of California, hereby represents, acknowledges, warrants and
agrees as follows:
1. Lessor has received this _____ day of ____________, 200__ (Time:______),
at [______________________________], from ALOHA ISLANDAIR, INC. ("Lessee")
possession of:
A. One (1) de Havilland Model Dash 8-103 Aircraft, bearing Manufacturer's
Serial Number __ together with two (2) Xxxxx & Whitney__ Engines,
Manufacturer's Serial Numbers ________ and ________, two (2) Xxxxxxxx
Standard propellers, Manufacturer's Serial Numbers ________ and
________ and all appliances. instruments, accessories, equipment (not
including an APU) and parts attached thereto and thereon, in an
airworthy condition;
B. Fuel on board the Aircraft, __________________________; and
C. All usual and customary manuals, logbooks, flight records and
historical information regarding the Aircraft, the engines and the
accessories and equipment, including, without limitation, those listed
on Exhibit D to the Lease.
2. All of the foregoing were delivered and accepted to Lessors full
satisfaction and pursuant to the terms and provisions of the Lease Agreement
between Lessor and Lessee dated as of __________________, 1998 (the "Lease")
except as set forth on Schedule 2 hereto.
3. The Aircraft, Engines, Propellers and Parts as described in the Lease
have been fully examined by Lessor and have been received in a condition fully
satisfactory to Lessor and in full conformance with the Lease except as set
forth on Schedule 2 hereto.
Dated this _____ day of ________________,[200_]
XXXXXX LEASE FINANCE CORPORATION
(LESSOR)
By: ___________________________________
Name: _________________________________
Title: ________________________________
Lease Return Acceptance Certificate
Lease of de Havilland Dash 8-103
MSN __________
E-1
EXHIBIT F
I. GENERAL RETURN CONDITIONS OF THE AIRCRAFT.
(a) OPERATING CONDITION. The Aircraft shall be in as good operating
condition as on the Delivery Date, ordinary wear and tear from normal airline
passenger operations excepted.
(b) CLEANLINESS STANDARDS. The Aircraft shall be clean by United States
commercial airline standards and shall have received an exterior and an interior
deep cleaning since its last commercial flight and shall be in the condition
required for immediate service in the commercial carriage of passengers.
(c) CERTIFICATE OF AIRWORTHINESS. The Aircraft shall have, and be in
compliance with, a current valid Standard Certificate of Airworthiness issued by
the FAA without any corrections, repairs, modifications, alterations or
overhauls having to be performed by Lessor to meet such standards and rules. If
required by Lessor, Lessee shall assist Lessor to do the necessary paperwork to
request in the name of Lessor or such other Person designated by the Lessor a
Certificate of Airworthiness for Export so as to allow Lessor to place the
Aircraft on a different aircraft registry. If any work, including engineering,
is required on the Aircraft to obtain such Certificate of Airworthiness for
Export, Lessee will cooperate with Lessor to do or cause to be done such work at
Lessor's expense.
(d) COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. The Aircraft shall be in
compliance with all Airworthiness Directives affecting the Aircraft. In the
event Lessee has obtained a waiver or applicable deviation from the Aeronautical
Authority from having to comply with any such Airworthiness Directives, Lessee
at its expense shall, irrespective of such waiver or deviation, fully comply
with all such Airworthiness Directives covered by such waiver or deviation prior
to the return of the Aircraft to Lessor as if such waiver or deviation did not
exist. It is expressly understood that with respect to Airworthiness Directives
with respect to which compliance is required during the Term Section 9.06 shall
apply.
(e) DEFERRED MAINTENANCE. The Aircraft shall have had accomplished thereon
all outstanding deferred maintenance items and flight discrepancies. Items
deferred because of maintenance concessions (i.e., an exemption to operate
beyond the normal limits by monitoring) shall be brought up-to-date as if such
maintenance concessions or exemptions did not exist.
(f) CORROSION TREATMENT. The Aircraft shall have been maintained by
cleaning and treating of all mild corrosion and correcting of all moderate and
severe or exfoliated corrosion in accordance with the Maintenance Program.
