LEASE AGREEMENT
LEASE
AGREEMENT
This
Lease
Agreement (“Agreement”) is made effective as of the 30th day of January, 2006,
by N2T, Inc., an Oregon corporation with an address located at 0000 XX
00xx
Xxxxxx, Xxxxxxxxx, Xxxxxx 00000 (“N2T”) and Oakley, Inc., a Washington
corporation with its principal offices located at One Icon, Xxxxxxxx
Xxxxx,
Xxxxxxxxxx 00000 (“Oakley”), with reference to the following facts:
RECITALS
A. N2T
is the
owner of that certain Bombardier Global Express XRS model BD-700-1A10
aircraft
bearing manufacturer’s serial number 9162 and an FAA registration number of N2T,
together with two installed Rolls Royce Deutschland BR700-710A2-20 engines,
bearing manufacturer’s serial numbers 12437 (left) and 12438 (right);
and
B. N2T
desires
to lease such aircraft to Oakley and Oakley desires to lease such aircraft
from
N2T for operation in accordance with the rules and regulations of the
FARs (as
defined below).
NOW,
THEREFORE, in consideration of the premises herein and for other good
and
valuable consideration, the parties agree as follows.
ARTICLE
1
DEFINITION
1.1 Aircraft.
The term
“Aircraft” means that certain Bombardier Global Express XRS model BD-700-1A10
aircraft with a manufacturer’s serial number 9162 and an FAA registration number
of N2T, together with two installed Rolls Royce Deutschland BR700-710A2-20
engines, bearing manufacturer’s serial numbers 12437 (left) and 12438 (right),
and with all accessories, parts, appliances and appurtenances now or
hereafter a
part thereof, substitutions therefor, and repairs thereto.
1.2 Aircraft
Business Expenses.
The term
"Aircraft Business Expenses" means the Expense Per Occupied Seat Hour
multiplied
by the number of Occupied Seat Hours directly related to or directly
associated
with the active conduct of Oakley's trade or business (within the meaning
of
Internal Revenue Service Notice 2005-45, 2005-1 C.B. 1228) incurred by
Oakley
during the applicable calendar quarter or calendar year.
1.3 Aircraft
Expenses.
The term
"Aircraft Expenses" means the expenses incurred by Oakley in maintaining
and
operating the Aircraft (including all fixed as well as Operating Expenses)
during the applicable calendar quarter or calendar year. These expenses
include,
but are not limited to, fuel, oil and other lubricant costs, salaries
and
benefits for pilots, maintenance personnel, and other personnel assigned
to the
Aircraft; meal and lodging expenses of flight personnel, take-off and
landing
fees; costs for maintenance and maintenance flights; costs of on board
refreshments, amenities, or gifts; hangar fees (at home or away); management
fees; amounts deductible under Section 179 of the Internal Revenue Code
of 1986,
as amended; Monthly Rent, prorated Base Annual Rent, and all other amounts
incurred, payable or reimbursable by Oakley hereunder (including, without
limitation, Section 9 hereof). N2T and Oakley agree that the definition
of
Aircraft Expenses is based on federal income tax law, rules and regulations
as
in effect the date hereof. Upon any applicable change in tax law, the
parties
will work together in good faith to conform this provision.
1.4 Airworthiness
Directive.
The term
“Airworthiness Directive” means any Airworthiness Directive issued by the FAA
and applicable to the Aircraft.
1.5 Annual
Reconciliation.
The term
“Annual Reconciliation” has the meaning ascribed to it in Section
3.5.
1.6 Charges.
The term
“Charges” has the meaning ascribed to it in Section
5.10.
1.7 Delivery
and Acceptance Certificate.
The term
“Delivery and Acceptance Certificate” means the certificate executed by Oakley
upon accepting delivery of the Aircraft, the form of which is attached
hereto as
Exhibit A.
1.8 Delivery
Date.
The term
“Delivery Date” means the date upon which the Aircraft is delivered by N2T to
Oakley as set forth in the Delivery and Acceptance Certificate.
1.9 Delivery
Location.
The term
“Delivery Location” means the Xxxxxxxx-Xxxxxxxxx Xxxxxxx, Xxxxxxxxx,
Xxxxxx.
1.10 Default.
The term
“Default” means any event or condition which with the giving of notice or the
lapse of time or both would become an Event of Default.
1.11 Estimated
Unreimbursed Aircraft Expenses.
The term
"Estimated Unreimbursed Aircraft Expenses" means a good faith estimate
prepared
by Oakley of its Unreimbursed Aircraft Expenses for the applicable period.
1.12 Event
of
Default.
The term
“Event of Default” has the meaning ascribed to it in ARTICLE
10
hereof.
1.13 Event
of
Loss.
The term
“Event of Loss” with respect to the Aircraft means any of the following events
with respect to such property: (i) the loss of such property or of the
use
thereof due to the destruction of or damage to such property which renders
repair uneconomic or which renders such property permanently unfit for
normal
use by Oakley for any reason whatsoever; (ii) any damage to such property
(including, but not limited to, anything requiring the completion of
an FAA Form
337 “Major Repair and Alteration Statement”) which results in an insurance
settlement with respect to such property on the basis of a total loss,
or a
constructive or compromised total loss; (iii) the theft or disappearance
of such
property; (iv) the condemnation, confiscation or seizure of, or the requisition
of title to or use or possession of, the Aircraft.
1.14 Expense
Per Occupied Seat Hour.
The term
"Expense Per Occupied Seat Hour" means the Aircraft Expenses incurred
during the
applicable calendar quarter or calendar year (including Aircraft Expenses
incurred, payable or reimbursable by Oakley after the Term), divided
by the
Occupied Seat Hours during the same period.
1.15 FAA.
The term
“FAA” means the United States Federal Aviation Administration and any successor
agency or agencies thereto.
1.16 FARs.
The term
“FARs” means the Federal Aviation Regulations.
1.17 Flight
Hours.
The term
“Flight Hours” means actual time that the Aircraft is used during the Term as
recorded in the Aircraft flight logs for actual time that the Aircraft
is aloft
(takeoff to landing) expressed in one-tenth of an hour increments.
1.18 Net
Rent.
The term
“Net Rent” has the meaning ascribed to it in Section
3.4.
1.19 Occupied
Seat Hours.
The term
"Occupied Seat Hours" means the aggregate Flight Hours multiplied by
the number
of seats occupied for each hour during the applicable calendar quarter
or
calendar year during the Term only. For purposes of this definition,
the
Aircraft returning empty from a flight after discharging passengers or
traveling
empty to pick up passengers (deadheading) is treated as having the same
number
and character of occupied seat hours as the leg or legs of the trip on
which
passengers are aboard, as provided in IRS Notice 2005-45, 2005-1 C.B.
1228, as
amended, supplemented or replaced from time to time.
1.20 Operating
Expenses.
The term
“Operating Expenses” means all expenses directly related to the operation of the
Aircraft including fuel, flight crew fees, flight training, landing charges
and
similar fees and all incidental expenses related to the operation of
the
Aircraft, but excluding specifically, Reimbursable Expenses.
1.21 Operating
Report.
The term
“Operating Report” has the meaning ascribed to it in Section
3.4.
1.22 Operational
Control.
The term
“Operational Control” means being the legal operator, holding sole authority
over initiating, conducting or terminating a flight, and having command
and
control of the flight crew.
