EXHIBIT 10.50
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THIS LEASE AGREEMENT HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO THE EXTENT,
IF ANY, THAT THIS LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS
DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS LEASE AGREEMENT MAY BE CREATED
THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL
EXECUTED COUNTERPART CONTAINING THE RECEIPT EXECUTED BY LESSOR OR, IF LESSOR HAS
ASSIGNED ITS RIGHTS TO A THIRD PARTY IN ACCORDANCE WITH THIS LEASE AGREEMENT,
SUCH THIRD PARTY ON THE SIGNATURE PAGE OF THIS LEASE AGREEMENT.
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DATED: JANUARY 15, 1997
ACG ACQUISITION VIII LLC
(Lessor)
- and -
ALOHA AIRLINES, INC.
(Lessee)
--------------------------------
LEASE AGREEMENT 802
- relating to -
Boeing 737-2S5C Aircraft
Manufacturers Serial No: 22148
U.S. Registration ▇▇▇▇ N802AL
--------------------------------
FELTMAN, KARESH, MAJOR & ▇▇▇▇▇▇▇,
Limited Liability Partnership
Carnegie Hall Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
RECORDED
Federal Aviation Administration
Date 1-27-97 Time 4:10 PM
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Conveyance Number TT008434
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By /s/ [Illegible]
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TABLE OF CONTENTS
CLAUSE PAGE
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1. DEFINITIONS and INTERPRETATION ................................................................1
1.1 Definitions .............................................................................1
1.2 Interpretation .........................................................................13
2. REPRESENTATIONS and WARRANTIES................................................................14
2.1 Lessee's Representations and Warranties ................................................14
2.2 Lessee's Further Representations and Warranties ........................................15
2.3 Repetition .............................................................................16
2.4 Lessor's Representations and Warranties ................................................17
2.5 Repetition .............................................................................18
3. CONDITIONS PRECEDENT..........................................................................18
3.1 Lessor's Documentary Conditions Precedent ..............................................18
3.2 Lessor's Other Conditions Precedent ....................................................19
3.3 Lessor's Waiver ........................................................................19
3.4 Lessee's Conditions Precedent ..........................................................20
3.5 Lessee's Waiver ........................................................................20
4. COMMENCEMENT..................................................................................20
4.1 Leasing.................................................................................20
4.2 Delivery................................................................................21
4.3 Acceptance and Risk.....................................................................21
5. PAYMENTS......................................................................................21
5.1 Security Deposit; Letter of Credit .....................................................21
5.2 Rental Periods .........................................................................23
5.3 Basic Rent .............................................................................23
5.4 Payments ...............................................................................24
5.5 Gross-up ...............................................................................24
5.6 Taxation ...............................................................................24
5.7 Information ............................................................................25
5.8 Taxation of Indemnity Payments .........................................................25
5.9 Default Interest .......................................................................26
5.10 Contest ................................................................................26
5.11 Absolute ...............................................................................27
6. MANUFACTURER'S WARRANTIES.....................................................................28
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TABLE OF CONTENTS
continued
CLAUSE PAGE
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6.1 Assignment .............................................................................28
6.2 Proceeds ...............................................................................29
6.3 Parts ..................................................................................29
6.4 Agreement ..............................................................................29
7. LESSOR'S COVENANTS and DISCLAIMERS............................................................30
7.1 Quiet Enjoyment ........................................................................30
7.2 Maintenance Contribution ...............................................................30
7.3 Registration and Filings ...............................................................31
7.4 Agreed Maintenance Performers ..........................................................31
7.5 Exclusion ..............................................................................31
7.6 Lessee's Waiver ........................................................................32
7.7 Lessee's Confirmation ..................................................................32
8. LESSEE'S COVENANTS............................................................................32
8.1 Duration ...............................................................................32
8.2 Information ............................................................................32
8.3 Lawful and Safe Operation ..............................................................34
8.4 Taxes and Other Charges ................................................................36
8.5 Sub-Leasing ............................................................................36
8.6 Inspection .............................................................................37
8.7 Protection of Title ....................................................................37
8.8 General ................................................................................38
8.9 Records ................................................................................39
8.10 Registration and Filings ...............................................................39
8.11 Maintenance and Repair .................................................................40
8.12 Removal of Engines and Parts ...........................................................41
8.13 Installation of Engines and Parts ......................................................42
8.14 Non-Installed Engines and Parts ........................................................44
8.15 Pooling of Engines and Parts ...........................................................45
8.16 Equipment Changes ......................................................................45
8.17 Title to Engines and Parts .............................................................46
8.18 Third Parties ..........................................................................46
9. INSURANCE.....................................................................................46
9.1 Insurances..............................................................................46
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TABLE OF CONTENTS
continued
CLAUSE PAGE
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9.2 Requirements ...........................................................................47
9.3 Insurance Covenants ....................................................................47
9.4 Failure to Insure ......................................................................48
9.5 Continuing Indemnity ...................................................................49
9.6 Application of Insurance Proceeds ......................................................49
10. INDEMNITY.....................................................................................50
10.1 General.................................................................................50
10.2 Mitigation..............................................................................51
10.3 Duration................................................................................52
11. EVENTS OF LOSS................................................................................52
11.1 Total Loss..............................................................................52
11.2 Requisition.............................................................................53
12. RETURN OF AIRCRAFT............................................................................54
12.1 Redelivery .............................................................................54
12.2 Final Checks ...........................................................................54
12.3 Final Inspection .......................................................................55
12.4 Non-Compliance .........................................................................56
12.5 Export Documentation ...................................................................56
12.6 Acknowledgment .........................................................................57
12.7 Maintenance Program ....................................................................57
12.8 Storage ................................................................................57
13. DEFAULT.......................................................................................58
13.1 Events..................................................................................58
13.2 Rights..................................................................................62
13.3 Export..................................................................................62
13.4 Default Payments........................................................................63
14. ASSIGNMENT and TRANSFER ......................................................................64
14.1 No assignment by Lessee ................................................................64
14.2 Lessor Assignment ......................................................................64
14.3 Grants of Security Interests ...........................................................66
14.4 Sale and Leaseback by Lessor ...........................................................68
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TABLE OF CONTENTS
continued
CLAUSE PAGE
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14.5 Further Acknowledgments ................................................................68
14.6 Certain Protections for Lessee's Benefit ...............................................68
15. MISCELLANEOUS.................................................................................69
15.1 Waivers, Remedies Cumulative............................................................69
15.2 Delegation .............................................................................69
15.3 Appropriation ..........................................................................69
15.4 Currency Indemnity .....................................................................69
15.5 Payment by the Lessor ..................................................................70
15.6 Severability ...........................................................................70
15.7 Remedy .................................................................................70
15.8 Expenses ...............................................................................70
15.9 Time of Essence ........................................................................71
15.10 Notices ................................................................................71
15.11 Law and Jurisdiction ...................................................................72
15.12 Sole and Entire Agreement ..............................................................73
15.13 Indemnities ............................................................................73
15.14 Counterparts ...........................................................................73
15.15 Confidentiality ........................................................................74
SCHEDULES
1. Aircraft Specification 76
2. Certificate of Acceptance 802 80
3. Operating Condition at Redelivery 84
4. Insurance Requirements 89
5. Form of Legal Opinion 94
6. Form of Letter of Credit 95
7. Form of Semi-Annual Status Report 96
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THIS
LEASE AGREEMENT is made the 15th day of January, 1997
BETWEEN:
(1) ACG ACQUISITION VIII LLC, a Delaware limited liability company, having
its principal place of business at Three Stamford Landing, ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇. (the "LESSOR"),
and
(2) ALOHA AIRLINES, INC., a Delaware corporation having its principal place
of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ (the "LESSEE").
WHEREAS:
(A) The Aircraft has previously been owned and operated by the Lessee.
(B) Pursuant to a Purchase Option Agreement 802, dated as of September 26,
1996, between Lessee, as seller, and Lessor, as buyer (the "Purchase
Agreement"), Lessor has exercised its option to purchase the Aircraft
from Lessee, and Lessor has agreed to lease the Aircraft to the Lessee
with effect from the purchase of the Aircraft upon and subject to the
covenants, terms and conditions set out in this Agreement.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement the following expressions shall, unless the context
otherwise requires, have the following respective meanings:
ACTUAL COST as it applies to any maintenance work on the
Aircraft means the actual cost of replacement
parts plus the cost of the associated labor at
Lessee's in-house labor rates (if the work is
performed by Lessee) or at third party costs
charged to Lessee (if the work is performed by
third parties) and shall in no event include
late charges, interest or other similar amounts.
AFFILIATE in relation to any person, any other person
controlled directly or indirectly by that
person, any other person that controls directly
or indirectly that person or any other person
under common control with that person. For this
purpose "control" of any entity or person
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means ownership of a majority of the voting
power of the entity or person.
AGREED MAINTENANCE PERFORMER the Lessee or any other reputable maintenance
organization that is (i) experienced in
maintaining aircraft and/or engines of the same
type as the Aircraft and the Engines, (ii) duly
certificated by the FAA under FAR Part 145, and
(iii) not objected to by Lessor pursuant to
Clause 7.4.
AGREED MAINTENANCE PROGRAM the Lessee's current Maintenance Program, as the
same may be amended from time to time in
accordance with this Agreement.
AGREED VALUE $6,000,000.
AIRCRAFT the aircraft described in Part 1 of Schedule I
(which term includes, where the context admits,
a separate reference to all Engines, Parts and
Aircraft Documents).
AIRCRAFT DOCUMENTS the documents, data and records identified in
Part 2 of Schedule I and all additions,
renewals, revisions and replacements from time
to time made in accordance with this Agreement.
AIRFRAME the Aircraft, excluding the Engines and the
Aircraft Documents.
APU (i) the auxiliary power unit listed in Schedule
1, (ii) any and all Parts, so long as such Parts
are incorporated in, installed on or attached to
such auxiliary power unit or so long as title to
such Parts is vested in the Lessor in accordance
with the terms of Clause 8.17(a) after removal
from such auxiliary power unit, and (iii)
insofar as the same belong to Lessor, all
substitutions, replacements or renewals from
time to time made in or to such auxiliary power
unit or to any of the Parts referred to in
clause (ii) above, as required or permitted
under this Agreement.
APPRAISAL PROCEDURE shall mean, with respect to any amount to be
determined, the amount mutually agreed by Lessor
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and Lessee or, if Lessor and Lessee are unable
to agree upon any such amount to be determined,
the average of the amounts determined by three
FAA-approved service centers in the continental
United States, one such service centers
appointed by Lessor, one by Lessee and one by
their appointed service centers, except that if
any party fails to appoint a service center the
Manufacturer or the Engine Manufacturer
(whichever is appropriate) shall be deemed
appointed.
ASSIGNMENT any present or future assignment by the Lessor
in favor of the Lender of the Lessor's rights
under this Agreement as security for its
obligations to the Lender.
AVIATION AUTHORITY the FAA or (if the State of Registration ceases
to be the United States of America) the
authority and/or Government Entity and/or agency
which, under the laws of the State of
Registration, from time to time (a) has control
or supervision of civil aviation; or (b) has
jurisdiction over registration, airworthiness or
operation of the Aircraft.
BASIC RENT all amounts payable pursuant to Clause 5.3.
BUSINESS DAY a day (other than a Saturday or Sunday) on which
business of the nature required by this
Agreement is carried out in Stamford,
Connecticut and the State of Incorporation or,
where used in relation to payments, on which
banks are open for business in New York, New
York and Honolulu, Hawaii.
CERTIFICATE OF ACCEPTANCE a certificate in the form of Schedule 2 to be
completed and executed by the Lessee on
Delivery.
CYCLE one take-off and landing of an airframe.
DAMAGE NOTIFICATION THRESHOLD $500,000.
DEFAULT any Event of Default and any event which with
the giving of notice, lapse of time,
determination of materiality or fulfilment of
other condition or any
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combination of the foregoing would constitute an
Event of Default.
DELIVERY the deemed delivery of the Aircraft to the
Lessee in accordance with the terms of this
Agreement.