F-1
(g) CONFIGURATION AND CONDITION. The Aircraft shall be returned in the same
configuration as on the Delivery Date and in the same condition with all Parts
installed therein as on the Delivery Date, excepting only Modifications,
additions, replacements and substitution of Parts as may have been properly made
by Lessee pursuant to Section 9 of the Lease and as specifically otherwise set
forth in this Exhibit F. Lessee shall, prior to such return of the Aircraft,
furnish Lessor with a list of all such Modifications made during the Term.
Lessee shall provide Lessor with the last twelve (12) reliability reports for
the Aircraft as provided to the Aeronautical Authority and a list of all rotable
Parts installed on the Aircraft during the last twelve (12) months of the Term
and of all rotable Parts replaced during said last twelve (12) months. Lessee
shall not replace Parts with parts having an operating record indicating a
higher failure rate than the average for the same type of parts placed by Lessee
in other aircraft or engines or propellers of the same respective model and
manufacturer during the last twelve (12) months of the Term.
(h) PART 121 OPERATION. The Aircraft shall be in a condition as to be
immediately capable of being operated as a Part 121 Aircraft.
(i) INTERIOR CONDITION. The interior of the Aircraft will be in
substantially the same condition as it was on the Delivery Date, ordinary wear
and tear excepted. Cabin windows shall be clear and without major crazing or
scratches.
II. CONDITION OF AIRFRAME AND ENGINES.
The Airframe at the time of its return to Lessor shall meet the
requirements set forth below, all at Lessee's expense, except as otherwise
provided herein:
(a) Lessee shall have performed or caused to be performed prior to
redelivery to the Lessor the following: (i) the next succeeding segment of the
de Havilland Equalized Maintenance Program, (ii) any maintenance or inspections,
including structural inspections, required by the Maintenance Program and not
included in the Equalized Maintenance Program or, any replacement Maintenance
Program for the de Havilland Equalized Maintenance Program, in effect on the
Redelivery Date, (the "Out of Phase Items") due within 3,500 Flight Hours or
Cycles or 12 months (whichever is the more limiting) after the end of the Term,
(iii) the Aircraft shall be redelivered to the Lessor with not less than the
number of Cycles remaining until the next 40,000 cycle structural inspection
required under the de Havilland Maintenance Program as it had remaining on the
Delivery Date. In the event, during the Term, the Lessee adopts a Maintenance
Program other than the de Havilland Equalized Maintenance Program the
requirement in (i) above shall be changed to, an "A" and "C" check or their
equivalent under the Maintenance Program. The Aircraft shall not have been
operated since the completion of the maintenance required in this section except
for flights pursuant to Section 10.07 and 10.08.
F-2
(b) Lessee will correct any deficiencies revealed during such check, if
any, and all deferred maintenance items;
(c) The cockpit shall be cleaned and placards replaced if required by the
Maintenance Program. Those items which are reasonably found by Lessor to be
defective items in the Aircrafts interior will be replaced or repaired in
accordance with the Maintenance Program. All cockpit windshields and windows
shall be free of delamination, bubbles or signs of overheat;
(d) Lessee will permanently repair impact damage to the Aircraft not
within the limits of the structural repair manual caused by ground handling
equipment or impact damage caused by foreign objects if required by and shall be
repaired in accordance with the structural repair manual or other FAA approved
data;
(e) Except as otherwise provided in this Exhibit F, all Parts shall be
serviceable in accordance with Aeronautical Authority standards and have a
value, modification status and condition equivalent to the Parts originally
installed in the Aircraft ordinary wear and tear excepted. All installed
life-limited and time controlled components, including the landing gear, shall
have not less than the number of Flight Hours and Cycles or days as its
respective then authorized life remaining to the next scheduled maintenance as
it did on the Delivery Date with no single component having less than 3,500
Flight Hours or Cycles or 12 months (whichever is the most limiting) of its then
authorized life remaining to the next scheduled maintenance.