1.23 Operations
Base.
The term
“Operations Base” means the principal base for operations of the Aircraft, which
shall be Hillsboro, Oregon.
1.24 Rent.
The term
“Rent” means for each Year hereunder, (i) the base annual amount of Ninety
Thousand Dollars ($ 90,000.00) per year (“Base Annual Rent”), payable in advance
at the commencement of each such Year; (ii) the additional monthly amount
of
Seven Thousand Nine Hundred Fifty Five Dollars ($ 7,955.00) per month
(“Monthly
Rent”) payable pursuant to Section
3.6
and (iii)
if applicable, any adjustment amount payable by Oakley under Section
3.3.2.
1.25 Reimbursable
Expenses.
The term
“Reimbursable Expenses” means the following expenses that are the responsibility
of N2T hereunder: scheduled and unscheduled maintenance and part replacement
and
repair expenditures, subscription maintenance programs, hangar and de-icing
fees, Aircraft washes, and any capital expenses and upgrades to the Aircraft.
1.26 Rent
Commencement Date.
The term
“Rent Commencement Date” means the Delivery Date.
1.27 Rental
Tax.
The term
“Rental Tax” has the meaning ascribed to it in Section
5.10.
1.28 Report
Balance.
The term
“Report Balance” has the meaning ascribed to it in Section
3.4.
1.29 Term.
The term
“Term” means the lease term hereunder beginning on the Delivery Date and
(i)
ending
one (1) year thereafter; or (ii) to the extent this Agreement is renewed
as
provided in Section
3.1,
then
ending one (1) year following the last such renewal term hereunder.
1.30 Timesharing
Agreement.
The term
“Timesharing Agreement” means a permissible timesharing agreement under Part
91.501 of the FARs entered into between Oakley and a Timesharing
Lessee.
1.31 Timesharing
Lessee.
The term
“Timesharing Lessee” means a lessee that enters into a permissible timesharing
agreement under Part 91.501 of the FARs with Oakley.
1.32 Unreimbursed
Aircraft Expenses.
The term
"Unreimbursed Aircraft Expenses" means (1) the Aircraft Expenses incurred
by
Oakley during the calendar quarter or the calendar year, as applicable,
minus
Aircraft Business Expenses during such period; less (2) the total flight
charges
payable to Oakley by each Timesharing Lessee pursuant to the Timesharing
Agreements with respect to such period; less (3) the total Reimbursable
Expenses
incurred during such period under this Agreement.
1.33 Year.
The term
“Year” means each one (1) year term under this Agreement beginning with the
Delivery Date or an annual anniversary thereof, to the extent that this
Agreement is renewed.
ARTICLE
2
ACCEPTANCE
AND LEASE OF AIRCRAFT
2.1 Acceptance
and Lease.
N2T hereby
agrees to lease to Oakley at the Delivery Location commencing on the
Delivery
Date, and Oakley hereby agrees to lease on the Delivery Date from N2T,
the
Aircraft. EXCEPT AS SPECIFICALLY STATED IN THIS AGREEMENT, THE AIRCRAFT
SHALL BE
DELIVERED BY N2T TO OAKLEY AS-IS, WHERE-IS ON THE DELIVERY DATE, SUBJECT
TO EACH
AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION SET FORTH IN THIS
AGREEMENT.
2.2 Time
and
Place.
N2T shall
deliver the Aircraft at the Delivery Location on or prior to the Delivery
Date.
All costs associated with movement of the Aircraft to the Delivery Location
shall be the responsibility of the N2T. Oakley shall execute the Delivery
and
Acceptance Certificate upon taking possession of the Aircraft on the
Delivery
Date.
2.3 Lease
Only.
At all
times during the Term, full legal title to the Aircraft shall remain
vested in
N2T. This Agreement and any related documents shall in no way assign
or transfer
any greater right or interest in the Aircraft or any other property of
N2T. The
lease of the Aircraft under this Agreement shall be for such term and
such rents
as set forth below.
2.4 Legal
Relationships.
Oakley
shall have Operational Control of the Aircraft at all times during the
Term,
except, if applicable, when a third party manager acceptable to N2T shall
have
Operational Control as provided in the respective management agreement.
Neither
N2T nor Oakley intends to enter into, and this Agreement is not intended
to
create or constitute, a joint ownership agreement, as such term is defined
in
FAR § 91.501(c)(3), or a joint venture, partnership, business organization,
association, cooperative arrangement or other relationship by and between
N2T on
the one hand and Oakley on the other hand and through which any party
may be
held liable for the omissions or commissions of the other party.
ARTICLE
3
TERM
AND RENT
3.1 Term.
The term
shall commence on the Delivery Date and shall continue for the period
specified
in Section
1.29
hereof.
This Agreement shall automatically renew for successive one (1) year
terms in
each case, unless either party, for any reason, provides a written notice
to the
other party sixty (60) days before the end of the then current term that
the
Agreement will not be renewed.
3.2 Termination
of Term.
The Term
and this Agreement may be terminated by N2T at any time, for any reason,
upon a
prior sixty (60) day written notice to Oakley, or by Oakley at any time,
for any
reason, upon a prior sixty (60) day written notice to N2T. No Net Rent
shall be
due for any period after termination or early termination of this
Agreement.
3.3 Rent.
Oakley
covenants and agrees to pay (i) the Base Annual Rent in advance at the
commencement of each such Year hereunder; and (ii) the Monthly Rent to
N2T, in
arrears, on a quarterly basis, subject to offsets for Estimated Unreimbursed
Aircraft Expenses and Reimbursable Expenses as provided in Section
3.4.
3.4 Operating
Report.
Within
thirty (30) calendar days after the end of each calendar quarter during
the
Term, Oakley shall submit to N2T in writing a statement (“Operating Report”),
which in each case shall detail the total Aircraft Expenses incurred
in such
preceding quarter and shall include a calculation of the net balance
for such
Operating Report (“Report Balance”) which shall consist of (i) as a debit amount
due to N2T a calculation of the corresponding total Monthly Rent for
such
preceding quarter; and (ii) as a credit amount due to Oakley, (Y) Oakley's
Estimated Unreimbursed Aircraft Expenses for such quarter (after offsetting
by
any corrections for any known overestimates or underestimates during
earlier
quarters of the same calendar year); and (Z) the total Reimbursable Expenses
paid by Oakley in such preceding quarter. To the extent that the Report
Balance
reflects a debit amount due to N2T (“Net Rent”), then Oakley shall submit, along
with the Operating Report, payment equal to such Net Rent. To the extent
that
the Report Balance reflects a net credit amount due to Oakley, then N2T
shall
rebate such net credit amount to Oakley within thirty (30) calendar days
of
N2T’s receipt of the Operating Report.
3.5 Annual
Reconciliation.