DELIVERY DATE the date on which Delivery takes place.
DELIVERY LOCATION a location selected by Lessee and reasonably
acceptable to Lessor.
DOLLARS AND $ the lawful currency of the United States of
America.
ENGINE whether or not installed on the Aircraft:
(a) each engine of the manufacture, model and
serial number specified in Part 1 of
Schedule 1 and having 750 or more rated
take-off horsepower, title to which shall
belong to the Lessor; or
(b) any engine which replaces that engine, title
to which passes to the Lessor in accordance
with Clause 8.17(a);
and in each case includes all modules and Parts
from time to time belonging to, installed in or
appurtenant to that engine but excludes any
engine replaced in accordance with Clause
8.13(a) title to which has, or should have,
passed to the Lessee in accordance with Clause
8.17(c) pursuant to this Agreement.
ENGINE LOSS DATE the relevant date determined in accordance with
the definition of "Total Loss Date" as if that
definition applied to an Engine Loss.
ENGINE MANUFACTURER the ▇▇▇▇▇ & ▇▇▇▇▇▇▇ Division of United
Technologies Corporation.
EVENT OF DEFAULT an event specified in Clause 13.1.
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EXPIRY DATE the day preceding the fifth anniversary of the
date of the Purchase Agreement or if earlier the
date on which:
(a) the Aircraft has been redelivered in
accordance with this Agreement and all
obligations of Lessee have been satisfied;
or
(b) the Lessor receives the Agreed Value
following a Total Loss and any other amounts
then due and owing in accordance with this
Agreement.
FAA the United States Federal Aviation
Administration, the Department of
Transportation, the Administrator of the Federal
Aviation Administration or any person or
Government Entity succeeding to the functions
thereof.
FAR the Federal Aviation Regulations for the time
being in force, issued by the FAA pursuant to
the Federal Aviation Law and published in Title
14 of the Code of Federal Regulations.
FEDERAL AVIATION LAW Title 49 of the United States Code, as amended,
or any successor statutory provisions and the
regulations promulgated under such provisions.
FINANCIAL INDEBTEDNESS any indebtedness in respect of:
(a) moneys borrowed;
(b) any liability under any debenture, bond,
note, loan stock, acceptance credit,
documentary credit or other security;
(c) the acquisition cost of any asset to the
extent payable before or after the time of
acquisition or possession; or
(d) the capitalized value (determined in
accordance with accounting practices
generally accepted in the State of
Incorporation) of obligations under finance
leases; or
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(e) any guarantee, indemnity or similar
assurance against financial loss of any
person in respect of the above.
FLIGHT HOUR each hour or part thereof (rounded up to one
decimal place) elapsing from the moment the
wheels of an airframe leave the ground on take
off until the moment the wheels of such airframe
next touch the ground.
GAAP generally accepted accounting principles as in
effect from time to time and, subject to changes
in such principles from time to time,
consistently applied in accordance with the past
practices of a person.
GOVERNMENT ENTITY (a) any national government, political
subdivision thereof or local jurisdiction
therein;
(b) any instrumentality, board, commission,
court, or agency of any thereof, however
constituted; and
(c) any association, organization, or
institution of which any of the above is a
member or to whose jurisdiction any thereof
is subject or in whose activities any of the
above is a participant.
HABITUAL BASE the State of Hawaii or, subject to the prior
written consent of the Lessor and Lender, any
other state, province or country in which the
Aircraft is for the time being habitually based.
INDEMNITEES each of the Lender and the Lessor, including
any of their respective successors and
assigns, shareholders, Affiliates, partners,
contractors, directors, officers, servants,
agents and employees.
IRS the Internal Revenue Service of the Department
of the Treasury of the United States of America.
LANDING GEAR the landing gear assembly of the Aircraft
excluding the wheels and brake units.
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LENDER FINOVA Capital Corporation, a Delaware
corporation, and any other person or
persons that may from time to time refinance
the Aircraft for the Lessor and/or for whose
benefit a security interest in respect of the
Aircraft and/or this Agreement is granted by
the Lessor.
LESSEE INSTALLED PART means passenger seats, overhead bins and galleys
title to which is held by Lessee subject to a
Security Interest in favor of an unrelated
third party or title to which is held by an
unrelated third party and such Part is leased or
conditionally sold to Lessee.
LESSOR LIEN (a) the Mortgage and any other
security interest whatever from time to time
created by or arising through the Lessor
and/or the Lender in connection with the
financing or refinancing of the Aircraft;
(b) any other security interest in respect of
the Aircraft that results from acts or
omissions of, or claims against, the
Lessor and/or the Lender not related to
the operation of the Aircraft or the
transactions contemplated by or
permitted under this Agreement; and
(c) liens in respect of the Aircraft for
Lessor Taxes.
LESSOR TAXES (a) Taxes imposed as a direct result of
activities of the Lessor and/or the Lender
in the jurisdictions imposing the liability
unrelated to the Lessor's and/or the
Lender's dealings with the Lessee
pursuant to this Agreement or to the
transactions contemplated by this
Agreement or the operation of the
Aircraft by the Lessee;
(b) Taxes imposed on the income, profits or
gains of the Lessor and/or the Lender by any
Federal Government Entity in the United
States of America or by any Government
Entity of the States of Delaware and/or
Connecticut or by any Government Entity
in any other jurisdiction Where the
Lessor and/or the Lender is liable for
- 7 -
such Taxes but only to the extent that such
liability has or would have arisen in the
absence of the transactions contemplated by
this Agreement;
(c) Taxes imposed with respect to any period
commencing or event occurring before the
date of this Agreement or after the
Expiry Date and unrelated to the Lessor's
and/or the Lender's dealings with the
Lessee pursuant to this Agreement or to
the transactions contemplated by this
Agreement;
(d) Taxes imposed as a direct result of the
sale or other disposition of the
Aircraft, unless such sale or disposition
occurs as a consequence of an Event of
Default;
(e) Taxes imposed by a taxing jurisdiction
for a particular tax period in which none
of the following is true for that tax
period (i) the operation, registration,
location, presence or use of the
Aircraft, the Airframe, any Engine or any
Part thereof in such jurisdiction, (ii)
the place of incorporation, commercial
domicile or other presence in such
jurisdiction of the Lessee, any sublessee
or any user of or person in possession of
the Aircraft, the Airframe, any Engine or
any Part thereof in such jurisdiction, or
(iii) any payments made under this
Agreement and related documents being
made from such jurisdiction;
(f) Taxes to the extent caused by the gross
negligence or intentional or willful
misconduct of Lessor or Lender;
(g) Taxes to the extent caused by a failure
by Lessor or Lender to furnish i a timely
manner notice or information which it is
required to furnish to Lessee by the
terms of this Agreement; and
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(h) Taxes based on or measured by the value
or principal amount of indebtedness
incurred by Lessor with respect to or
secured by a Security Interest on the
Aircraft, the Airframe, any Engine or any
interest therein.
LETTER OF CREDIT an irrevocable standby letter of credit, in the
form set out in Schedule 6 or otherwise in form
and substance reasonably satisfactory to the
Lessor, to be issued (at the Lessee's option) in
favor of the Lessor by a reputable bank in the
United States of America reasonably acceptable
to the Lessor for the payment of the Security
Deposit.
MAINTENANCE PROGRAM an Aviation Authority approved maintenance
program for the Aircraft encompassing scheduled
maintenance, condition monitored maintenance
and/or on-condition maintenance of Airframe,
Engines and Parts, including servicing, testing,
preventative maintenance, repairs, structural
inspections, system checks, overhauls, approved
modifications, service bulletins, engineering
orders, airworthiness directives, corrosion
control, inspections and treatments.
MAJOR CHECKS any C-Check, multiple C-Check, D-Check or annual
heavy maintenance visit or segment thereof
suggested for commercial aircraft of the same
model as the Aircraft by its manufacturer
(however denominated) as set out in the Agreed
Maintenance Program.
MANUFACTURER The Boeing Company, a Delaware corporation with
a place of business in Seattle, Washington.
MINIMUM LIABILITY COVERAGE $300,000,000 on each occurrence.
MORTGAGE the first priority aircraft chattel mortgage
and security agreement to be granted by the
Lessor as debtor to the Lender as secured
party, whereby the Lessor will grant to the
Lender a first priority security interest in
the Aircraft and its right, title and
interest in this Agreement.
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PARENT Aloha Airgroup, Inc., a Hawaii corporation and
the sole stockholder of Lessee.
PART whether or not installed on the Aircraft:
(a) any component, furnishing or equipment
(other than a complete Engine) furnished
with, installed on or appurtenant to the
Airframe and Engines on Delivery; and
(b) any other component, furnishing or
equipment (other than a complete Engine)
title to which has, or should have,
passed to the Lessor pursuant to the
Purchase Agreement or Clause 8.17(a),
but excludes any such items title to which
has, or should have, passed to the Lessee
pursuant to Clause 8.17(c) and any Lessee
Installed Part.
PERMITTED LIEN (a) any lien for Taxes not assessed or, if
assessed, not yet due and payable, or being
contested in good faith by appropriate
proceedings;
(b) any lien of a repairer, mechanic, carrier,
hangar keeper, unpaid seller or other
similar lien arising in the ordinary course
of business or by operation of law in
respect of obligations which are not
overdue in accordance with applicable law
(or, if applicable, generally accepted
accounting principles and practices in
the relevant jurisdiction) or are being
contested in good faith by appropriate
proceedings; and
(c) any Lessor Lien;
but only if, in the case of (a) and (b):
(i) adequate reserves have been provided by
the Lessee for the payment of the Taxes
or obligations in accordance with
generally accounting principles and
practices in the relevant jurisdiction;
and (ii) such proceedings, or the
continued existence of the Lien, do not
give rise to any, reasonable likelihood
of the sale, forfeiture or
- 10 -
other loss of the Aircraft or any interest
therein or of criminal liability on the
Lessor or any Lender.
REDELIVERY LOCATION Honolulu, Hawaii or an airport in one of the
States on the West Coast of the United States
of America, as agreed by Lessor and Lessee
before the Expiry Date.
RENT collectively, all Basic Rent and all
Supplemental Rent.
RENTAL PERIOD each period ascertained in accordance with
Clause 5.2.
RENT DATE the Delivery Date and the 26th day of each
calendar month during the Term.
SECURITY DEPOSIT the amount of $227,000.
SECURITY INTEREST any mortgage, charge, pledge, lien, assignment,
hypothecation, right of set-off, or any
agreement or arrangement having the effect of
creating a security interest, other than a
Permitted Lien.
STATE OF INCORPORATION State of Delaware.
STATE OF REGISTRATION United States of America.
SUBSIDIARY (a) in relation to any reference to accounts,
any company wholly or partially owned by
Parent, including the Lessee, whose
accounts are consolidated with the
accounts of the Parent in accordance with
accounting principles generally accepted
under accounting standards of the State
of Incorporation; and
(b) for any other purpose, an entity from time
to time:
(i) of which another has direct or indirect
control or owns directly or indirectly
more than 50% of the voting share
capital; or
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(ii) which is a direct or indirect
subsidiary of another under the
laws of the jurisdiction of its
incorporation.
SUPPLEMENTAL RENT all amounts, liabilities and obligations (other
than Basic Rent) which Lessee assumes or
agrees to pay under this Agreement to Lessor
or any other person, including payment of the
Security Deposit, other deposits, indemnities
and the Agreed Value.
TAXES all present and future taxes, levies, imposts,
duties or charges in the nature of taxes,
whatever and wherever imposed, including
customs duties, value added taxes or similar
taxes and any franchise, transfer, sales,
use, business, occupation, excise, personal
property, stamp or other tax or duty imposed
by any national or local taxing or fiscal
authority or agency, together with any
withholding, penalties, additions to tax,
fines or interest thereon or with respect
thereto.
TERM the period commencing on the Delivery Date and
ending on the Expiry Date.