(f) The Engines and Propellers shall have not less than the number of
Flight Hours and Cycles remaining to their next scheduled removal as each did on
the Delivery Date, provided that in no event shall any Engine or Propeller have
fewer than 3,500 Flight Hours or Cycles (whichever is more limiting) until its
next scheduled removal; and
(g) The Aircraft shall be returned with the same amount of fuel on board as
when delivered. All engine oil tanks, hydraulic reservoirs and oxygen cylinders
shall be serviced full.
III. ADJUSTMENTS.
In the event the Airframe, Engines, Propellers, Parts or other components
(each a "Component") do not meet the return conditions in Part II above, the
Lessee shall pay the Lessor a dollar amount computed by multiplying (i) the cost
to Lessee of having an outside supplier or contractor perform checks, scheduled
removal, scheduled maintenance or replacement of the Component, whichever is the
appropriate measure for such return condition (the "Periodic Service"), by (ii)
a fraction of which (x) the numerator shall be the difference between the
required number of Flight Hours or Cycles (whichever is more limiting) for such
Component to the next Periodic Service specified in Part II above and the actual
number of Flight Hours or Cycles (whichever is more limiting)
F-3
remaining for such Component to the next Periodic Service and (y) the
denominator shall be the number of Flight Hours or Cycles (whichever is more
limiting) allowable between each instance of Periodic Service for such
Component. To the extent that the remaining life of any Component exceeds the
Flight Hours or Cycles (whichever is more limiting) to the next Periodic Service
required in Part II above and no Default or Event of Default shall then exist,
the Lessee shall be entitled to a credit against amounts due to Lessor by
operation of the preceding sentence. Such credit shall equal a dollar amount
calculated by multiplying (i) the cost to Lessee of having an outside supplier
or contractor perform the appropriate Periodic Service for the Component by
(ii) a fraction of which (x) the numerator shall be the difference between the
actual number of Flight Hours or Cycles (whichever is more limiting) remaining
for such Component to the next Periodic Service and the required number of hours
of operation or Cycles for such Component to the next Periodic Service specified
in Part II above, and (y) the denominator shall be the number of Flight Hours
or Cycles (whichever is more limiting) allowable between each instance of
Periodic Service for such Component, provided that (1) the credit shall only be
used to offset the Lessee's obligation to pay a dollar adjustment to Seller
pursuant to this Part III and in no event shall Lessor be required to pay any
amount to Lessee by reason of the condition of any Component and (2) no credit
provided herein shall be used to offset a dollar adjustment caused by the
Component having less than the minimum hours of Flight Hours or Cycles
(whichever is more limiting) to the next Periodic Service provided for in
Part II above.
F-4
ALOHA AIRGROUP, INC.
Dated as of May____, 1998
TO: Xxxxxx Lease Finance Corporation
000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Re: One (1) de Havilland Dash 8-103 Aircraft
Manufacturers Serial No. 357
U.S. Registration No. N854MA
Ladies and Gentlemen:
Reference is hereby made to the Lease Agreement dated as of the date hereof
(as amended, modified or supplemented from time to time, the "Lease Agreement"),
between Xxxxxx Lease Finance Corporation ("Lessor"), a California corporation,
as lessor, and Aloha Islandair, Inc. ("Lessee"), a Delaware corporation, as
lessee, covering the Aircraft. Capitalized terms used herein without definition
which are defined in the Lease Agreement are used herein with the respective
meanings given such terms in the Lease Agreement.
In order to induce you to enter into the Lease Agreement and the
transactions contemplated thereby with the Lessee, Aloha Airgroup, Inc.
(together with any successor, the "Guarantor") hereby represents, warrants and
covenants to you as follows:
1. REPRESENTATIONS AND WARRANTIES.
(a) All of the representations and warranties with respect to the Guarantor
contained in the Lease Agreement are true, complete and correct and are
incorporated herein by reference for the benefit of the Lessor with the same
force and effect as if set forth herein in full.
(b) The Guarantor acknowledges receipt of executed counterparts or copies
of the Operative Documents and consents to all the terms and conditions thereof,
such consent not to be construed as requiring the consent of the Guarantor to
any amendments thereof.