Within
ninety (90) calendar days after the end of each calendar year that includes
any
portion of the Term, and within ninety (90) calendar days after the Term,
Oakley
shall submit to N2T a statement (“Annual Reconciliation”) for the preceding
calendar year which shall reconcile Estimated Unreimbursed Aircraft Expenses
with actual Unreimbursed Aircraft Expenses such that Oakley pays N2T
additional
Net Rent (if Unreimbursed Aircraft Expenses for such calendar year were
overestimated in the Operating Reports), or N2T pays Oakley a rebate
of Net Rent
(if Unreimbursed Aircraft Expenses for such calendar year were underestimated
in
the Operating Reports), equal to the difference between the aggregate
total
Estimated Unreimbursed Aircraft Expenses as applied in the Operating
Reports for
such calendar year and the aggregate actual Unreimbursed Aircraft Expenses
incurred by Oakley in the previous calendar year. To the extent that
Oakley owes
N2T additional Net Rent, then Oakley shall submit, along with the Annual
Reconciliation, such additional Net Rent. To the extent that N2T owes
Oakley a
rebate of Net Rent, N2T shall pay such amount to Oakley within thirty
(30)
calendar days of N2T’s receipt of the Annual Reconciliation.
3.6 Payments.
Except as
N2T may otherwise direct in writing, each payment of Net Rent shall be
made by
Oakley to N2T, by Oakley’s company check delivered to N2T, Inc. 0000 XX 00xx
Xxxxxx, Xxxxxxxxx, Xxxxxx 00000 or by wire transfer to the bank account
designated by N2T on or before the applicable due date. Notwithstanding
anything
to the contrary contained herein, if any date on which a payment of Net
Rent
becomes due and payable is not a business day then such payment shall
be made on
the next succeeding business day and no interest shall accrue on the
amount of
such payment, if such payment is made on such next succeeding business
day.
3.7 Net
Lease.
This
Agreement is a net lease. Oakley (or a third party manager acceptable
to N2T, if
applicable) will be in Operational Control of the Aircraft at all times
during
the Term, and shall not sell, transfer, assign, encumber or, except with
N2T’s
prior written consent, sublet or part with such possession of the Aircraft
or
any of its rights under this Agreement and shall be solely responsible
for its
possession, use and operation, it being agreed that any Timesharing Agreements
entered into by Oakley do not violate this sentence. Except as expressly
provided herein, N2T shall not be responsible to pay for any Operating
Expenses.
N2T shall be responsible to pay for all Reimbursable Expenses at its
sole cost.
Reimbursable Expenses may be paid initially by Oakley, in which case
they shall
be applied as a credit by Oakley to offset against amounts due to N2T
as
provided in Section
3.4
above.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES
4.1 Mutual
Warranties.
Each party
represents and warrants to the other parties that it is not a party to
any
restrictions, agreements or understandings which would prevent or make
unlawful
such party’s acceptance of the terms set forth in this Agreement or such party’s
performance hereunder. Each party further represents that its acceptance
of the
terms of this Agreement and the performance of its obligations hereunder
does
not and will not (with or without the passage of time) conflict with
or
constitute a breach or default of any contract, agreement or understanding,
oral
or written, to which such party is a party or by which such party is
bound. N2T
and Oakley further warrant to each other that each has the right to enter
into
this Agreement, to perform all of its respective obligations hereunder
and to
transfer and grant the rights transferred and granted herein.
4.2 N2T’s
Representations and Warranties.
N2T
represents and warrants that on the Delivery Date (i) N2T shall have
good title
to the Aircraft; (ii) the Aircraft shall be free of liens; and (iii)
the
Aircraft will, beginning on the Delivery Date and continuing throughout
the
Term, be covered by the insurance required by ARTICLE
8
hereof. N2T
DOES NOT MAKE AND HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE AIRWORTHINESS, CONDITION, VALUE, DESIGN,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR ANY PARTICULAR PURPOSE
OF THE
AIRCRAFT OR ANY PART THEREOF, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP
WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, AS TO THE CORRECTNESS
OR
COMPLETENESS OF ALL AIRCRAFT RECORDS AND LOGBOOKS, AS TO THE ABSENCE
OF LATENT
OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE
OF
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION
OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT
OR ANY
PART THEREOF. None of the provisions of this Section
4.2
nor any
other provision of this Agreement shall be deemed to amend, modify or
otherwise
affect the representations, warranties or other obligations (express
or implied)
of the applicable manufacturer, or any subcontractor or supplier of the
manufacturer with respect to the Aircraft, or any parts thereof, or to
release
the manufacturer, or any such subcontractor or supplier from any such
representation, warranty or obligation.
4.3 Oakley’s
Representations and Warranties.
Oakley
hereby
represents and warrants to N2T and covenants to and with N2T that at
all times
during the Term:
4.3.1 EXCEPT
AS
SPECIFICALLY PROVIDED FOR IN THIS AGREEMENT AND EXCEPT FOR NORMAL MAINTENANCE
AND REPAIR OR AS REQUIRED BY FAA REGULATIONS AND THE APPLICABLE MANUFACTURER
MAINTENANCE PROGRAM, OAKLEY SHALL NOT MAKE ANY NON-SEVERABLE IMPROVEMENTS,
ALTERATIONS, ADDITIONS OR REPAIRS TO THE AIRCRAFT WITHOUT N2T’S PRIOR WRITTEN
CONSENT, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED.
4.3.2 Oakley
shall
only use and operate the Aircraft and permit the Aircraft to be used
and
operated by a third party manager acceptable to N2T (if applicable),
in each
case (i) in compliance with any and all requirements of the manufacturer
and
FAA; and (ii) in accordance with any requirement of any insurance issued
with
respect to the Aircraft.
4.3.3 The
Aircraft
is, and shall at all times remain, the property of N2T, and Oakley shall
have no
right, title or interest therein except as set forth in this Agreement.
Oakley
shall, at its expense, protect and defend N2T’s title against all persons
claiming against or through Oakley, at all times keeping the Aircraft
free from
any legal process or encumbrance whatsoever, including, but not limited
to,
liens, attachments, levies and executions, except for such legal process
or
encumbrance as are created by or through N2T. Oakley shall give N2T immediate
written notice of any such legal process or encumbrance of which Oakley
becomes
aware.
4.3.4 Oakley
will
only operate and maintain the Aircraft and will only permit the Aircraft
to be
operated and maintained by a third party manager acceptable to N2T (if
applicable), in each case, according to this Agreement, and will only
use
appropriately certified persons to conduct any maintenance required hereunder.
4.3.5 Oakley
will,
and its use of the Aircraft and the use of the Aircraft by the third
party
manager acceptable to N2T (if applicable) will, comply with all current
and
future federal, state or local laws and regulations regarding required
security
procedures, passenger screening, and any other security and safety requirements
applicable to Oakley, the third party manager acceptable to N2T and to
Oakley’s
use and such third party manager’s use of the Aircraft.
ARTICLE
5
USE,
LAWFUL INSURED OPERATIONS AND COVENANTS, MAINTENANCE
5.1 Use.
Oakley
shall use the Aircraft solely for its own business purposes for which
it is duly
authorized and strictly in accordance with the terms of this Agreement
and the
FARs and will permit (i) a third party manager acceptable to N2T to use
the
Aircraft solely pursuant to a management agreement acceptable in form
and
content by N2T; and (ii) affiliates of Oakley and other third parties
to lease
the Aircraft pursuant to time sharing agreements that comply with the
requirements of FAR Section 91.501 and other requirements of the FARs.
Oakley
will have in its possession, or obtain on behalf of N2T, all licenses
and
permits required by any federal, state or local governments to operate
the
Aircraft.
5.2 Aircraft
Location.