TOTAL LOSS with respect to the Airframe:
(a) the actual, arranged or constructive total
loss of the Airframe (including any
damage to the Airframe which results in
an insurance settlement on the basis of a
total loss, or requisition for use or
hire which results in an insurance
settlement on the basis of a total loss);
(b) the Airframe being destroyed, damaged
beyond repair or permanently
rendered unfit for normal use for
any reason whatsoever;
(c) the requisition of title, or other
compulsory acquisition, capture, seizure,
deprivation, confiscation or detention
for any reason of the Airframe by the
government of the State of Registration
(whether DE JURE or DE FACTO), but
excluding requisition for use or hire not
involving requisition of title; or
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(d) the hi-jacking, theft, condemnation,
confiscation, seizure or requisition for
use or hire of the Airframe which
deprives any person permitted by this
Agreement to have possession and/or use
of the Airframe of its possession and/or
use for more than 60 consecutive days.
TOTAL LOSS DATE (a) in the case of an actual total loss, the
actual date on which the loss occurs or,
if such date is unknown, the day on which
the Aircraft was last heard of;
(b) in the case of any of the events
described in sub-paragraph (a) of the
definition of "Total Loss" (other than an
actual total loss), the earlier of (i)
30 days after the date on which notice
claiming such total loss is given to the
relevant insurers, and (ii) the date on
which such loss is admitted or
compromised by the insurers;
(c) in the case of any of the events
described in sub-paragraph (b) of the
definition of "Total Loss", the date on
which such destruction, damage or
rendering unfit occurs;
(d) in the case of any of the events
described in sub-paragraph (c) of the
definition of "Total Loss", the date on
which the relevant requisition of title
or other compulsory acquisition, capture,
seizure, deprivation, confiscation or
detention occurs;
(e) in the case of any of the events
described in sub-paragraph (d) of the
definition of "Total Loss", the expiry of
the period of 60 days referred to in such
sub-paragraph (d);
and, in each case, the Total Loss shall be
deemed to have occurred at noon Greenwich
Mean Time on such date.
1.2 INTERPRETATION
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(a) In this Agreement, unless the contrary intention is stated, a
reference to:
(i) each of "THE LESSOR", "THE LESSEE", "THE LENDER" or any
other person includes without prejudice to the provisions
of this Agreement any successor in title to it and any
permitted assignee;
(ii) words importing the plural shall include the singular and
vice versa;
(iii) the term "including", when used in this Agreement, means
"including without limitation" and "including but not
limited to".
(iv) any document shall include that document as amended,
novated or supplemented;
(v) a law (1) includes any statute, decree, constitution,
regulation, order, judgment or directive of any Government
Entity; (2) includes any treaty, pact, compact or other
agreement to which any Government Entity is a signatory or
party; (3) includes any judicial or administrative
interpretation or application thereof; and (4) is a
reference to that provision as amended, substituted or
re-enacted; and
(vi) a Clause or a Schedule is a reference to a clause of or a
schedule to this Agreement.
(b) The headings in this Agreement are to be ignored in construing
this Agreement.
2. REPRESENTATIONS AND WARRANTIES
2.1 LESSEE'S REPRESENTATIONS AND WARRANTIES
The Lessee represents and warrants to the Lessor as follows:
(a) STATUS: The Lessee is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Incorporation, has the corporate power to own its assets and
carry on its business as it is being conducted and is (or will
at the relevant time be) the holder of all necessary air
transportation licences required in connection therewith and
with the use and operation of the Aircraft.
(b) POWER AND AUTHORITY: The Lessee has the corporate power to enter
into and perform, and has taken all necessary corporate action to
authorize the entry into, performance and delivery of, this
Agreement and the transactions contemplated by this Agreement.
(c) LEGAL VALIDITY: This Agreement constitutes the Lessee's legal,
valid and binding obligation.
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(d) NON-CONFLICT: The entry into and performance by the Lessee of,
and the transactions contemplated by, this Agreement do
not and will not:
(i) conflict with any laws binding on the Lessee;
(ii) conflict with the constitutional documents of the Lessee; or
(iii) conflict with or result in default under any document which
is binding upon the Lessee or any of its assets, or result
in the creation of any Security Interest over any of its
assets.
(e) AUTHORIZATION: All authorizations, consents and registrations
required by, and all notifications to be given by, the Lessee
in connection with the entry into, performance, validity and
enforceability of, this Agreement and the transactions
contemplated by this Agreement have been (or will on or before
Delivery have been) obtained, effected or given (as
appropriate) and are (or will on their being obtained or
effected be) in full force and effect.
(f) NO IMMUNITY:
(i) The Lessee is sub ject to civil commercial law with respect
to its obligations under this Agreement.
(ii) Neither the Lessee nor any of its assets is entitled to any
right of immunity and the entry into and performance of
this Agreement by the Lessee constitute private and
commercial acts.
(g) FINANCIAL STATEMENTS: the audited consolidated financial
statements of the Parent and its Subsidiaries most
recently delivered to the Lessor:
(i) have been prepared in accordance with accounting principles
and practices generally accepted and consistently applied in
the State of Registration; and
(ii) fairly present the consolidated financial condition of the
Parent and its Subsidiaries as at the date to which they
were drawn up and the consolidated results of operations
of the Parent and its Subsidiaries for the periods covered
by such statements.
2.2 LESSEE'S FURTHER REPRESENTATIONS AND WARRANTIES
The Lessee further represents and warrants to the Lessor that:
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(a) NO DEFAULT: No Event of Default has occurred and is continuing or
might reasonably be expected to result from the entry into or
performance of this Agreement.
(b) REGISTRATION:
(i) It is not necessary or advisable under the laws of the State
of Incorporation, the State of Registration or the Habitual
Base in order to ensure the validity, effectiveness and
enforceability of this Agreement, the Mortgage or the
Assignment or to establish, perfect or protect the property
rights of the Lessor or the Lender in the Aircraft, any Engine
or Part that this Agreement or any other instrument relating
thereto be filed, registered or recorded or that any other
action be taken or, if any such filings, registrations,
recordings or other actions are necessary, the same have been
effected or will have been effected on or before Delivery.
(ii) Under the laws of the State of Incorporation, the State of
Registration and the Habitual Base the property rights of the
Lessor and the Lender (pursuant to the Mortgage) in the
Aircraft have been fully established, perfected and protected
and this Agreement will have priority in all respects over the
claims of all creditors of the Lessee, with the exception of
such claims as are mandatorily preferred by law and not by
virtue of any contract.
(c) LITIGATION: No litigation, arbitration or administrative
proceedings are pending or, to the Lessee's knowledge,
threatened against the Lessee which, if adversely determined,
would have a material adverse effect upon its financial
condition or business or its ability to perform its
obligations under this Agreement.
(d) PARI PASSU: The obligations of the Lessee under this Agreement rank
at least PARI PASSU with all other present and future unsecured and
unsubordinated obligations (including contingent obligations) of
the Lessee, with the exception of such obligations as are
mandatorily preferred by law and not by virtue of any contract.
(e) TAXES: The Lessee has delivered all necessary returns and payments
due to the tax authorities in the State of Incorporation, the State
of Registration and the Habitual Base and is not required by law to
deduct or withhold any Taxes from any payments under this Agreement.
2.3 REPETITION
The representations and warranties in Clause 2.1 and Clause 2.2 will
survive the execution of this Agreement. The representations and
warranties contained in Clause 2.1 and Clause 2.2 (other than Clause
2.2(c) above) will be deemed to be repeated by the Lessee on Delivery
with reference to the facts and circumstances then existing. The
representations and
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warranties contained in Clause 2.1 will be deemed to be repeated by the
Lessee on each Rent Date as if made with reference to the facts and
circumstances then existing.
2.4 LESSOR'S REPRESENTATIONS AND WARRANTIES
The Lessor represents and warrants to the Lessee that:
(a) STATUS: The Lessor is a limited liability company duly formed and
validly existing under the laws of Delaware and has the power to
own its assets and carry on its business as it is now being
conducted.
(b) POWER AND AUTHORITY: The Lessor has the power to enter into and
perform, and has taken all necessary action to authorize the entry
into, performance and delivery of, this Agreement and the
transactions contemplated by this Agreement.
(c) LEGAL VALIDITY: This Agreement constitutes the Lessor's legal,
valid and binding obligation.
(d) NON-CONFLICT: The entry into and performance by the Lessor of, and
the transactions contemplated by, this Agreement do not and will
not:
(i) conflict with any laws binding on the Lessor;
(ii) conflict with the constitutional documents of the Lessor; or
(iii) conflict with any document which is binding upon the Lessor or
any of its assets.
(e) AUTHORIZATION: So far as concerns the obligations of the Lessor,
all authorizations, consents, registrations and notifications
required under the laws of the States of Delaware and New York in
connection with the entry into, performance, validity and
enforceability of, and the transactions contemplated by, this
Agreement by the Lessor have been (or will on or before Delivery
have been) obtained or effected (as appropriate) and are (or will
on their being obtained or effected be) in full force and effect.
(f) NO IMMUNITY:
(i) The Lessor is subject to civil commercial law with respect to
its obligations under this Agreement.
(ii) Neither the Lessor nor any of its assets is entitled to any
right of immunity and the entry into and performance of this
Agreement by the Lessor constitute private and commercial acts.
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(g) RIGHT TO LEASE: On the Delivery Date, the Lessor shall have the
right to lease the Aircraft to the Lessee under this Agreement.
2.5 REPETITION
The representations and warranties in Clause 2.4 will survive the
execution of this Agreement. The representations and warranties
contained in Clause 2.4 will be deemed to be repeated by the Lessor on
Delivery and on each subsequent Rent Date as if made with reference to
the facts and circumstances then existing.
3. CONDITIONS PRECEDENT
3.1 LESSOR'S DOCUMENTARY CONDITIONS PRECEDENT
The Lessor's obligation to lease the Aircraft to the Lessee under this
Agreement is subject to the receipt of the following by the Lessor from
the Lessee on or before Delivery in form and substance satisfactory to
the Lessor, PROVIDED THAT it shall not be a condition precedent to the
obligations of the Lessor that any document be produced, or action
taken, which is to be produced or taken by it or any person within its
control:
(a) CONSTITUTIONAL DOCUMENTS: a copy of the constitutional documents of
the Lessee;
(b) RESOLUTIONS: a copy of a resolution of the board of directors of
the Lessee approving the terms of, and the transactions
contemplated by, this Agreement, resolving that it enter into this
Agreement, and authorizing a specified person or persons to execute
this Agreement and accept delivery of the Aircraft on its behalf;
(c) OPINION: an opinion, in the form set out in Schedule 5, in respect
of the Lessee's obligations under this Agreement issued by
independent legal counsel acceptable to the Lessor in the State of
Incorporation;
(d) APPROVALS: evidence of the issue of each approval, licence and
consent which may be required in relation to, or in connection
with, the performance by Lessee of any of its obligations hereunder;
(e) LICENCES: copies of the Lessee's air transport license, air
operator's certificate and all other licenses, certificates and
permits required by the Lessee in relation to, or in connection
with, the operation of the Aircraft;
(f) CERTIFICATE: a certificate of a duly authorized officer of the
Lessee:
(i) setting out a specimen of each signature referred to in Clause
3.1(b); and
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(ii) certifying that each copy of a document specified in this
Clause 3.1 is correct, complete and in full force and effect;
(g) INSURANCES: certificates of insurance, brokers' undertakings and
other evidence satisfactory to the Lessor that the Lessee is taking
the required steps to ensure due compliance with the provisions of
this Agreement as to insurances with effect on and after Delivery;
(h) REGISTRATION: evidence that the Aircraft has been validly
registered under the laws of the State of Registration and that all
filings, registrations, recordings and other actions have been or
will be taken which are necessary to ensure the validity,
effectiveness and enforceability of this Agreement, the Mortgage
and the Assignment and to protect the respective rights of the
Lessor and the Lender in the Aircraft or any Part; and
(i) GENERAL: such other documents as the Lessor may reasonably
request.