(c) The Guarantor has requested that the Lessee enter into the transactions
contemplated by the Operative Documents for valid business purposes of the
Guarantor, and acknowledges receipt of good and sufficient consideration for the
guaranties given herein.
(d) The obligations of the Guarantor under this Guaranty shall rank at
least PARI PASSU with all other unsecured indebtedness of the Guarantor now or
hereafter existing.
(e) It shall not be necessary for the Lessor to inquire into the capacity,
power or authority of the officers, directors, or agents acting or purporting to
act on behalf of the Lessee, and any obligations incurred or created in reliance
upon the professed exercise of such powers shall be guarantied hereunder.
2. GUARANTY.
(a) The Guarantor does hereby unconditionally and irrevocably guarantee to
the Lessor, as a primary obligor and not merely as surety, (i) the due,
punctual, and full payment (when due, by acceleration or otherwise) of each
amount which the Lessee is or may become obligated to pay under the Operative
Documents, (ii) the due and punctual performance and observance by Lessee of
each term, provision, condition, agreement and covenant for which it is liable
contained in each Operative Document to which it is a party, and (iii) the
accuracy of each of the representations and warranties of the Lessee set forth
in the Operative Documents.
(b) This is a continuing guaranty of payment and performance, not of
collection. The Guarantor hereby expressly waives notice, promptness,
presentment and diligence as to the obligations guarantied hereby and acceptance
of this guaranty or any requirement that the Lessor proceed against Lessee or
any security for or any other guarantor of any of the obligations guarantied
hereunder (and without having to join any other Person in any such action). The
Guarantor agrees that it shall not be required to consent to, or receive any
notice of, any amendment or modification of, or waiver, consent or extension
with respect to, any Operative Document to which it is not a party that may be
made or given as provided therein. Guarantor hereby waives any and all benefits
and defenses under California Civil Code Section 2810 and hereby agrees that by
doing so Guarantor is liable hereunder even if Lessee had no liability at the
time of execution of any of the Operative Documents, or thereafter ceases to be
liable. Guarantor hereby waives any and all benefits and defenses under
California Civil Code Section 2809 and agrees that by doing so Guarantors
liability may be larger in amount and more burdensome than that of Lessee.
- 2 -
(c) The obligations of the Guarantor hereunder are absolute, unconditional,
and irrevocable irrespective of the legality, validity or binding effect of any
of the Operative Documents and, without limiting the foregoing, will not be
discharged or otherwise affected by: (i) any extension, increase or renewal with
respect to any obligation of the Lessee under any Operative Document; (ii) any
modification of, or amendment or supplement to, any Operative Document or any
other agreement or instrument referred to therein; (iii) any furnishings or
acceptance of additional security for any obligation of the Lessee or any
release of any such security; (iv) any waiver, consent or other action or
inaction or any exercise or non-exercise of any right, remedy or power with
respect to the Lessee; (v) any change in the structure or organization of the
Lessee or the Guarantor or any determination that the Lessee or the Guarantor
lacks capacity or authority to contract; (vi) any insolvency, bankruptcy,
reorganization, arrangement, composition, liquidation, dissolution, or similar
proceedings with respect to the Lessee or the Guarantor; (vii) any legal
prohibition against the exercise of any remedies against the Lessee or the
Guarantor under any of the Operative Documents which in either case might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor; (viii) the unenforceability of any terms of the Operative Documents,
including without limitation any of the remedies for an Event of Default set
forth in Section 15 of the Lease, the Guarantor hereby expressly acknowledging
that it participated in the negotiation of such remedies, that it is fully
familiar with the terms of such remedies, that it consents to such terms, and
that for the Lessor such remedies are essential to the transactions contemplated
by the Operative Documents; (ix) any limitation, discharge, or cessation which
may now or hereafter be imposed by any statute, regulation or rule of law, of
the liability or obligations of. the Lessee or the Guarantor or any other Person
under the terms of the Operative Documents or any discharge, termination,
cancellation, frustration, irregularity, or impossibility of performance, in
whole or in part, of the Operative Documents or any term thereof, (x) any defect
in the title, condition, design, operation or fitness for use of, or damage to
or loss or destruction of or interruption of use of the Aircraft or any part
thereof for any reason whatsoever regardless of the duration thereof, whether or
not resulting from accident and whether or not without fault of the Lessee, the
Guarantor, or any other Person; (xi) any defense, setoff, counterclaim, or claim
of recoupment, discharge or exoneration, that the Lessee or the Guarantor may
have or assert; (xii) any failure, omission or delay on the part of the Lessee
to conform or comply with any term of the Operative Documents; and (xiii) any
other occurrence or circumstance whatsoever which might otherwise constitute a
legal or equitable discharge or defense of a surety or guaranty, except (A)
payment in full of all amounts payable by the Lessee under the Operative
Documents and performance in full of all obligations of the Lessee, in each case
in accordance with the terms and conditions of the Operative Documents and (B)
payment and performance in full of the obligations of the Guarantor hereunder.