The
Aircraft shall not be operated or located in (i) any area excluded from
coverage
by the terms of insurance or (ii) any recognized or threatened area of
hostilities, unless fully covered to N2T’s satisfaction by war risk insurance.
The Aircraft shall be principally based at the Operations Base during
the Term.
Oakley shall not change the Operations Base without the prior written
consent of
N2T.
5.3 Transportation
Code Filings.
Oakley
shall, at its sole cost and expense, take all steps necessary to preserve
and
protect the U.S. registration of the Aircraft under the applicable provisions
of
Title 49 of the U.S. Code, and the rules and regulations promulgated
thereunder.
5.4 Flight
Crew.
Oakley
will not permit the Aircraft to be operated by other than currently qualified,
appropriately certified, and rated (appropriate to the Aircraft) pilots
and crew
paid and contracted for by Oakley and employed by Oakley, whose licenses
are in
good standing, who meet the requirements established and specified by
the
insurance policies required hereunder and by the FAA, and who have attended
and
successfully completed the manufacturer’s approved training course for this type
of aircraft.
5.5 Lawful
Insured Operations.
5.5.1 Oakley
will
operate and maintain or cause to be maintained the Aircraft in an efficient
and
professional manner, and Oakley will at all times operate and maintain
or cause
to be maintained the Aircraft under the provisions of FARs Part 91, or
other
such applicable regulation. Neither Oakley nor its designees will maintain,
use,
service, repair, overhaul or operate the Aircraft in violation of any
law or any
rule, regulation, treaty, order or certificate of any government or governmental
authority (domestic or foreign) having jurisdiction, or in violation
of any
airworthiness certificate, license or registration relating to the Aircraft
issued by any such authority.
5.5.2 Oakley
will
not permit the Aircraft to be used except for lawful purposes. The Aircraft
shall not be loaded, used, operated, maintained or stored negligently,
improperly or knowingly in violation of any applicable law, regulation,
ordinance or order of any government or governmental authority having
jurisdiction (domestic or foreign), or in violation of any airworthiness
certificate, license or registration relating to the Aircraft or its
use, or in
violation or breach of any representation or warranty made with respect
to
obtaining insurance required to be in effect under this Agreement on
the
Aircraft or any term or condition of such insurance policy.
5.5.3 Oakley
agrees not to operate the Aircraft, or permit the Aircraft to be operated
(i)
unless the Aircraft is covered by insurance required by the terms of
this
Agreement; or (ii) contrary to the terms of the insurance required by
the
provisions of ARTICLE
8
hereof.
5.6 Covenants.
Oakley
covenants and agrees with N2T that during the Term:
5.6.1 Oakley
will
pay or cause to be paid, at its sole cost, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income and
profits,
or upon any property belonging to it, prior to the date on which penalties
attach thereto and all lawful claims, in each case which, if not paid,
might
become a lien or charge upon Oakley's interest in the Aircraft. Oakley
shall not
permit the sale, forfeiture or loss of any part of the Aircraft or interest
therein in the course of or as a result of any such proceedings;
and
5.6.2 Oakley
shall
not, directly or indirectly create, incur, assume or suffer to exist
any lien on
or with respect to this Agreement, the Aircraft or any part thereof or
interest
therein, except (i) the respective rights of N2T; (ii) N2T’s liens or liens of
any party claiming through or against N2T, if any, including, but not
limited
to, any lien for any loan that N2T shall elect to arrange on the security
of the
Aircraft; and (iii) inchoate materialmen’s, mechanics’, workmen’s, repairmen’s,
employees’ or other like liens arising in the ordinary course of business and
for amounts the payment of which are not yet delinquent or that are being
contested in good faith.
5.7 Maintenance.
5.7.1 Oakley
shall, at N2T’s expense as a Reimbursable Expense, cause the Aircraft to be
inspected, serviced, repaired, overhauled, tested and maintained in compliance
with all applicable FARs so as to keep the Aircraft at all times as good
operating condition and appearance as when delivered to Oakley hereunder,
ordinary wear and tear excepted, and so as to keep the Aircraft in such
operating condition as may be necessary to cause the airworthiness certificate
of the Aircraft to be maintained in good standing and compliance at all
times
under the applicable rules and regulations of the FAA and in such manner
as to
comply with the provisions of this Agreement and to maintain in full
force and
effect all manufacturers’ warranties in respect of the Aircraft. Any damage,
defects or corrosion discovered during any inspection shall be permanently
repaired and treated at the sole expense of N2T.
5.7.2 Oakley
shall
cause, at N2T’s expense as a Reimbursable Expense, all work required by
Airworthiness Directives or mandatory, alert or equivalent service bulletins
or
manuals which require compliance during the Term, to be performed on
the
Aircraft as required by the FAA, the Aircraft manufacturer, the airframe
manufacturer, the engine manufacturer or any other applicable manufacturer
as
the case may be. Additionally, Oakley shall maintain, inspect, service
and test
the Aircraft and perform all repairs on the Aircraft in accordance with
all
recommended service bulletins which might have a detrimental effect on
the
Aircraft airworthiness or safety of the Aircraft if not performed.
5.7.3 Rights
Against Third Parties.
N2T hereby
assigns to Oakley for the Term all presently existing and future rights
and
claims of N2T against the manufacturer (or any of its subcontractors
or
suppliers) of, or service facility for, the airframe, engines, accessories,
equipment and component parts of the Aircraft or any replacement thereof
with
respect to the obligation of said manufacturer or service facility under
the
warranties granted pursuant to the sale or servicing of such property.
Oakley
shall perform, and N2T shall cooperate with Oakley to perform, all acts
necessary to make a claim under any such warranty, in each case at N2T's
expense.
5.8 Records.
5.8.1 Oakley
or
its designee will maintain copies of all appropriate records of the Aircraft
including, but not limited to, flight time, and shall make such records
available to N2T, for inspection upon reasonable notice during Oakley’s business
hours. Should N2T require an independent audit of these records, such
audit will
be performed at N2T’s expense by a mutually acceptable third party.
5.8.2 N2T
shall
deliver to Oakley all maintenance and repair records pertaining to the
Aircraft
on or prior to the Delivery Date. Oakley will, in turn, deliver all such
records
in current form to N2T when the Aircraft is returned to N2T. N2T and
Oakley
shall have access to these records at all reasonable times during the
Term.
5.9 Delegation
to Third Party Manager.
Oakley,
pursuant to a separate management agreement, may delegate some of its
operational, maintenance and other obligations under this Agreement to
a third
party manager acceptable to N2T and notwithstanding anything to the contrary
contained herein, performance by such third party manager under the respective
management agreement will be deemed to be performance by Oakley for purposes
of
its covenants and obligations under this Agreement.
5.10 Taxes.
Oakley
agrees to pay all property taxes, tolls, license fees or assessments,
and
landing fees (collectively, “Charges”) which may be levied or assessed by any
government against the Aircraft or the use thereof, in each case to the
extent
attributable to the period of the Term. In addition, Oakley shall be
liable to
pay any rental, sales or use tax that may be imposed on or with respect
to the
amount of the Rent hereunder or, if greater, the amount of imputed rent
as
assessed by any taxing authority (a “Rental Tax”, in each case excluding taxes
in the nature of income or franchise taxes).