3.2 LESSOR'S OTHER CONDITIONS PRECEDENT
The obligation of the Lessor to deliver and lease the Aircraft under
this Agreement is also subject to the following additional conditions
precedent:
(a) that the representations and warranties of the Lessee under Clauses
2.1 and 2.2 are correct and would be correct if repeated on
Delivery;
(b) that all payments due to the Lessor under this Agreement on or
before Delivery, including the first payment of Basic Rent, shall
have been received by the Lessor;
(c) all conditions precedent to the purchase of the Aircraft and the
Aircraft Documents by the Lessor under the Purchase Agreement shall
have been satisfied (or waived by the Lessor), the Lessor shall
have drawn down under its financing facility with the Lender the
amount required to pay the "Purchase Price" (as defined in the
Purchase Agreement) due to the Lessee and the Lessee has delivered
the Aircraft and Aircraft Documents to Lessor pursuant to the
Purchase Agreement; and
(d) the Mortgage shall be in full force and effect.
3.3 LESSOR'S WAIVER
The conditions specified in Clauses 3.1 and 3.2(a) and (b) are for the
sole benefit of the Lessor and the Lender and may be waived or deferred
in whole or in part and with or without conditions by the Lessor. If any
of those conditions are not satisfied on or before Delivery and the
Lessor (in its absolute discretion) nonetheless agrees to deliver the
Aircraft to the
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Lessee, the Lessee will ensure that those conditions (other than the
representation set forth in Clause 2.2(c) being correct on the Delivery
Date) are fulfilled within one month after the Delivery Date and the
Lessor may treat as an Event of Default the failure of the Lessee to do
so.
3.4 LESSEE'S CONDITIONS PRECEDENT
The Lessee's obligation to accept the Aircraft on lease from the Lessor
under this Agreement is subject to the satisfaction by the Lessor of the
following conditions precedent:
(a) RESOLUTIONS: the receipt by the Lessee of a copy of resolutions of
the board of directors of the Lessor approving the terms of, and
the transactions contemplated by, this Agreement, resolving that it
enter into this Agreement, and authorizing a specified person or
persons to execute this Agreement and deliver the Aircraft on its
behalf;
(b) CERTIFICATE: the receipt by the Lessee of a certificate of a duly
authorized officer of the Lessor:
(i) setting out a specimen of each signature referred to in
sub-clause (a) above; and
(ii) certifying that the copy of the resolutions referred to in
sub-clause (a) above is correct, complete and in full force
and effect;
(c) REPRESENTATIONS AND WARRANTIES: that the representations and
warranties of the Lessor under Clause 2.4 are correct and would be
correct if repeated on Delivery; and
(d) LENDER'S COVENANT OF QUIET ENJOYMENT: the receipt by the Lessee of
the Lender's Letter of Quiet Enjoyment, duly signed by the Lender.
3.5 LESSEE'S WAIVER
The conditions specified in Clause 3.4 are for the sole benefit of the
Lessee and may be waived or deferred in whole or in part and with or
without conditions by the Lessee. If any of those conditions are not
satisfied on or before Delivery and the Lessee (in its absolute
discretion) nonetheless agrees to lease the Aircraft from the Lessor,
the Lessor will ensure that those conditions are fulfilled within one
month after the Delivery Date.
4. COMMENCEMENT
4.1 LEASING
(a) The Lessor will lease the Aircraft to the Lessee and the Lessee
will take the Aircraft on lease in accordance with this Agreement
for the duration of the Term.
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(b) The Lessor and the Lessee intend that this Agreement constitute a
"true lease" and a lease for all United States federal income tax
purposes. The Lessor and the Lessee further intend and agree that
the Lessor shall be entitled to the full benefits afforded lessors
of aircraft under 11 U.S.C. Section 1110, as amended.
4.2 DELIVERY
The Aircraft will be deemed to have been delivered to, and will be
accepted by, the Lessee at the Delivery Location, or such other location
as may be agreed, on the Delivery Date immediately following
satisfaction of the conditions precedent specified in Clauses 3.1, 3.2
and 3.4 (or their waiver or deferral by the party entitled to grant such
waiver or deferral).
4.3 ACCEPTANCE AND RISK
(a) Immediately following satisfaction of the conditions precedent
specified in Clauses 3.1, 3.2 and 3.4 (or their waiver or deferral
by the party entitled to grant such waiver or deferral), the Lessee
and the Lessor shall forthwith complete Annex 1 to the Certificate
of Acceptance (specifying the maintenance status of the Airframe,
Engines, APU and Landing Gear) and the Lessee shall sign and
deliver to the Lessor the Certificate of Acceptance. Delivery of
the signed Certificate of Acceptance to the Lessor shall constitute
deemed delivery of the Aircraft to the Lessee.
(b) On and from Delivery, the Aircraft and every Part will be in every
respect at the sole risk of the Lessee, which will bear all risk
of loss, theft, damage or destruction to the Aircraft from any
cause whatsoever.
(c) Immediately following Delivery, the Lessor shall file for
recordation this Lease at the FAA Aircraft Registry together with
the Mortgage and the Assignment.
5. PAYMENTS
5.1 SECURITY DEPOSIT: LETTER OF CREDIT
(a) SECURITY DEPOSIT: On the date of this Agreement, Lessee shall pay
the Security Deposit to Lessor. The Security Deposit shall
constitute additional security for performance by Lessee of its
obligations under this Agreement, and the following provisions
shall apply:
(i) If an Event of Default occurs and for as long as it
continues, the Lessor may (but shall not be obligated to)
apply all or any portion of the Security Deposit in or
towards satisfaction of any sums due and payable to the
Lessor under this Agreement or to compensate the Lessor for
any sums which it may, in its
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discretion, advance or expend as a result of any such Event
of Default. Notwithstanding any such use or application by
the Lessor, the Lessee shall remain in default under this
Agreement until the full amount owed by the Lessee, including
interest accrued thereon pursuant to Clause 5.9, shall have
been paid to the Lessor. If the Lessor so uses or applies all
or any portion of the Security Deposit, the Lessee shall
immediately, on demand of the Lessor, replenish the Security
Deposit in an amount equal to the amount so used or applied
within five Business Days after Lessor's demand therefor.
(ii) Lessor may commingle the Security Deposit with its general
funds, and any interest earned on the Security Deposit will
be for Lessor's account.
(iii) The Security Deposit shall be returned to the Lessee within
five Business Days of (1) redelivery of the Aircraft to the
Lessor in the condition required by Clause 12 of, and
Schedule 3 to, this Agreement, (2) receipt by the Lessor of
the Agreed Value following a Total Loss and all other amounts
due under Clause 11.1 (b), or (3) at such later time as the
Lessor is satisfied that the Lessee has irrevocably paid to
the Lessor all amounts which are at that time outstanding
under this Agreement; provided always that the Lessor shall
not be obliged to return the Security Deposit if, at the
relevant time, a Default shall have occurred and be
continuing.
(b) LETTER OF CREDIT: the Lessee shall be entitled, instead of paying
the Security Deposit in cash in accordance with sub-clause (a)
above, to provide the Lessor with the Letter of Credit. In the
event that the Lessee elects to provide the Letter of Credit, the
following provisions shall apply:
(i) Lessee shall cause the Letter of Credit to be renewed or
replaced by the issuing bank not later than 10 Business Days
before the expiration of such Letter of Credit, and shall
cause the Letter of Credit to remain in effect, as renewed,
until 90 days after the scheduled Expiry Date.
(ii) If an Event of Default occurs and for as long as it
continues, the Lessor may (but shall not be obliged to) call
on the Letter of Credit and use or apply the proceeds in or
towards satisfaction of any sums due and payable to the
Lessor under this Agreement or to compensate the Lessor
for any sums which it may, in its discretion, advance or
expend as a result of any such Event of Default.
Notwithstanding any such use or application by the Lessor,
the Lessee shall remain in default under this Agreement
until the full amount owed by the Lessee, including
interest accrued thereon pursuant to Clause 5.9, shall have
been paid to the Lessor. If the Lessor so uses or applies
all or any portion of the amount available under the
Letter of Credit, the Lessee shall immediately, on demand of
the Lessor, procure the issue of a new Letter of Credit
acceptable to the Lessor for
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an amount equal to the amount so used or applied, or shall
pay to the Lessor an amount in cash equal to the amount so
used or applied to be held pursuant to Clause 5.1(a).
(iii) The Letter of Credit shall be returned to the Lessee within
five Business Days of
(1) redelivery of the Aircraft to the Lessor in the
condition required by Clause 12 of, and Schedule 3 to,
this Agreement; or
(2) receipt by the Lessor of the Agreed Value following a
Total Loss and all other amounts due under Clause
11.1(b); or
in either case, at such later time as the Lessor is satisfied
that the Lessee has irrevocably paid to the Lessor all
amounts which are at that time outstanding under this
Agreement; provided always that the Lessor shall not be
obliged to return the Letter of Credit if, at the relevant
time, a Default shall have occurred and be continuing.
5.2 RENTAL PERIODS
The first Rental Period will commence on the Delivery Date and each
subsequent Rental Period will commence on the date succeeding the last
day of the previous Rental Period. Each Rental Period will end on the
date immediately preceding the next succeeding Rent Date except that if
a Rental Period would otherwise overrun the Expiry Date, it will end on
the Expiry Date.
5.3 BASIC RENT
(a) TIME OF PAYMENT: the Lessee will pay to the Lessor or its order
Basic Rent in advance on each Rent Date. Payment must be initiated
adequately in advance of the Rent Date to ensure that the Lessor
receives credit for the payment on the Rent Date.
(b) AMOUNT: The Basic Rent payable in respect of each Rental Period
will be as follows:
(i) The Basic Rent payable in respect of the first Rental Period
will be the product of $113,500 multiplied by a fraction (1)
the numerator of which is the number of days from and
including the Delivery Date to but excluding the next
succeeding Rent Date and (2) the denominator of which is the
number of days in the calendar month immediately preceding
the calendar month in which such next succeeding Rent Date
occurs.
(ii) The Basic Rent payable in respect of each subsequent Rental
Period will be the amount of $113,500.
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5.4 PAYMENTS
(a) All payments of Rent by the Lessee to the Lessor under this
Agreement will be made for value on the due date, for the full
amount due, in Dollars and in same day funds, settled through the
New York Clearing House System or such other funds as may for the
time being be customary for the settlement in New York City of
payments in Dollars by telegraphic transfer to the account of the
Lender at Citibank, N.A., New York, New York, ABA No. ▇▇▇▇▇▇▇▇▇,
Account No. ▇▇▇▇▇▇▇▇, reference "Aloha Airlines/N802AL-N804AL".
(b) if any Rent or other payment would otherwise become due on a day
which is not a Business Day, it shall be due on the immediately
succeeding Business Day.
5.5 GROSS-UP
(a) All payments by the Lessee under or in connection with this
Agreement will be made without offset or counterclaim, free and
clear of and without deduction or withholding for or on account of
any Taxes (other than Lessor Taxes that Lessee is compelled by law
to deduct or withhold).
(b) All Taxes (other than Lessor Taxes) in respect of payments under
this Agreement shall be for the account of the Lessee.
(c) If the Lessee is compelled by law to make payment to the Lessor
under or in connection with this Agreement subject to any Tax and
the Lessor does not actually receive for its own benefit on the due
date a net amount equal to the full amount provided for under this
Agreement (other than Lessor Taxes that Lessee is compelled by law
to deduct or withhold), the Lessee will pay all necessary
additional amounts to ensure receipt by the Lessor of the full
amount (other than Lessor Taxes that Lessee is compelled by law to
deduct or withhold) so provided for.
5.6 TAXATION
(a) The Lessee will on demand pay and indemnify the Lessor and the
Lender against all Taxes (other than Lessor Taxes) levied or
imposed against or upon the Lessor, the Lender or the Lessee and
relating to or attributable to the Lessee, this Agreement or the
Aircraft directly or indirectly in connection with the importation,
exportation, registration, ownership, leasing, sub-leasing,
purchase, delivery, possession, use, operation, repair,
maintenance, overhaul, transportation, landing, storage, presence
or redelivery of the Aircraft or any part thereof or any rent,
receipts, insurance proceeds, income or other amounts arising
therefrom.