Without limiting the generality of the foregoing, Guarantor hereby waives the
rights and benefits under California Civil Code Section 2819, and agrees that by
doing so Guarantors liability shall continue even if Lessor alters any
obligations guaranteed hereunder in any respect or if Lessor's remedies or
rights against Lessee are in any way impaired or suspended without Guarantor's
consent.
- 3 -
3. RELATED PROVISIONS.
(a) The obligations of the Guarantor hereunder shall continue to be
effective, or shall be reinstated, if any payment by the Lessee under any
Operative Document is rescinded or must otherwise be restored for any reason,
all as though such payment had not been made.
(b) Any and all payments to be made by the Guarantor hereunder shall be
made in full in U.S. dollars without setoff or counterclaim and free and clear
of and without deduction for or on account of any present or future taxes,
levies, imposts, duties, stamp tax, turnover tax, charges, currency surcharges,
fees, assessments, restrictions, conditions, deductions or withholdings of any
nature (collectively, together with any interest and/or penalties thereon,
hereinafter called "taxes") unless Guarantor is compelled by law to make payment
subject to any of such takes in which event the Guarantor shall pay to the
Lessor or its assignee such additional amounts as may be necessary to ensure
that the Lessee or such assignee receives an amount in U.S. dollars equal to the
full amount that the Lessee or such assignee would have received if payment had
not been made subject to any of such taxes.
(c) The Guarantor shall not be subrogated to any rights against the Lessee
as a result of any payment hereunder until all amounts and performance owing by
the Lessee under the Operative Documents are paid and performed in full.
(d) The obligations of the Guarantor shall continue unimpaired, even if the
beneficial interest of the Lessee is no longer wholly owned by the Guarantor.
(e) This Guaranty shall be binding upon the successors and permitted
assigns of the Guarantor and be enforceable by the Lessor and its successors and
assigns. The Guarantor shall have no right to assign or transfer its obligations
hereunder except with the prior written consent of the Lessor. This Guaranty
shall be governed, construed, applied and enforced in accordance with the laws
of the State of California.
(f) The Guarantor agrees to pay all reasonable costs, expenses, and damages
(including reasonable legal fees and expenses) incurred in connection with any
action or appeal to enforce the obligations of the Lessee under the Operative
Documents to the extent that such costs, expenses and damages are not paid by
the Lessee pursuant to the terms of the Operative Documents or otherwise and in
connection with the Lessor enforcing this Guaranty.
(g) The Guarantor shall not voluntarily take (A) any action to subject the
Lessee, as debtor to the provisions of any applicable bankruptcy or insolvency
law (as now or hereafter in effect), or (B) any other action not permitted by
the terms of the Operative Documents to threaten the existence or integrity of
the Lessee.