Oakley
will reimburse N2T for any such Charges and Rental Taxes which N2T shall
be
required to pay; however, Oakley may contest any assessment of a Charge
or a
Rental Tax on N2T and N2T shall provide Oakley with a timely opportunity
to
defend against such assessment and cooperate in the defense thereof at
Oakley’s
expense. Oakley shall, upon receipt of written request from N2T, submit
to N2T
evidence of Oakley’s payment of any Charges and Rental Taxes due by
Oakley.
5.11 Inspection.
N2T or its
designee shall have the right, but not the duty, to inspect the Aircraft
at any
reasonable time and upon reasonable notice, provided that each such inspection
shall be subject to Oakley’s safety and security rules applicable to the
location of the Aircraft and no exercise of such inspection right shall
interfere with the normal operation or maintenance of the Aircraft by
Oakley or
violate requirements of applicable insurance policies. Xxxx X0X’s request,
Oakley shall advise N2T of the Aircraft’s location and, within a reasonable time
and, provided there is no undue inconvenience and delay to Oakley, shall
permit
N2T to examine all information, logs, documents and Oakley’s records regarding
or with respect to the Aircraft and its use, maintenance or
condition.
ARTICLE
6
REPLACEMENT
OF PARTS; ALTERATIONS, MODIFICATIONS AND ADDITIONS
6.1 Replacement
of Parts.
Oakley
shall, at N2T’s expense, promptly replace all parts of the Aircraft which may
from time to time become worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use for any reason
whatsoever.
6.2 Title
to
Replaced and Replacement Parts.
All parts
removed from the Aircraft shall remain the property of N2T and shall
be subject
to this Agreement. Immediately upon any replacement part becoming incorporated,
installed or attached as above provided prior to the return of the Aircraft
to
the N2T hereunder, such replacement part shall become the property of
N2T.
6.3 Alterations,
Modifications and Additions.
Except as
contemplated by the terms of this Agreement, Oakley shall not make any
non-severable alteration, modification or addition to the Aircraft without
the
prior written consent of N2T, which consent shall not be unreasonably
withheld
or delayed. Oakley shall, at N2T’s expense, make such alterations, modifications
and additions to the Aircraft as may be required from time to time to
meet the
applicable FARs, mandatory, recommended, alert or equivalent service
bulletins
of the Aircraft manufacturer and to comply with Airworthiness Directives
issued
after the Delivery Date and which require compliance during the Term
and to have
a valid and continuing FAA certificate of airworthiness. All non-severable
alterations, modifications, additions and improvements which are made
shall
become the property of N2T and shall be subject to all the terms of this
Agreement.
6.4 Improvements.
Oakley
shall, at N2T’s expense, affix or install any accessory, equipment or device to
the Aircraft or make any improvement, modification, alteration or addition
thereto as may be required from time to time to meet the standards of
the FAA or
other governmental authority having jurisdiction and which require compliance
during the Term. Title to all parts constituting improvements shall without
further act vest in N2T and shall be deemed to constitute a part of the
Aircraft
and be subject to this Agreement.
ARTICLE
7
EVENTS
OF LOSS
7.1 Event
of
Loss With Respect to the Aircraft.
Upon the
occurrence of an Event of Loss with respect to the Aircraft, Oakley shall
forthwith (and in any event, within ten (10) business days after such
occurrence) give N2T written notice of such Event of Loss.
7.2 Event
of
Loss With Respect to an Engine.
Upon the
occurrence of an Event of Loss with respect to an engine installed on
the
Aircraft under circumstances in which there has not occurred an Event
of Loss
with respect to the Aircraft, Oakley shall forthwith (and in any event,
within
ten (10) business days after such occurrence) give N2T written notice
thereof.
N2T shall, (i) as soon as practicable arrange, at its sole expense, for
an
acceptable alternate engine being in substantially good operating condition
to
be leased and mounted on the Aircraft; and (ii) within ninety (90) calendar
days
after N2T's receipt of property insurance proceeds with respect to the
occurrence of such Event of Loss, purchase, as replacement for the engine
with
respect to which such Event of Loss occurred, and as soon as such engine
is
delivered lease to Oakley, an acceptable alternate engine, free and clear
of all
liens and having a utility equivalent to, and being in substantially
as good an
operating condition as, the removed engine with respect to which such
Event of
Loss occurred, assuming such engine was in the condition and repair required
by
the terms hereof immediately prior to the occurrence of such Event of
Loss. For
all purposes hereof, each such acceptable alternate engine shall, after
such
acquisition, be deemed part of the property leased hereunder, and shall
be
deemed part of the Aircraft. No Event of Loss with respect to an engine
under
any circumstances shall result in any reduction in Rent provided that
the engine
is replaced as provided hereunder. If, following an Event of Loss or
damage to
an engine, Oakley leases a spare engine during the period that the engine
leased
hereunder is unavailable, Oakley shall pay, at N2T's expense as a Reimbursable
Expense, the costs of leasing such spare engine.
ARTICLE
8
INSURANCE
8.1 Public
Liability and Property Damage Liability Insurance.
N2T, at
its own expense, shall maintain or cause to be maintained in effect throughout
the Term combined aircraft bodily injury, property damage liability,
including
passenger liability, insurance with limits of not less than Two Hundred
Million
Dollars ($200,000,000.00) for each occurrence. Any policies of insurance
carried
in accordance with this Section
8.1
and any
policies taken out in substitution or replacement for any of such policies
shall:
(1) name
Oakley and each Timesharing Lessee as an additional named insured; (2)
be with
insurance companies with an A.M. Best rating of at least A- and a financial
size
classification of VII or otherwise as mutually approved by N2T and Oakley;
(3)
provide for not less than thirty (30) days prior written notice to be
received
by the certificate holders and additional named insureds before any lapse,
material alteration, termination or cancellation of such insurance policy;
(4)
provide that in respect of the interests of Oakley such policies of insurance
shall insure Oakley regardless of any breach or violation of any warranty,
declarations or conditions contained in such policies by N2T or any other
person; (5) shall waive any rights of set off, counterclaim or deduction,
whether by attachment or otherwise, and all rights of subrogation against
Oakley
or any other additional insured, and Oakley’s or such additional insured's
officers, employees and servants; and (6) provide that, if the insurers
cancel
such insurance for any reason whatever, or the same is allowed to lapse
for
non-payment of premium, or if there is any material change in policy
terms and
conditions, such cancellation, lapse or change shall not be effective
until
thirty (30) calendar days after receipt by Oakley of written notice from
such
insurers of such cancellation, lapse or change. Each liability policy
shall (i)
be primary without right of contribution from any other insurance which
is
carried by Oakley or any other additional insured; and (ii) expressly
provide
that all of the provisions thereof, except the limits of liability, shall
operate in the same manner as if there were a separate policy covering
each
insured. Oakley shall provide at its own expense worker’s compensation insurance
with all-states coverage for the crew and maintenance personnel.
8.2 Insurance
Against Loss or Damage to the Aircraft.
N2T, at
its own expense, shall maintain or cause to be maintained in effect with
insurers and/or reinsurers of recognized reputation and responsibility
all risk
ground and flight aircraft hull insurance with respect to the Aircraft
against
any loss, theft or damage to the Aircraft, including, without limitation
F.O.D.