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(b) If the Lessor or the Lender shall, based upon its own reasonable
interpretation of any relevant laws or regulations, realize any Tax
savings (by way of refund, deduction, credit or otherwise) in
respect of any amount with respect to which the Lessee shall have
made a payment (or increased payment) pursuant to Clause 5.5 or 5.8
or shall have indemnified the Lessor or the Lender pursuant to
sub-clause (a) above, or in respect of the occurrence or
transaction which gave rise to such payment or indemnification, and
such Tax savings shall not have been taken into account previously
in calculating any indemnity payment made by the Lessee, then the
Lessor or the Lender (as the case may be) shall, to the extent that
it can do so without prejudice to the retention of the relevant
savings and subject to the Lessee's obligations to repay such
amount to the Lessor or the Lender (as applicable) if the relevant
savings are subsequently disallowed or canceled, pay to the Lessee
such amount as the Lessor or the Lender (as the case may be) shall
in its opinion have concluded to be the amount of such Tax savings
(together with, in the case of a refund, any interest received
thereon); provided however that neither the Lessor nor the Lender
shall be obliged to make any payment to the Lessee pursuant to this
sub-clause (b) to the extent that the amount of any Tax savings in
respect of which such payment is to be made would exceed the
aggregate amount of all prior payments made by the Lessee to, on
behalf of or as indemnification of the Lessor or the Lender under
this Agreement for Taxes less the amount of all prior payments made
pursuant to this sub-clause (b) in respect of such Tax savings. The
Lessee acknowledges that nothing contained in this sub-clause (b)
shall interfere with the right of the Lessor or the Lender to
arrange its tax affairs in whatsoever proper manner it thinks fit
(or give the Lessee any right to investigate, or impose any
obligation on the Lessor or the Lender to disclose, the same) and,
in particular, neither the Lessor nor the Lender shall be under any
obligation to claim any Tax savings in priority to any other
savings available to it; provided, that subject to the foregoing
Lessor shall use reasonable good faith diligence to realize Tax
savings as described above.
5.7 INFORMATION
If the Lessee is required by any applicable law, or by any third party,
to deliver any report or return in connection with any Taxes, the Lessee
will duly complete the same and, in particular, will state therein that
the Lessee is exclusively responsible for the use and operation of the
Aircraft and for the Taxes (other than Lessor Taxes) arising therefrom,
and the Lessee will, on request, supply a copy of the report or return
to the Lessor. If Lessee requires any information or cooperation from
Lessor or Lender in order to satisfy its obligations as set forth above,
Lessor and Lender shall promptly furnish such information or cooperation
as Lessee may reasonably request upon written request by Lessee. If
actual notice is given by any taxing authority to Lessor that a report
or return is required to be filed with respect to any Taxes (other than
Lessor Taxes), the Lessor shall promptly notify Lessee of such required
report or return.
5.8 TAXATION OF INDEMNITY PAYMENTS
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(a) If and to the extent that any sums payable to the Lessor or the
Lender by the Lessee under this Agreement by way of indemnity
are insufficient, by reason of any Taxes payable in respect of
those sums, for the Lessor or the Lender to discharge the
corresponding liability to the relevant third party (including
any taxation authority), or to reimburse the Lessor or the
Lender for the cost incurred by it to a third party (including any
taxation authority) the Lessee will pay to the Lessor or the
Lender (as the case may be) such sum as will, after the tax
liability has been fully satisfied, leave the Lessor or the
Lender (as the case may be) with the same amount as it would
have been entitled to receive in the absence of that
liability, together with interest on the amount of the deficit at
the Default Rate in respect of the period commencing on the date
on which the payment of taxation is finally due until payment by
the Lessee (both before and after judgment).
(b) If and to the extent that any sums constituting (directly or
indirectly) an indemnity to the Lessor or the Lender but paid by
the Lessee to any person other than the Lessor or the Lender are
treated as taxable in the hands of the Lessor or the Lender, the
Lessee will pay to the Lessor or the Lender such sum as will,
after the tax liability has been fully satisfied, indemnify the
Lessor or the Lender to the same extent as it would have been
indemnified in the absence of such liability, together with
interest on the amount payable by lessee under this sub-clause at
the Default Rate in respect of the period commencing on the date
on which the payment of taxation is finally due until
payment by the Lessee (both before and after judgment).
5.9 DEFAULT INTEREST
If the Lessee fails to pay any amount payable under this Agreement on
the due date, the Lessee will pay on demand from time to time to the
Lessor or the Lender (as the case may be) interest (both before and
after judgment) on the amount, from the due date to the day of payment
in full by the Lessee to the Lessor or the Lender, at the prime rate for
the time being charged by Citibank, N.A. plus 3.0% (the "DEFAULT RATE").
All such interest will be compounded monthly and calculated on the basis
of the actual number of days elapsed and on a 360 day year.
5.10 CONTEST
If written claim is made against Lessor or Lender for or with respect to
any Taxes (other than Lessor Taxes), Lessor shall, and shall cause
Lender to, promptly notify the Lessee. If reasonably requested by the
Lessee in writing within 30 days after such notification, Lessor shall
or shall cause Lender to, upon receipt of indemnity satisfactory to
Lessor or Lender, as the case may be, and at the expense of the Lessee
(including all costs, expenses, losses, legal and accountants' fees and
disbursements, penalties and interest), in good faith contest or to the
extent permissible by law allow Lessee to contest in Lessee's, the
Lessor's or the Lender's
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name, the validity, applicability or amount of such Taxes by either (i)
resisting payment thereof if practicable and permitted by applicable
law, or (ii) if payment is made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings,
and in the contest of any such claim by Lessor or Lender, Lessor shall,
and shall cause Lender to, apprise the Lessee of all material
developments with respect to such contest, shall forward copies of all
material submissions made in such contest and shall materially comply in
good faith with any reasonable request concerning the conduct of any
such contest; provided, however, the Lessor or the Lender (as the case
may be) will not be obliged to take any such action:
(a) which the Lessor or the Lender (as the case may be) considers, in
its reasonable discretion, may prejudice it; or
(b) which the Lessor or the Lender (as the case may be) reasonably
considers does not have a reasonable prospect of success; or
(c) for which the Lessee has not made adequate provision to the
reasonable satisfaction of the Lessor or the Lender (as the case
may be) in respect of the expense concerned; or
(d) if such action gives rise to any material likelihood of the
Aircraft or any interest therein being sold, forfeited or otherwise
lost or of criminal liability on the part of the Lessor or the
Lender.
If Lessor or Lender, in accordance with the foregoing, determines to pay
such Taxes and seek a refund, Lessee will either pay such Taxes on
Lessor's or Lender's behalf and pay Lessor or Lender, as the case may
be, any amount due with respect to such payment or will promptly
reimburse Lessor for such Taxes. If Lessor shall obtain a refund of all
or any part of such Taxes paid by the Lessee, Lessor shall pay the
Lessee the amount of such refund; provided that such amount shall not be
payable before such time as the Lessee shall have made all payments or
indemnities to Lessor then due with respect to Taxes and so long as no
Default has occurred and is continuing. If in addition to such refund
Lessor shall receive an amount representing interest, attorneys fees or
any other amount on the amount of such refund, the Lessee shall be paid
that proportion of such interest, attorneys fees or any other amount
which is fairly attributable to the Taxes paid by the Lessee prior to
the receipt of such refund. Lessor and/or Lender shall not enter into a
settlement or other compromise with respect to, or otherwise concede,
any claim by a taxing authority on account of Taxes being contested by
Lessee pursuant to this Clause 5.10 without the written consent of
Lessee, which consent shall not be unreasonably withheld, unless Lessor
waives its right and the right of Lender to be indemnified by Lessee
with respect to such claim (but not with respect to any future claims).
5.11 ABSOLUTE
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The Lessee's obligations under this Agreement are absolute and
unconditional irrespective of any contingency whatever including (but
not limited to):
(a) any right of offset, counterclaim, recoupment, defense or other
right which either party to this Agreement may have against the
other;
(b) any unavailability of the Aircraft for any reason, including a
requisition of the Aircraft or any prohibition or interruption of,
interference with or other restriction against the Lessee's use,
operation or possession of the Aircraft;
(c) any lack or invalidity of title or any other defect in title,
airworthiness, merchantability, fitness for any purpose, condition,
design or operation of any kind or nature of the Aircraft for any
particular use or trade, or for registration or documentation under
the laws of any relevant jurisdiction, or any Total Loss in respect
of or any damage to the Aircraft;
(d) any insolvency, bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar
proceedings by or against the Lessor or the Lessee;
(e) any invalidity, unenforceability or lack of due authorization of,
or other defect in, this Agreement; or
(f) any other cause which, but for this provision, would or might
otherwise have the effect of terminating or in any way affecting
any obligation of the Lessee under this Agreement;
provided always, however, that this Clause 5.11 shall be without
prejudice to the Lessee's right to claim damages and other relief from
the courts in the event of any breach by the Lessor of its obligations
under this Agreement, or in the event that, as a result of any lack or
invalidity of title to the Aircraft on the part of the Lessor, the
Lessee is deprived of its possession of the Aircraft.
6. MANUFACTURER'S WARRANTIES
6.1 ASSIGNMENT
Notwithstanding this Agreement and subject to the rights of the Lender
pursuant to the Assignment, the Lessor will remain entitled to the
benefit of each warranty, express or implied, and any unexpired customer
and/or product support given or provided in respect of the Aircraft, any
Engine or Part by any manufacturer, vendor, maintenance performer,
subcontractor or supplier. Unless an Event of Default shall have
occurred and be continuing, the Lessor hereby authorizes the Lessee to
pursue any claim thereunder in relation to defects affecting the
Aircraft, any Engine or Part and the Lessee agrees diligently to pursue
any such
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claim which arises at its own cost. The Lessee will notify the Lessor
promptly upon becoming aware of any such claim. The Lessor will provide
such assistance to the Lessee in making a claim under any such
warranties or customer and/or product support as the Lessee may
reasonably request, and, if requested by the Lessee and at the Lessee's
expense, will pursue a claim in its own name where the relevant
manufacturer, vendor, maintenance performer, subcontractor or supplier
has refused to acknowledge the Lessee's right to pursue that claim.
6.2 PROCEEDS
Unless an Event of Default shall have occurred and be continuing, all
proceeds of any such claim as is referred to in Clause 6.1 and which
exceed $100,000 will be paid direct to the Lender, but if and to the
extent that such claim relates:
(a) to defects affecting the Aircraft which the Lessee has rectified; or
(b) to compensation for loss of use of the Aircraft, an Engine or any
Part during the Term; or
(c) to costs incurred by the Lessee in pursuing such claim (whether or
not proceeds of such claim are payable to the Lessee);
and provided no Default shall have occurred and be continuing, the
proceeds will be promptly paid to the Lessee by the Lender but, in the
case of (a), only on receipt of evidence reasonably satisfactory to the
Lessor and the Lender that the Lessee has rectified the relevant defect.
6.3 PARTS
Except to the extent the Lessor otherwise agrees in a particular case,
the Lessee will procure that all engines, components, furnishings or
equipment provided by the manufacturer, vendor, maintenance performer,
subcontractor or supplier as a replacement for a defective Engine or
Part pursuant to the terms of any warranty or customer and/or product
support arrangement comply with Clause 8.13(a), are installed on the
Aircraft promptly and that title thereto vests in the Lessor in
accordance with Clause 8.17(a). On installation those items will be
deemed to be an Engine or Part, as applicable.
6.4 AGREEMENT
To the extent any warranties or customer and/or product support relating
to the Aircraft are made available under an agreement between any
manufacturer, vendor, maintenance performer, subcontractor or supplier
and the Lessee, this Clause 6 is subject to that agreement. However the
Lessee will:
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(a) pay the proceeds of any claim thereunder that exceed $100,000 to
the Lender to be applied pursuant to Clause 6.2 and, pending such
payment, will hold the claim and the proceeds on trust for the
Lender; and
(b) take all such steps as are necessary and requested by the Lessor at
the end of the Term to ensure the benefit of any of those
warranties or customer and/or product support which have not
expired are vested in the Lessor (but subject to the rights of the
Lender under the Mortgage).