- 4 -
4. SUBORDINATION. Any right of the Guarantor to reimbursement from the
Lessee of any amount paid hereunder shall be subordinate in right and time of
payment to the full payment or performance of the obligations guarantied hereby
and the Guarantor will hold in trust and immediately pay to the Lessor any
payment in respect of such reimbursement received from the Lessee without
affecting, reducing or impairing in any manner from the liability (determined
after application of such payment) of the Guarantor under the other provisions
of this Guaranty. Except with the prior written consent of the Lessor, the
Guarantor will not commence, prosecute or take a position in any bankruptcy or
insolvency proceeding or any administrative, legal or equitable action involving
the Lessee that might adversely affect the Lessor or their interests or that is
inconsistent with the provisions of this Guaranty. In the event any case is
commenced by or against the Lessee under any bankruptcy act or code, the Lessor
may, in its sole discretion, enforce this subordination paragraph by receiving
any distribution that would otherwise go to the Guarantor in or pursuant to such
case and by filing any claim that the Lessee would be entitled to file in their
own name. Unless and until all obligations guarantied hereby have been
discharged by payment or performance in full, the Guarantor shall not assign or
otherwise transfer any claim against the Lessee to any other Person unless the
assignee or transferee of such claim accepts such assignment or transfer subject
to the provisions of this Guaranty.
5. INDEPENDENT OBLIGATIONS. The obligations of the Guarantor hereunder are
independent of the obligations of the Lessee and a separate action may be
brought against the Guarantor regardless of whether the Lessee is joined in such
action or a separate action is brought against Lessee.
6. SPECIAL CALIFORNIA LAW WAIVERS. Guarantor understands and acknowledges
that if Lessor exercises remedies judicially or nonjudicially against the
Aircraft or other property described in the Lease, such exercises of remedies
could impair or destroy any ability that Guarantor may have to seek
reimbursement, contribution or indemnification from Lessee or others based on
any right Guarantor may have of subrogation, reimbursement, contribution or
indemnification for any amounts paid by Guarantor under this Guaranty. In
addition to all the other waivers agreed to and made by Guarantor as set forth
in this Guaranty, by executing this Guaranty, Guarantor freely, irrevocably and
unconditionally:
(i) waives and relinquishes any defense to liability under this
Guaranty and agrees that Guarantor will be fully liable under this Guaranty
even though Lessor may exercise remedies judicially or nonjudicially
against the Aircraft or other property described in the lease;
(ii) agrees that Guarantor will not assert any defense in any action
or proceeding which Lessor may commence to enforce this Guaranty, other
than the indefeasible payment in full of the obligations guaranteed hereby;
(iii) acknowledges and agrees that the rights and defenses waived by
Guarantor in this Guaranty include any right or defense that Guarantor may
have
- 5 -
or be entitled to assert based upon or arising out of Section 2848 of the
California Civil Code;
(iv) waives any defenses resulting from any provisions of the Lease
which contractually limit or negate Lessors right to obtain a deficiency
judgment or other recourse against Lessee;
(v) waives presentment, demand, protest, notice of protest, notice of
dishonor and notice of non-payment and notice of acceptance of this
Guaranty;
(vi) waives the right, if any, to the benefit of, or to direct the
application of, any security held by Lessor; and, until all the
obligations, payment and performance of which are hereby guaranteed have
been paid and performed in full, any right to enforce any remedy which
Lessor now has or hereafter may have against Lessee, and any right to
participate in any security now or hereafter held by Lessor;
(vii) waives the right to require Lessor to proceed against Lessee, to
proceed against or exhaust any property held as security for the
obligations, or to proceed against or exhaust any other security now or
hereafter held by Lessor or to pursue any other remedy in Lessors power;
(viii) waives any other defenses arising out of the absence,
impairment or loss of any right of reimbursement, contribution,
indemnification or subrogation or other right or remedy of Guarantor
against Lessee or against any security resulting from the exercise or
election of any remedy or remedies by Lessor, and any defense arising by
reason of any disability or other defense of Lessee or by reason of the
cessation, from any cause, of the liability of Lessee;
(ix) waives the benefit of or right to assert any statute of
limitations affecting the liability of Guarantor hereunder or the
enforcement hereof to the extent permitted by law; any part payment by
Lessee or other circumstances which operates to toll any statute of
limitations as to Lessee shall also operate to toll the statute of
limitations as to Guarantor;
(x) waives the suretyship and other rights, benefits and defenses, if
any, otherwise available to Guarantor pursuant to California law,
including, without limitation, the rights, benefits or defenses set forth
in California Civil Code Sections 2809, 2810, 2819, 2839, 2845, 2849, 2850,
2855, 2899 or 3433 and any rights, benefits or defenses resulting from
alteration, impairment or suspension in any respect or by any means of any
of Lessee's obligations under the Operative Documents or any of Lessors
rights or remedies under the Lease without Guarantors prior consent;
(xi) acknowledges and agrees that Lessor is relying on the above
waivers in leasing the Aircraft and other property under the Lease, and
that these
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waivers are a material part of the consideration which Lessor is receiving
for entering into the Lease; and
(xii) pursuant to the provisions of California Civil Code Section
2856, "waives all rights and defenses arising out of an election of
remedies by the creditor, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a guaranteed
obligation, has destroyed the guarantors rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the
Code of Civil Procedure or otherwise."