(foreign object damage), fire and explosion coverage, and lightning and
electrical damage (including any engines or parts while removed from
the
Aircraft), for an amount not less than Forty Five Million Dollars
($45,000,000.00). N2T shall additionally maintain in effect, at its own
expense,
with insurers of recognized responsibility, war risk, hijacking (air
piracy),
governmental confiscation and expropriation insurance with respect to
the
Aircraft. All such insurance shall be in full force and effect throughout
any
geographical areas at any time traversed by the Aircraft and shall be
payable in
Dollars in the United States. Any policies carried in accordance with
this
Section
8.2:
(1) name
N2T as the loss payee; (2) be with insurance companies with an A.M. Best
rating
of at least A- and a financial size classification of VII or otherwise
as
mutually approved by N2T and Oakley; (3) provide for not less than thirty
(30)
days prior written notice to be received by the certificate holders and
Oakley
before any lapse, material alteration, termination or cancellation of
such
insurance policy; (4) provide that in respect of the interests of Oakley
such
policies of insurance shall insure Oakley regardless of any breach or
violation
of any warranty, declarations or conditions contained in such policies
by N2T or
any other person; (5) shall waive any rights of set off, counterclaim
or
deduction, whether by attachment or otherwise, and all rights of subrogation
against Oakley, and Oakley’s officers, employees and servants; and (6) provide
that, if the insurers cancel such insurance for any reason whatever,
or the same
is allowed to lapse for non-payment of premium, or if there is any material
change in policy terms and conditions, such cancellation, lapse or change
shall
not be effective until thirty (30) calendar days after receipt by Oakley
of
written notice from such insurers of such cancellation, lapse or change.
Each
property insurance policy shall (i) be primary without right of contribution
from any other insurance which is carried by Oakley; and (ii) expressly
provide
that all of the provisions thereof, except the limits of liability, shall
operate in the same manner as if there were a separate policy covering
each
insured.
ARTICLE
9
RETURN
OF AIRCRAFT
9.1 Time,
Place and Condition.
Upon the
expiration of the Term or other termination of this Agreement (other
than an
Event of Loss), Oakley shall return the Aircraft in substantially similar
repair, condition and working order as existed on the Delivery Date,
ordinary
wear and tear excepted, by delivering the Aircraft to N2T, at Oakley’s expense,
at Hillsboro, Oregon or at such other location within the forty-eight
contiguous
United States as specified by N2T. If the delivery location is other
than
Xxxxxxxxx, Xxxxxx, X0X shall specify the delivery location no later than
five
(5) days prior to the date upon which the Aircraft is due to be returned
to N2T.
All expenses for delivery and return of the Aircraft shall be borne by
Oakley.
9.2 Return
Condition.
9.2.1 Upon
return
(other than a return upon an Event of Loss where provisions of ARTICLE
7
shall
apply) and at N2T's or Oakley’s expense (based on the party ultimately
financially responsible for such item or matter during the Term), the
Aircraft
must satisfy all of the following conditions: (i) The Aircraft must be
in an
airworthy and serviceable condition, meet all of the applicable FARs,
Airworthiness Directives issued after the Delivery Date [which require
compliance during the Term] and manufacturer’s mandatory, recommended, alert or
equivalent service bulletins, and have a valid and continuing FAA certificate
of
airworthiness; (ii) the Aircraft must be returned with all equipment,
parts,
components, passenger service items and other accessories that were on
or in the
Aircraft when delivered to Oakley in a serviceable condition (ordinary
wear and
tear excepted) or with an equivalent or better replacement thereof; (iii)
all
exterior paint and interior components (including, without limitation,
paint,
carpet, fabric and wood paneling) must be in the same good appearance
as when
the Aircraft was delivered to Oakley (ordinary wear and tear excepted);
(iv) the
Aircraft must be returned with all and complete originals of the logs,
manuals,
certificates, data, inspection, modification and overhaul records that
were on
or in the Aircraft when delivered to Oakley or are required to be obtained
and
maintained by Oakley hereunder (or if originals are not available, then
any
consequences of or conditions to use of new logs and new maintenance
records
under FAA rules and regulations shall be observed or complied with),
and all
entries therein must be complete, correct, and current, and in the case
of any
modifications made to, or supplemental type certificates incorporated
in, the
Aircraft, all engineering documents and drawings therefor must also be
returned;
(v) the Aircraft shall undergo a reasonable inspection or inspections
or a
flight test or tests, as required in N2T’s discretion (which shall not include a
borescope inspection of any Engine), resulting in N2T’s determination that the
Aircraft and all parts, components, systems and records comply with FAA
standards at that date and meet all of the above conditions; (vi) the
Aircraft
shall be free and clear of all liens (other than liens created by, or
resulting
from the actions or inactions of, N2T).
9.2.2 If
Oakley
does not return the Aircraft in accordance with the above condition by
reason of
a failure to fulfill any obligation required to be fulfilled at Oakley's
expense
(but counting only expenses for which Oakley does not have a right of
reimbursement by N2T), (X) N2T may make (or cause to be made) any repairs
reasonable necessary to restore the Aircraft to the required condition,
(Y)
Oakley shall reimburse N2T, upon demand, for any costs, expenses and
fees
related to such restoration (including, without limitation, costs and
expenses
incurred as a result of actions pursuant to the parenthetical in Section
9.2.1
(iv)
above); and/or (Z) Oakley shall compensate N2T for the diminished value
of the
Aircraft resulting from Oakley’s failure to return the Aircraft in such
condition to N2T’s satisfaction.
Should
Oakley fail to immediately reimburse N2T for such costs, then that failure
shall
be deemed to be an Event of Default under this Lease.
9.2.3 If
the
parties hereto cannot agree on the diminished value of the Aircraft mentioned
in
Section 9.2.2(Z)
above,
said value shall be established by using the average of the diminished
value
determined by two appraisals (each party appointing one appraiser) if
these are
within Five Percent (5%) of each other; if not, a third appraisal shall
be done
(the appraiser being appointed by the two preceding appraisers) and the
average
of the two closest appraisals shall be used.
9.3 Notwithstanding
the foregoing, it is acknowledged by N2T that the Aircraft will necessarily
have
more hours and cycles at the time of return than on the Delivery Date
and that
the Aircraft will have less time remaining to mandatory maintenance,
checks and
overhauls. It is agreed that none of the foregoing circumstances (except
for any
mandatory maintenance, checks and overhauls required to be performed
during the
Term and not performed by Oakley) shall be considered a breach of Oakley’s
obligation to return the Aircraft in substantially similar repair, condition
and
working order as existed on the Delivery Date.
ARTICLE
10
EVENTS
OF DEFAULT AND REMEDIES
10.1 Oakley’s
Defaults.