7. LESSOR'S COVENANTS AND DISCLAIMERS
7.1 QUIET ENJOYMENT
Provided no Event of Default shall have occurred and be continuing, none
of the Lessor, its successors and assigns, the Lender or any Person
claiming by, through or on account of any of such parties will interfere
with the quiet use, possession and enjoyment of the Aircraft by the
Lessee.
7.2 MAINTENANCE CONTRIBUTION
(a) Provided no Default has occurred and is continuing, upon the
performance by Lessee of "Qualifying Work" (as hereinafter defined)
relating to any airworthiness directive, the Lessor will pay to the
Lessee, by way of contribution to the cost of maintenance of the
Aircraft, an amount equal to the product of (a) the amount by which
the Actual Cost of the Qualifying Work for such airworthiness
directive exceeds $225,000, multiplied by (b) a fraction the
numerator of which is 60 minus the number of months (rounded to the
nearest whole number of months) from the date of the completion of
such Qualifying Work until the scheduled Expiry Date and the
denominator is 60.
(b) "Qualifying Work" means maintenance work performed on the Aircraft
solely in order to comply fully with airworthiness directives
issued by the Aviation Authority (whether or not such airworthiness
directives were issued before or after the Delivery Date) on a
terminating action basis, and excluding work performed for any
other purpose, such as compliance with airworthiness directives by
means of repetitive inspections, recording compliance work in the
Aircraft Documents and all other maintenance work.
(c) The Lessor will be obligated to pay any amount specified in Clause
7.2(a) within 14 days after submission by the Lessee to the Lessor
of an invoice and supporting documentation reasonably satisfactory
to the Lessor evidencing the performance of Qualifying Work for an
airworthiness directive.
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7.3 REGISTRATION AND FILINGS
The Lessor shall, at the Lessor's cost:
(a) maintain the registration of the Aircraft with the Aviation
Authority reflecting (so far as permitted by applicable law) the
respective interests of the Lessor and the Lender and not do or
suffer to be done anything which might reasonably be expected to
adversely affect that registration; and
(b) do all acts and things (including making any filing or registration
with the Aviation Authority or any other Government Entity) as may
be required following any change In the ownership or financing of
the Aircraft.
7.4 AGREED MAINTENANCE PERFORMERS
The Lessor may object to and may exclude any maintenance organization
(other than Lessee) being included as an "Agreed Maintenance Performer"
for a valid business reason. The Lessor shall furnish to Lessee in
writing from time to time a list of all maintenance organizations
excluded from the definition of "Agreed Maintenance Performer" pursuant
to the preceding sentence, which list may be amended by Lessor from time
to time. The Lessor and the Lessee shall consult in good faith regarding
any organizations on such list from time to time at the request of
either party.
7.5 EXCLUSION
THE AIRCRAFT IS ACCEPTED BY THE LESSEE "AS IS, WHERE IS WITH ALL FAULTS"
AND LESSEE AGREES AND ACKNOWLEDGES THAT, SAVE AS IS EXPRESSLY STATED IN
THIS AGREEMENT, LESSOR WILL HAVE NO LIABILITY IN RELATION TO, AND LESSOR
HAS NOT AND WILL NOT BE DEEMED TO HAVE MADE OR GIVEN, ANY CONDITIONS,
WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, WITH RESPECT TO THE
AIRCRAFT, INCLUDING BUT NOT LIMITED TO:
(a) THE DESCRIPTION, AIRWORTHINESS, MERCHANTABILITY, FITNESS FOR ANY
USE OR PURPOSE, VALUE, CONDITION, OR DESIGN, OF THE AIRCRAFT OR ANY
PART; OR
(b) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER
OR NOT ARISING FROM LESSOR'S NEGLIGENCE, ACTUAL OR IMPUTED (BUT
EXCLUDING ANY SUCH OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN
TORT WHICH ARISES FROM LESSOR'S GROSS NEGLIGENCE OR WILFUL
MISCONDUCT); OR
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(c) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR
DAMAGE TO THE AIRCRAFT, FOR ANY LIABILITY OF LESSEE TO ANY THIRD
PARTY, OR FOR ANY OTHER DIRECT, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES.
7.6 LESSEE'S WAIVER
LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND THE LESSOR, ALL ITS RIGHTS
IN RESPECT OF ANY CONDITION, WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, ON THE PART OF LESSOR AND ALL CLAIMS AGAINST LESSOR HOWSOEVER
AND WHENEVER ARISING AT ANY TIME IN RESPECT OF OR OUT OF THE OPERATION
OR PERFORMANCE OF THE AIRCRAFT OR THIS AGREEMENT EXCEPT AS IS OTHERWISE
EXPRESSLY STATED IN THIS AGREEMENT.
7.7 LESSEE'S CONFIRMATION
LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF CLAUSES 7.5
AND 7.6 AND ACKNOWLEDGES THAT BASIC RENT AND OTHER AMOUNTS HAVE BEEN
CALCULATED NOTWITHSTANDING ITS PROVISIONS.
8. LESSEE'S COVENANTS
8.1 DURATION
The undertakings in this Clause 8 and in Clause 12 will:
(a) except as otherwise stated, be performed at the expense of the
Lessee; and
(b) remain in force until redelivery of the Aircraft to the Lessor in
accordance with this Agreement and thereafter to the extent of any
accrued rights of the Lessor in relation to those undertakings.
8.2 INFORMATION
The Lessee shall:
(a) furnish to the Lessor, with a copy to the Lender:
(i) within 60 days after the last day of the first three fiscal
quarters of each fiscal year of the Parent, unaudited
consolidated quarterly financial statements of the Parent
prepared for such quarter, including a consolidated balance
sheet of the Parent and its Subsidiaries as of the last day
of such quarter and consolidated
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statements of income and retained earnings for such fiscal
quarter and on a comparative basis figures for the
corresponding period of the immediately preceding fiscal
year, all in reasonable detail, each such statement to be
certified in a certificate of Lessee's chief financial
officer or chief accounting officer as fairly presenting the
financial position and the results of operations of the
Parent as at its date and for such quarter (subject to
year-end audit adjustments) and as having been prepared in
accordance with GAAP;
(ii) as soon as available but not in any event later than 120 days
after the last day of each fiscal year of the Parent, audited
consolidated financial statements of the Parent prepared for
such year, including a consolidated balance sheet of the Parent
and its Subsidiaries as of the last day of such year,
consolidated statements of income and retained earnings of the
Parent and its Subsidiaries for such fiscal year, a
consolidating balance sheet of the Lessee and its Subsidiaries
as of the last day of such year and consolidating statements of
income and retained earnings of the Lessee and its Subsidiaries
for such fiscal year and in all cases on a comparative basis
figures for the immediately preceding fiscal year, all in
reasonable detail, each prepared in accordance with GAAP and
certified without qualification by Coopers & ▇▇▇▇▇▇▇ or another
of the largest national firms of independent certified public
accountants as fairly presenting the financial position and the
results of operations of Lessee and its Subsidiaries at the end
of and for such fiscal year and as having been prepared in
accordance with GAAP;
(iii) in lieu of the financial statements referred to in
sub-clauses (i) and (ii) above, any Quarterly Reports on Form
10-Q and Annual Report on Form 10-K for the respective
periods filed by the Parent pursuant to and in accordance
with the Securities Exchange Act of 1934, as amended;
(iv) concurrently with the financial statements furnished pursuant
to Clauses 8.2(a)(i) and (ii) above, an officer's certificate
signed by the chief financial officer or chief accounting
officer of Lessee certifying to the best knowledge after due
inquiry of such officer that no Default occurred during the
period covered by such financial statements and no Default
exists on the date of such officer's certificate or, if a
Default occurred or exists, stating that fact and specifying
the nature and period of existence of such Default and the
actions Lessee took or proposes to take with respect to such
Default;
(v) at the same time as it is issued to the creditors of the
Lessee, a copy of each notice or circular issued to the
Lessee's creditors as a group; and
(vi) on request from time to time such other information regarding
the Lessee and its business and affairs as the Lessor may
reasonably request;
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(b) on request, inform the Lessor as to the current serial numbers of
the Engines and any engine installed on the Airframe;
(c) promptly furnish to the Lessor all information which the Lessor
from time to time reasonably requests regarding the Aircraft, any
Engine or any Part and its use, location and condition, including
the hours available on the Aircraft and any Engine until the next
scheduled check, inspection, overhaul or shop visit, as the case
may be;
(d) on request, furnish to the Lessor evidence reasonably satisfactory
to the Lessor that all Taxes and charges incurred by the Lessee
with respect to the Aircraft have been paid and discharged in full;
(e) provide to the Lessor, within 15 days following the end of June and
December of each calendar year during the Term, or upon reasonable
request by Lessor, a monthly report on the Aircraft in the form set
out in Schedule 7 or such other form as the Lessee may select
providing substantially the same information;
(f) promptly notify the Lessor of
(i) any Total Loss, any loss of an Engine, any theft of the
Airframe or any Engine, any damage to the Aircraft if the
potential cost of repair may reasonably be expected to exceed
the Damage Notification Threshold, or any modification to the
Aircraft if the potential cost may reasonably be expected to
exceed the Damage Notification Threshold;
(ii) any claim or other occurrence likely to give rise to a claim
under the Insurances (but, in the case of hull claims only,
in excess of the Damage Notification Threshold) and details
of any negotiations with the insurance brokers over any such
claim; and
(iii) any litigation, arbitration or administrative proceedings
that are pending or, to the Lessee's knowledge, threatened
against the Lessee which, if adversely determined, would have
a material adverse effect upon its financial condition or
business or its ability to perform its obligations under this
Agreement.
8.3 LAWFUL AND SAFE OPERATION
The Lessee shall:
(a) comply with the law for the time being in force in any country or
jurisdiction in which the Aircraft is being operated which is
applicable to the Aircraft or the use and operation of the Aircraft;
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(b) not use the Aircraft in any manner contrary to any recommendation
of the Aviation Authority or the manufacturers of the Aircraft, any
Engine or any Part or any rule or regulation of the Aviation
Authority or for any purpose for which the Aircraft is not designed
or reasonably suitable;
(c) ensure that the crew and engineers employed by it in connection
with the operation and maintenance of the Aircraft have the
qualifications and hold the licences required by the Aviation
Authority and applicable law;
(d) use the Aircraft solely in commercial or other operations for which
the Lessee is duly authorized by the Aviation Authority and
applicable law;
(e) not knowingly use the Aircraft (or use it when the Lessee ought
reasonably to have known that it was being so used) for the
carriage of:
(i) whole animals, living or dead, except in the cargo
compartments according to I.A.T.A. regulations, and except
domestic pet animals carried in a suitable container to
prevent the escape of any liquid and to ensure the welfare of
the animal;
(ii) acids, toxic chemicals, other corrosive materials,
explosives, nuclear fuels, nuclear wastes or any nuclear
assemblies or components, except as permitted for cargo
aircraft under the "Restriction of Goods" schedule issued by
I.A.T.A. from time to time and provided that all the
requirements for packaging or otherwise contained therein are
fulfilled;
(iii) any other goods, materials or items of cargo which could
reasonably be expected to cause damage to the Aircraft and
which would not be adequately covered by the Insurances; or
(iv) any illegal item or substance;
(f) not utilize the Aircraft for purposes of training, qualifying or
re-confirming the status of cockpit personnel except for the
benefit of the Lessee's cockpit personnel, and then only if the use
of the Aircraft for such purpose is not disproportionate to the use
for such purpose of other aircraft of the same type operated by the
Lessee;
(g) not (other than for bona fide safety reasons) cause or permit the
Aircraft to proceed to, or remain at, any location which is for the
time being the subject of a prohibition order (or any similar order
or directive) by:
(i) any Government Entity of the State of Registration or the
Habitual Base; or
-35-
(ii) any Government Entity of the country in which such location is
situated; or
(iii) any Government Entity having jurisdiction over the Lessor, the
Lender or the Aircraft;
(h) obtain and maintain in full force all certificates, licences,
permits and authorizations required for the use and operation of
the Aircraft for the time being, and for the making of payments
required by, and the compliance by the Lessee with its other
obligations under, this Agreement.