7. FULL KNOWLEDGE. Guarantor agrees that each waiver set forth in this
Guaranty is made with full knowledge of its significance and consequences and
is, under the circumstances reasonable and not contrary to public policy or law.
If a court of competent jurisdiction shall determine that any such waiver is in
any respect contrary to public policy or applicable law, such waiver shall
nevertheless remain effective to the extent not so contrary.
8. JURISDICTION, SERVICE OF PROCESS AND WAIVER OF IMMUNITY WITH RESPECT TO
THE GUARANTOR. The provisions of Section 22.06 of the Lease Agreement are
incorporated herein by reference as though fully set out herein.
9. WAIVER OF JURY TRIAL. GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS
GUARANTY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL
OR WRITTEN), OR ACTION OF GUARANTOR OR LESSEE. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR LESSOR ENTERING INTO THE LEASE.
10. NOTICES. All notices, demands, requests, consents, approvals and other
communications required under the terms and provisions hereof shall be given as
provided in Section 19 of the Lease Agreement with respect to the Lessee.
11. NO WAIVER, ETC. No failure on the part of the Lessor to exercise, no
delay in exercising, and no course of dealing with respect to, any right or
remedy hereunder will operate as a waiver thereof, nor will any single or
partial exercise of any right or remedy hereunder preclude any exercise of any
other right or remedy. This Guaranty may not be amended or modified except by
written agreement of the Guarantor and each of the Lessor.
12. ASSIGNMENT. The Guarantor acknowledges that the Lessor may assign its
right, title and interest in and to this Guaranty and all moneys due or to
become due hereunder as contemplated by Section 18 of the Lease Agreement, and
the Guarantor consents to any such assignment and agrees to make all payments
hereunder in the same manner as would be required of the Lessee under the
Operative Documents. The Guarantor hereby waives the right to assert against any
lender, as assignee of the
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Lessor, any claim, defense, counterclaim or setoff that it could assert against
the Lessor in an action brought by the Lessor upon this Guaranty. Unless any
Lender shall otherwise direct in writing, the Guarantor hereby agrees that it
will make payment of all moneys due or to become due to the Lessor hereunder to
such Lender for application pursuant to any applicable loan agreement or other
facility.
13. Partial Unenforceability. If any term of this Guaranty and any other
application thereof shall be invalid or unenforceable, the remainder of this
Guaranty and any other application of such terms shall not be affected thereby.
Very truly yours,
ALOHA AIRGROUP, INC.
By: /s/ XXXXXX X. XXXXXXXXX
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Name: XXXXXX X. XXXXXXXXX
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Title: SR. VICE PRESIDENT FINANCE &
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PLANNING AND CFO
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By: /s/ XXXX XXXXXXXX
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Name: XXXX XXXXXXXX
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Title: STAFF VICE PRESIDENT - FINANCE
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& CONTROLLER
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Guaranty
MSN 357
-8-