Any one or
more of the following events shall constitute an Event of Default:
10.1.1 Oakley
shall
fail to make any payment of Base Annual Rent or Net Rent when due hereunder
and
such failure shall continue for a period in excess of ten (10) calendar
days
after notice of such failure; or
10.1.2 Oakley
shall
operate the Aircraft outside the scope of the insurance coverage maintained
with
respect to the Aircraft; or
10.1.3 Oakley
shall
fail to perform or observe in any material respect any of the covenants,
conditions or agreements to be performed or observed by it hereunder
(except for
payment of Base Annual Rent or Net Rent) and such failure shall continue
for a
period in excess of thirty (30) calendar days after written notice from
N2T, to
Oakley of such failure; or
10.1.4 Any
representation or warranty made by Oakley herein or in any other document
or
certificate furnished to N2T in connection herewith or therewith or pursuant
hereto or thereto shall prove to have been incorrect in any material
respect
when made and not cured within 30 days after notice; or
10.1.5 Oakley
suspends substantially all of its operations or the franchises, concessions,
permits, rights or privileges required for the conduct of the business
and
operations of Oakley are revoked, cancelled or otherwise terminated;
or
10.1.6 Oakley
shall
become insolvent or cease to do business as a going concern; or
10.1.7 Oakley
shall
(i) commence any case, proceeding or other action (A) under any existing
or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order
for
relief entered with respect to it, or seeking to adjudicate it a bankrupt
or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to
it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian or
other
similar official for it or for all or any substantial part of its assets,
or
Oakley shall make a general assignment for the benefit of its creditors;
or (ii)
there shall be commenced against Oakley any case, proceeding or other
action of
a nature referred to in clause (i) above which (A) results in the entry
of an
order for relief or any such adjudication or appointment, or (B) remains
undismissed, undischarged or unbonded for a period of sixty (60) calendar
days
or more; or (iii) there shall be commenced against Oakley any case, proceeding
or other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its
assets
which results in the entry of an order for any such relief which shall
not have
been vacated, discharged, or stayed or bonded pending appeal within sixty
(60)
calendar days from the entry thereof; or (iv) Oakley shall take any action
in
furtherance of, or indicating its consent to, approval of, or acquiescence
in,
any of the acts set forth in clause (i), (ii), or (iii) above; or (v)
Oakley
shall generally not, or shall be unable to, or shall admit in writing
its
inability to, pay its debts as they become due; or (vi) Oakley shall
make an
assignment for the benefit of creditors; or
10.1.8 Any
attachments or other liens shall be issued or entered against substantially
all
of the property of the Oakley and shall remain undischarged or unbonded
for
ninety (90) calendar days or more, except for security interests created
in
connection with monies borrowed or obligations agreed to by Oakley in
the
ordinary course of its business.
Oakley
hereby acknowledges that the occurrence of any one of the foregoing Events
of
Default would represent a material Default in the performance of its
obligations
under this Agreement.
10.2 N2T’s
Remedies.
Upon the
occurrence of any Event of Default, and at any time thereafter so long
as the
same shall be continuing, N2T may, at its option and upon notice to Oakley
declare this Agreement to be in default and at any time thereafter, N2T
may
exercise one or more of the following remedies with respect to the Aircraft
as
N2T, in its sole discretion, shall elect, to the extent available and
permitted
by, and subject to compliance with any mandatory requirements of, applicable
law
then in effect:
10.2.1 Demand
that
Oakley, and Oakley shall upon the written demand of N2T and at Oakley’s expense,
immediately return the Aircraft to N2T in the manner specified in such
notice.
Notwithstanding such immediate return of the Aircraft, Oakley shall be
required
to have the Aircraft comply with all return conditions relating to the
Aircraft,
as contemplated in this Agreement, none of which shall be deemed waived
by such
return;
10.2.2 Sell
at
private or public sale, as N2T may determine, or hold, use, operate or
lease to
others the Aircraft as N2T, in its sole discretion, may determine, all
free and
clear of any rights of Oakley;
10.2.3 Perform
or
cause to be performed any obligation, covenant or agreement of Oakley
hereunder.
Oakley agrees to pay all costs and expenses incurred by N2T for such
performance
as additional Rent hereunder and acknowledges that such performance by
N2T shall
not be deemed to cure said Event of Default;
10.2.4 Exercise
any
other right or remedy which may be available to N2T under applicable
law or
proceed by appropriate court action or actions either at law or in equity,
to
enforce performance by Oakley of the applicable covenants of this Agreement
and
to recover damages for the breach thereof and to rescind this Agreement;
and
10.2.5 Terminate
this Agreement by written notice to Oakley and repossess the Aircraft.
N2T, at
its option, may, with or without legal process, enter upon the premises
where
the Aircraft may be located and take immediate possession of and remove
the
same. Oakley specifically authorizes N2T’s entry upon any premises where the
Aircraft may be located for the purpose of, and waives any cause of action
it
may have arising from, a peaceful retaking of the Aircraft.
10.3 Remedies
Cumulative.
No remedy
referred to in this ARTICLE
10
is intended
to be exclusive, but each shall be cumulative and in addition to any
other
remedy referred to above or otherwise available to N2T at law or in equity;
and
the exercise or beginning of exercise by N2T of any one or more of such
remedies
shall not preclude the simultaneous or later exercise by N2T of any or
all of
such other remedies. No express or implied waiver by N2T of any Event
of Default
shall in any way be, or be construed to be, a waiver of any future or
subsequent
Event of Default. The failure or delay of N2T in exercising any rights
granted
it hereunder upon any occurrence of any of the contingencies set forth
herein
shall not constitute a waiver of any such right upon the continuation
or
recurrence of any such contingencies or similar contingencies and any
single or
partial exercise of any particular right by N2T shall not exhaust the
same or
constitute a waiver of any other right provided herein.
ARTICLE
11
GENERAL
PROVISIONS
11.1 Governing
Law and Venue.
This
Agreement shall be interpreted and enforced according to the substantive
laws of
the State of California without application of its conflicts or choice
of law
rules.
11.2 Counterparts.
This
Agreement may be executed in several counterparts that together shall
be
originals and constitute one and the same instrument.
11.3 Headings.
The
headings of Articles, Sections, and sub-sections of this Agreement (other
than
11.16)
are
included for convenience only and shall not be used in its construction
or
interpretation.
11.4 Waiver.
The
failure of any party to enforce any of its rights hereunder or at law
shall not
be deemed a waiver or a continuing waiver of any of its rights or remedies
against another party, unless such waiver is in writing and signed by
the party
to be charged.
11.5 Severability.
If any
provision of this Agreement is judicially determined to be invalid, void
or
unenforceable, the remaining provisions shall remain in full force and
effect.
11.6 Attorneys’
Fees.
Oakley
shall be liable for all costs, charges and expenses, including reasonable
legal
fees and disbursements, incurred by N2T by reason of the occurrence of
any Event
of Default or the exercise of N2T’s remedies with respect thereto. In the event
a dispute (other than by reason of the occurrence of any Event of Default
or the
exercise of N2T’s remedies with respect thereto) arises regarding this
Agreement, the prevailing party shall be entitled to recover its reasonable
attorneys’ fees and costs, in addition to other relief to which it is
entitled.
11.7 DISCLAIMER
OF DAMAGES.
N2T AGREES
THAT IT SHALL NOT BE ENTITLED TO RECOVER, AND HEREBY DISCLAIMS AND WAIVES
ANY
RIGHT THAT IT MAY OTHERWISE HAVE TO RECOVER CONSEQUENTIAL, INCIDENTAL,
EXEMPLARY
OR INDIRECT DAMAGES THAT MAY ARISE AS A DIRECT OR INDIRECT RESULT OF
ANY BREACH
OR ALLEGED BREACH BY OAKLEY OF ANY OF THE AGREEMENTS, REPRESENTATIONS
OR
WARRANTIES OF OAKLEY CONTAINED IN THIS AGREEMENT.
11.8 Entire
Agreement.