8.4 TAXES AND OTHER CHARGES
The Lessee will promptly pay:
(a) all licence and registration fees, Taxes (other than Lessor Taxes)
and other amounts of any nature imposed by any Government Entity
that are imposed on the Lessee or for which the Lessee is
responsible under this Agreement with respect to the Aircraft,
including the purchase, ownership, delivery, leasing, possession,
use, operation, return, sale or other disposition of the Aircraft;
and
(b) all rent, fees, charges, Taxes (other than Lessor Taxes) imposed on
the Lessee and other amounts in respect of any premises where the
Aircraft or any Part thereof is located from time to time during
the Tenn;
except to the extent that such payment is being contested in good faith
by appropriate proceedings in accordance with Clause 5.10.
8.5 SUB-LEASING
(a) Subject to sub-clause (b) below, the Lessee will not, without the
prior written consent of the Lessor and the Lender (such consent
not to be unreasonably withheld), sub-lease, "wet lease" or
otherwise part with possession of the Aircraft, the Engines or any
Part except that the Lessee may part with possession:
(i) so long as no Default or Event of Default has occurred and is
continuing, with respect to the Aircraft, the Engines or any
Part to the relevant manufacturers for testing or similar
purposes or to an Agreed Maintenance Performer for service,
repair, maintenance or overhaul work or for alterations,
modifications or additions to the extent required or
permitted by this Agreement; and
(ii) with respect to an Engine or Part, as expressly permitted by
this Agreement.
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(b) The Lessor's consent shall not be required in relation to a
"wet lease" or charter of the Aircraft in which operational control
of the Aircraft remains with the Lessee at all times, provided the
Aircraft remains registered with the Aviation Authority.
8.6 INSPECTION
(a) The Lessor, the Lender and any person designated by the Lessor or
the Lender may at any time visit, inspect and survey the Aircraft,
any Engine or any Part and for such purpose may, subject to any
applicable Aviation Authority regulation, travel on the flight deck
as observer.
(b) The Lessor and the Lender shall bear its own costs and expenses in
connection with any such visit, inspection or survey unless the
visit, inspection or survey discloses that the Lessee is in breach
of its material obligations under this Agreement, in which case
such costs and expenses shall be paid by the Lessee on demand.
(c) The Lessor shall:
(i) have no duty to make, or liability arising out of, any such
visit, inspection or survey; and
(ii) so long as no Default has occurred and is continuing, not
exercise such right other than on reasonable notice and so as
not to disrupt unreasonably the maintenance or operation of the
Aircraft.
8.7 PROTECTION OF TITLE
The Lessee shall:
(a) not do or knowingly permit to be done or omit or knowingly permit
to be omitted to be done any act or thing which might reasonably be
expected to jeopardize the respective rights, title and interest of
the Lender as mortgagee of the Aircraft and assignee of this
Agreement or the Lessor as owner of the Aircraft and lessor under
this Agreement or the validity, enforceability or priority of the
Mortgage and the Assignment;
(b) on all occasions when the ownership of the Aircraft, any Engine or
any Part is relevant, make clear to third parties that title is
held by the Lessor and is subject to the Mortgage;
(c) not at any time:
(i) represent or hold out the Lessor or the Lender as carrying goods
or passengers on the Aircraft or as being in any way connected
or associated with any operation or
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carriage (whether for hire or reward or gratuitously) which may
be undertaken by the Lessee; or
(ii) pledge the credit of the Lessor or the Lender;
(d) ensure that there is always affixed, and not removed or in any way
obscured, a fireproof plate (having dimensions of not less than 6
in. x 4 in.) in a reasonably prominent position on the Aircraft and
on each Engine stating:
"This Aircraft/Engine is owned by ACG Acquisition
VIII LLC, is leased to Aloha Airlines, Inc. and is
subject to a mortgage and security agreement in favor
of FINOVA Capital Corporation. It may not be operated
by any other person without the prior written consent
of ACG Acquisition VIII LLC and FINOVA Capital
Corporation.";
(e) not create or permit to exist any Security Interest upon the
Aircraft, any Engine or any Part;
(f) not do or permit to be done anything which may reasonably be
expected to expose the Aircraft, any Engine or any Part to penalty,
forfeiture, impounding, detention, appropriation, damage or
destruction and, without prejudice to the foregoing, if any such
penalty, forfeiture, impounding, detention, appropriation, damage
or destruction occurs, give the Lessor notice and use its best
efforts to procure the immediate release of the Aircraft, such
Engine or such Part, as the case may be;
(g) not abandon the Aircraft, the Engine or any Part;
(h) pay and discharge or cause to be paid and discharged when due and
payable or make adequate provision by way of security or otherwise
for all debts, damages, claims and liabilities which have given or
might reasonably be expected to give rise to a Security Interest
over or affecting the Aircraft, any Engine or any Part; and
(i) not attempt, or hold itself out as having any power, to sell, lease
or otherwise dispose of the Aircraft, any Engine or any Part other
than as expressly permitted by this Agreement.
8.8 GENERAL
The Lessee will:
(a) not make any substantial change in the nature of the business in
which it is engaged if such change, in the reasonable opinion of
the Lessor, might reasonably be expected to
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have a material adverse effect on the Lessee's performance of its
obligations under this Agreement;
(b) preserve its corporate existence, and will not merge or consolidate
with any person unless the successor person resulting from such
merger or consolidation (the "SUCCESSOR"):
(i) is the Lessee or an Affiliate incorporated in the State of
Incorporation or another State of the United States of
America;
(ii) shall have a net worth immediately after such merger or
consolidation of not less than the Lessee's net worth
immediately prior thereto;
(iii) shall be authorized under applicable law to perform the
Lessee's obligations under this Agreement to the same extent
as the Lessee;
(iv) shall deliver to the Lessor an agreement in form and
substance reasonably satisfactory to the Lessor containing an
assumption by the Successor of the Lessee's representations
and warranties under this Agreement, together with the due
and punctual performance of all the Lessee's obligations
under this Agreement; and
(v) shall deliver to the Lessor an opinion of counsel reasonably
satisfactory in form and substance to the Lessor to the
effect that the agreement referred to in subclause (iii)
above constitutes the Successor's legal, valid and binding
obligations; and
(c) ensure that no change will occur in the Habitual Base of the
Aircraft without the prior written consent of the Lessor.
8.9 RECORDS
The Lessee shall procure that accurate, complete and current records of
all flights made by, and all maintenance carried out on, the Aircraft
(including, in relation to each Engine and Part subsequently installed,
before the installation) are kept in English, and shall keep the records
in such manner as the Aviation Authority may from time to time require.
The records will form part of the Aircraft Documents.
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8.10 REGISTRATION AND FILINGS
The Lessee shall:
(a) not do anything that might reasonably be expected to adversely
affect the registration of the Aircraft with the Aviation Authority
reflecting (so far as permitted by applicable law) the respective
interests of the Lessor and the Lender;
(b) do all acts and things (including making any filing or registration
with the Aviation Authority or any other Government Entity) and
executing and delivering all documents (including any amendment of
this Agreement) as may be required by the Lessor following any
modification of the Aircraft, any Engine or any Part or the
permanent replacement of any Engine or Part in accordance with this
Agreement, so as to ensure that the respective rights of the Lessor
and the Lender under this Agreement apply with the same effect as
before.
8.11 MAINTENANCE AND REPAIR
The Lessee shall:
(a) keep the Aircraft airworthy in all respects and in good repair and
condition;
(b) advise the Lessor and Lender in writing of all material changes to
the Agreed Maintenance Program;
(c) maintain the Aircraft in accordance with the Agreed Maintenance
Program through Agreed Maintenance Performers and perform (at the
respective intervals provided in the Agreed Maintenance Program)
all Major Checks;
(d) maintain the Aircraft in accordance with FAR Part 121 and any other
rules and regulations of the Aviation Authority as are applicable
to aircraft of the same type as the Aircraft operated by United
States of America air carriers, subject to the special exemptions
permitted Lessee regarding compliance with the Airport Noise and
Capacity Act of 1990, as amended, and the regulations promulgated
by the FAA thereunder;
(e) comply with all mandatory inspection and modification requirements,
airworthiness directives and similar requirements applicable to the
Aircraft, any Engine or Part having a compliance date during the
Term and that are required by the Aviation Authority;
(f) comply with all alert service bulletins issued by any manufacturer
of the Aircraft, Engines or Parts, and comply (including scheduling
complying work and then performing such work on schedule) with all
other service bulletins issued by any such
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manufacturer if and to the extent that the Lessee brings or
schedules to bring in compliance at least one-half of the
applicable aircraft it operates (excluding for purposes of such
calculation aircraft acquired from unrelated third parties that
already comply with such other service bulletins);
(g) comply with all applicable laws and the regulations of the Aviation
Authority and any other aviation authorities with jurisdiction over
the Lessee or the Aircraft, any Engine or Part that relate to the
maintenance, condition, use or operation of the Aircraft or require
any modification or alteration to the Aircraft, any Engine or Part;
(h) maintain in good standing a current U.S. Standard Transport
Category Certificate of Airworthiness for the Aircraft issued by
the Aviation Authority in accordance with FAR Part 21 except when
the Aircraft is undergoing maintenance, modification or repair
required or permitted by this Agreement and shall from time to time
provide to the Lessor a copy on request;
(i) if required by the Aviation Authority, maintain a current
certification as to maintenance issued by or on behalf of the
Aviation Authority in respect of the Aircraft and shall from time
to time provide to the Lessor a copy on request;
(j) maintain the Engines with respect to overhaul build standards and
disc replacements at a level which is consistent with the level
applied by the Lessee in relation to other engines of the same type
as the Engines in its fleet, provided, however, Lessee may maintain
the Engines with respect to overhaul build standards and disc
replacements in such manner as to achieve minimal compliance with
return conditions;
(k) maintain the Engines and the APU in a "on condition" program as set
forth in the respective manufacturer's maintenance planning
document; and
(l) subject to Clause 11.1(c), procure promptly the replacement of
any Engine or Part which has become time, cycle or calendar
expired, lost, stolen, seized, confiscated, destroyed, damaged
beyond repair, unserviceable or permanently rendered unfit for use,
with an engine or part complying with the conditions set out in
Clause 8.13(a).
8.12 REMOVAL OF ENGINES AND PARTS
The Lessee will ensure that no Engine or Part installed on the Aircraft is
at any time removed from the Aircraft other than:
(a) if replaced as expressly permitted by this Agreement; or
(b) if the removal is of an obsolete item and is in accordance with the
Agreed Maintenance Program; or
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(c) pursuant to, and in accordance with, Clause 8.15; or
(d) (i) during the course of maintaining, servicing, repairing,
overhauling or testing that Engine or the Aircraft, as the case
may be; or
(ii) as part of a normal engine or part rotation program; or
(iii) for the purpose of making such modifications to the Engine or
the Aircraft, as the case may be, as are permitted under this
Agreement,
and then in each case only if it is reinstalled or replaced by an
engine or part complying with Clause 8.13(a) as soon as practicable
and in any event no later than the Expiry Date.
8.13 INSTALLATION OF ENGINES AND PARTS
(a) The Lessee will ensure that, except as permitted by this Agreement,
no engine or part is installed on the Aircraft unless:
(i) in the case of an engine, it is an engine of the same model
as, or an improved or advanced version of the Engine it
replaces (provided, in the case of an improved or advanced
version, it can be installed and operated on the Airframe
without modification of the Airframe or the engine, whether
or not the other installed Engine is also such an improved
or advanced version), which has attached to it a current
"serviceable tag" issued by the manufacturer or supplier
indicating that the engine is new, serviceable or overhauled,
and the Lessee shall retain all such tags;
(ii) in the case of a part, it is in as good operating condition,
is of the same interchangeable modification status as the
replaced Part and has attached to it a current "serviceable
tag" issued by the manufacturer or supplier indicating that
the part is new, serviceable or overhauled, and the Lessee
shall retain all such tags;
(iii) in the case of a part, it has become and remains the property
of the Lessor free from Security Interests and on
installation on the Aircraft will, without further act, be
subject to this Agreement and to the security interest
created by the Mortgage, in which case title to the removed
part shall automatically become vested in Lessee without
further action or warranty on the part of Lessor except that
such Part shall be free of Lessor Liens; and
(iv) in each case, the Lessee has full details as to its source
and maintenance records.