This
Agreement constitutes the entire agreement between the parties regarding
the
lease of the Aircraft, and supersedes all prior oral or written agreements
or
understandings regarding this subject matter, and shall be binding upon
the
parties, their successors, assigns and legal representatives. This Agreement
can
only be amended by a writing signed by all parties.
11.9 Assignment.
It is
understood that N2T may assign or pledge any or all of its rights in
this
Agreement or the Aircraft without notice to or the consent of Oakley.
Any
payments received by the assignee from Oakley with respect to the assigned
portion of the Agreement shall, to the extent thereof, discharge the
obligations
of Oakley to N2T with respect to the assigned portions of the lease.
Oakley
shall not have any right to assign, delegate, transfer or otherwise encumber
this Agreement or any portion hereof without N2T’s prior written consent, which
consent shall not be unreasonably withheld or delayed, it being agreed
that this
sentence shall not apply to Timesharing Agreements.
11.10 Notices.
All
notices, requests or other communications under this Agreement shall
be in
writing, and shall be sent to the parties (Attn: Xxx Xxxxxxx, President
if for
N2T; Attn: Link Xxxxxxx, Chief Operating Officer if for Oakley) at the
respective addresses set forth on Page 1 of this Agreement, and shall
be deemed
to have been duly given on the date of service if sent by facsimile (provided
a
hard copy is sent in one of the manners specified herein) or hand delivery,
or
on the day following service if sent by overnight air courier service
with next
day delivery with written confirmation of delivery. Each party is required
to
notify the other parties in the above manner of any change of
address.
11.11 Authority.
The
parties executing this Agreement on behalf of N2T and Oakley represent
and
warrant that they have the authority from their respective governing
bodies to
enter into this Agreement and to bind their respective companies to all
the
terms and conditions of this Agreement.
11.12 Effectiveness.
This
Agreement shall have retroactive effect to January 30, 2006.
11.13 Survival.
The
provisions of all Sections under ARTICLE
1,
ARTICLE
9,
ARTICLE
10
and
ARTICLE
11
shall
survive any termination of this Agreement.
11.14 Modification
of Agreement.
No change
or modification hereof or waiver of any term or condition hereof shall
be
effective unless the change or modification is in writing and signed
by both
parties.
11.15 Time
of
the Essence.
Time is of
the essence in this Agreement.
11.16 Truth
In
Leasing Statement Under FAR 91.23.
11.16.1 OAKLEY
HAS
REVIEWED THE AIRCRAFT’S MAINTENANCE AND OPERATING LOGS SINCE ITS DATE OF
MANUFACTURE AND HAS FOUND THAT THE AIRCRAFT HAS BEEN MAINTAINED AND INSPECTED
UNDER FAR PART 91.409 OR PART 135 DURING SUCH PERIOD. OAKLEY CERTIFIES
THAT THE
AIRCRAFT PRESENTLY COMPLIES WITH THE APPLICABLE MAINTENANCE AND INSPECTION
REQUIREMENTS OF FAR PART 91 OR PART 135.
11.16.2 THE
AIRCRAFT, WITHIN THE TWELVE (12) MONTH PERIOD PRECEDING THE DATE OF THIS
AGREEMENT, EXCEPT TO THE EXTENT THE AIRCRAFT IS LESS THAN TWELVE (12)
MONTHS
OLD, HAS BEEN, AND DURING THE TERM, SHALL BE INSPECTED AND MAINTAINED
IN
ACCORDANCE WITH FAR PART 91.409 OR PART 135, AND ALL APPLICABLE REQUIREMENTS
FOR
MAINTENANCE AND INSPECTION THEREUNDER HAVE BEEN COMPLIED WITH.
11.16.3 OAKLEY,
INC.
CERTIFIES AND KNOWINGLY ACKNOWLEDGES THAT WHEN IT OPERATES THE AIRCRAFT
UNDER
THIS AGREEMENT, OAKLEY, INC. SHALL BE KNOWN AS, CONSIDERED AND IN FACT
WILL BE,
THE OPERATOR OF SUCH AIRCRAFT.
11.16.4 AN
EXPLANATION OF FACTORS BEARING ON CONTROL AND PERTINENT FEDERAL AVIATION
REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT
OFFICE; AND
11.16.5 THE
PARTIES
HERETO CERTIFY THAT A TRUE COPY OF THIS AGREEMENT SHALL BE CARRIED ON
THE
AIRCRAFT AT ALL TIMES DURING ANY LEASE THEREOF, AND SHALL BE MADE AVAILABLE
FOR
INSPECTION UPON REQUEST BY ANY REPRESENTATIVE OF THE FAA.
11.16.6 OAKLEY,
INC.
CERTIFIES THAT IT IS RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT
AND
THAT IT UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE
FARS.
11.16.7 Notwithstanding
the foregoing, any inaccuracy in any statement or certification in Section
11.16.1
shall not
in and of itself constitute an indemnifiable claim or an Event of Default
hereunder.
IN
WITNESS
WHEREOF the parties have executed this Agreement as of the day and year
first
above mentioned and written. THIS AGREEMENT SHALL NOT BE EFFECTIVE UNTIL
EXECUTED ON BEHALF OF EACH PARTY.
|
LESSOR:
N2T,
Inc.
By:
Xxx
Xxxxxxx, President
Title:
President
|
LESSEE:
Oakley,
Inc.
By:
Xxxxxx
Xxxxx, Vice President, Business
Development
|
EXHIBIT
A
DELIVERY
AND ACCEPTANCE CERTIFICATE
THIS
DELIVERY AND ACCEPTANCE CERTIFICATE is delivered, as of the date set
forth
below, by Oakley, Inc., a Washington corporation, whose address is One
Icon,
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000 (“Oakley”) to N2T, Inc., an Oregon corporation
whose address is 0000 XX 00xx Xxxxxx, Xxxxxxxxx, Xxxxxx 00000 (“N2T”), pursuant
to the Lease Agreement between N2T and Oakley dated January 30, 2006
(the
“Agreement”).
Oakley
hereby indicates and confirms to N2T that Oakley has, at Hillsboro, Oregon,
on
January 30, 2006, in accordance with the provisions of the Agreement
accepted
delivery of one (1) Bombardier Global Express XRS Aircraft, serial number
9162,
registration number N2T, together with all parts, items of equipment,
instruments, components, and accessories installed therein or thereon,
including
the two installed Rolls Royce Deutschland BR700-710A2-20 engines having
manufacturer’s serial numbers 12437 (left) and 12438 (right) (collectively, the
“Aircraft”).
OAKLEY
ACCEPTS THE AIRCRAFT “AS-IS” AND IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF
THE AGREEMENT INCLUDING THE WARRANTIES AND DISCLAIMERS PROVIDED IN SECTION
2.1
and 4.2 THEREOF.
IN
WITNESS
WHEREOF, Oakley has caused this instrument to be executed and delivered
by its
duly authorized officer at the date and time of delivery set forth
above.
|
Oakley,
Inc.
By:
Xxxxxx
Xxxxx, Vice President, Business Development
|
Accepted
and Agreed by N2T, Inc.:
By:
Xxx
Xxxxxxx, President
|
AT
DELIVERY:
| Total Hours / Landings on Airframe SN 9162: | Hours | Landings |
| Total Hours / Cycles on Left Engine SN 12437: | Hours | Cycles |
| Total Hours / Cycles on Right Engine SN 12438: | Hours | Cycles |