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(b) If no Default has occurred which is continuing, the Lessee will be
entitled to install any engine or part on the Aircraft by way of
replacement notwithstanding Clause 8.13(a) if:
(i) there is not available to the Lessee at the time and in the
place that engine or part is required to be installed on the
Aircraft a replacement engine or part complying with the
requirements of Clause 8.13(a);
(ii) it would result in an unreasonable disruption of the
operation of the Aircraft or the business of the Lessee to
ground the Aircraft until an engine or part complying with
Clause 8.13(a) becomes available for installation on the
Aircraft; and
(iii) as soon as practicable after installation of the same on the
Aircraft but, in any event, no later than the earlier of (1)
60 days after such installation and (2) the Expiry Date, the
Lessee removes any such engine or part and replaces it with
the Engine or Part replaced by it or by an engine or part
complying with Clause 8.13(a).
(c) If no Default has occurred which is continuing, the Lessee will be
entitled to install Lessee Installed Parts on the Airframe by way of
replacement notwithstanding Clause 8.13(a)(iii) so long as:
(i) the terms of any lease, conditional sale agreement or
security agreement, as the case may be, covering such Lessee
Installed Part will not have the effect of prejudicing the
title and interest of the Lessor in and to the Aircraft
(including its Engines and Parts) or the interest of the
Lender in respect thereof under the Mortgage;
(ii) the secured party, lessor or conditional vendor, as the case
may be, of such Lessee Installed Part has confirmed and
acknowledged in writing (which such confirmation and
acknowledgment may be contained in the lease, conditional
sale agreement or security agreement) to the Lessor and the
Lender, in form and substance satisfactory to the Lessor,
that it will recognize the respective rights, title and
interest of the Lessor and the Lender in and to the Aircraft
(including its Engines and Parts) and that it will not seek
to exercise any rights whatever in relation thereto; and
(iii) before the Expiry Date the Lessee removes any such Lessee
Installed Part and replaces it with the Part replaced by it
or by another part, in either case complying with Clause
8.13(a).
(d) The Lessor agrees, for the benefit of the Lessee and any mortgagee or
holder of any other Security Interest in any engine (other than an
Engine) or Lessee Installed Part
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owned by the Lessee, any lessor of any engine (other than an Engine
leased to the Lessee) or Lessee Installed Part and any conditional
vendor of any engine (other than an Engine purchased by the Lessee
subject to a conditional sale agreement or any other security
agreement) or Lessee Installed Part, that no right, title to or
interest in any such engine or Lessee Installed Part shall be
exercised or asserted by the Lessor and the Lessor acknowledges and
confirms that it will not acquire any right, title or interest to
or in any such engine or Lessee Installed Part as a result of its
installation on the Airframe.
8.14 NON-INSTALLED ENGINES AND PARTS
(a) The Lessee shall ensure that any Engine or Part which is not
installed on the Airframe (or any other airframe as permitted by
this Agreement) is, except as expressly permitted by this
Agreement, properly and safely stored and kept free from Security
Interests, with insurance thereon complying with the requirements
of this Agreement.
(b) Notwithstanding sub-clause (a), the Lessee shall be permitted, if
no Default has occurred and is continuing, to install any Engine on
an airframe and any Part on an airframe or engine:
(i) owned and operated by the Lessee free from Security Interests;
(ii) leased or hired to the Lessee pursuant to a lease or
conditional sale agreement on a long-term basis and on terms
whereby the Lessee has full operational control of that
aircraft or engine; or
(iii) acquired or financed by the Lessee and operated by the Lessee
on terms that ownership of that aircraft or engine, as the
case may be, pursuant to a lease, conditional sale agreement
or Security Interest is vested in or held by any other person;
provided that in the case of (ii) and (iii):
(1) the terms of any such lease, conditional sale agreement or
Security Interest will not have the effect of prejudicing the
title and interest of the Lessor in and to that Engine or
Part or the interest of the Lender in respect thereof under
the Mortgage; and
(2) the lessor under such lease, the seller under such
conditional sale agreement or the secured party of such
Security Interest, as the case may be, has confirmed and
acknowledged in writing (which such confirmation and
acknowledgment may be contained in the lease, conditional
sale agreement or document creating the Security Interest) to
the Lessor and the Lender, in form and substance satisfactory
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to the Lessor, that it will recognize the respective rights,
title and interest of the Lessor and the Lender to and in
that Engine or Part and that it will not seek to exercise any
rights whatever in relation thereto.
8.15 POOLING OF ENGINES AND PARTS
The Lessee will not enter into nor permit any pooling agreement or
arrangement in respect of an Engine or Part without the prior written
consent of the Lessor and the Lender, such consent not to be
unreasonably withheld in any case where an Engine or Part is leased, let
on hire or otherwise made available by the Lessee (on terms conferring
no more than a contractual right IN PERSONAM against the Lessee and not
a right IN REM against such Engine or Part) pursuant to a pooling
agreement to which the Lessee is a party and:
(a) the other parties to which are reputable, solvent commercial air
carriers or the manufacturers or suppliers of the Engine or Part
(or other reputable, solvent organizations whose business includes
the administration of and participation in such pooling agreements
or arrangements); and
(b) which does not contemplate the transfer of title to the pooled
Engine or Part; and
(c) either provides that the Lessor (or the Lender, as the case may be)
will be sole loss payee in respect of any loss or damage to the
Engine or Part, or provides for Lessor to acquire title to a
substitute engine or part satisfying the conditions set out in
Clause 8.13(a) if the Engine or Part is destroyed.
8.16 EQUIPMENT CHANGES
(a) The Lessee will not make any modification or addition to the
Aircraft (each an "EQUIPMENT CHANGE"), except for an Equipment
Change that:
(i) is expressly permitted by any other provision of this
Agreement, or
(ii) has the prior written approval of the Lessor and the Lender
(which approval shall not be unreasonably withheld provided
the proposed Equipment Change will not, in the reasonable
opinion of the Lessor and the Lender, diminish the value,
utility, condition or airworthiness of the Aircraft), except
for painting or minor cabin interior modifications not
affecting the structure of the Airframe, any or all of which
may be made without such prior approval.
(b) So long as no Event of Default has occurred and is continuing, the
Lessee may remove any Equipment Change if it can be removed from
the Aircraft without diminishing or impairing the value, utility,
condition or airworthiness of the Aircraft.
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8.17 TITLE TO ENGINES AND PARTS
(a) Title to all engines and parts installed on the Aircraft, whether
by way of replacement as the result of an Equipment Change or
otherwise (except those installed pursuant to Clause 8.13(b) or
Clause 8.15) will on installation, without further act, vest in
the Lessor subject to this Agreement free and clear of all
Security Interests. The Lessee will at its own expense take all
such steps and execute, and procure the execution of, all such
instruments that are necessary to ensure that title so passes to
the Lessor and is subject to the Security Interest created by the
Mortgage according to all applicable laws. At any time when
requested by the Lessor, the Lessee will provide evidence
to the Lessor's reasonable satisfaction (including the
provision, if required, to the Lessor of one of more legal
opinions) that title has so passed to the Lessor and is subject to
the Security Interest created by the Mortgage.
(b) The Lessor may require the Lessee to remove any Equipment Change
and to restore the Aircraft to its condition prior to that
Equipment Change.
(c) Except as referred to in Clause 8.16(b), any Engine or Part at any
time removed from the Aircraft will remain the property of the
Lessor until a replacement has been made in accordance with this
Agreement and until title to that replacement has passed, according
to applicable laws, to the Lessor subject to this Agreement free of
all Security Interests, whereupon title to the Engine or Part will,
provided no Default has occurred and is continuing, pass to the
Lessee free of Lessor Liens.
8.18 THIRD PARTIES
The Lessee shall procure that no person having possession of the
Aircraft during the Term (other than the Lessor or the Lender) will act
in any manner inconsistent with the Lessee's obligations under this
Agreement and that all such persons shall comply with those obligations
as if references to "Lessee" included a separate reference to those
persons.
9. INSURANCE
9.1 INSURANCES
The Lessee will maintain in full force and effect during the Term
insurances in respect of the Aircraft in form and substance reasonably
satisfactory to the Lessor (the "INSURANCES") through such brokers and
with such insurers and having such deductibles and being subject to such
exclusions as are usual and customary in the worldwide aviation
insurance marketplace for air carriers operating similar equipment who
are similarly situated with Lessee. The Insurances will be effected
either on a direct basis with insurers of recognized standing who
normally participate in aviation insurances in the leading international
insurance markets and led by reputable underwriters approved by the
Lessor and the Lender,
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such approval not to be unreasonably withheld. The Lessor acknowledges
and confirms that the current deductibles and exclusions, together with
the existing brokers and insurers, in respect of the insurances
maintained by Lessee on the date of the Purchase Agreement are
acceptable to it and the Lender.
9.2 REQUIREMENTS
The Lessor's current requirements as to required Insurances are as
specified in this Clause and in Part I of Schedule 4. Except for the
amount of the Agreed Value, the Minimum Liability Coverage and the
deductible under Lessee's hull and war risk insurance policies, the
Lessor may from time to time stipulate such other requirements for the
Insurances as the Lessor reasonably considers necessary to ensure that
the scope and level of cover is maintained in accordance with the then
prevailing industry practice in relation to aircraft of the same type as
the Aircraft and in relation to operators of similar standing to the
Lessee. In the event that the Lessor proposes any such stipulation, it
shall notify the Lessee accordingly and the Lessor and/or its brokers
will then consult in good faith with the Lessee and the Lessee's brokers
(as for the time being approved by the Lessor) with regard to such
proposed stipulation. If, following the consultation, the Lessor is
satisfied that the stipulation should be made, the Lessee shall then
comply with the stipulated requirements.
9.3 INSURANCE COVENANTS
The Lessee shall:
(a) ensure that all legal requirements as to insurance of the Aircraft,
any Engine or any Part that may from time to time be imposed by the
laws of the State of Registration or any jurisdiction to, from or
over which the Aircraft may be flown, in so far as they affect or
concern the operation of the Aircraft, are complied with and, in
particular, those requirements compliance with which is necessary
to ensure that:
(i) the Aircraft does not become subject to detention or forfeiture;
(ii) the Insurances remain valid and in full force and effect; and
(iii) the interests of the Indemnitees in the Insurances and the
Aircraft or any Part are not thereby prejudiced;
(b) not use, cause or permit the Aircraft, any Engine or any Part to
be used for any purpose or in any manner not covered by the
Insurances or outside any geographical limit imposed by the
Insurances;
(c) comply with the terms and conditions of each policy of the
Insurances and not do, consent or agree to any act or omission that:
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(i) invalidates or may reasonably be expected to invalidate the
Insurances;
(ii) renders or may reasonably be expected to render void or voidable
the whole or any part of any of the Insurances; or
(iii) brings any particular liability within the scope of an exclusion
or exception to the Insurances;
(d) not take out without the prior written approval of the Lessor any
insurance in respect of the Aircraft other than those of the type
required under this Agreement unless relating solely to hull total
loss, business interruption, engine break-down, profit commission
and deductible risk;
(e) commence renewal procedures at least 30 days prior to the
expiration of any of the Insurances and provide to the Lessor and
the Lender:
(i) if requested by the Lessor, a written status report of renewal
negotiations 14 days prior to each expiration date;
(ii) telefaxed confirmation of completion of renewal prior to each
expiration date; and
(iii) a certificate of insurance and broker's letter of undertaking
substantially in the form set out in Parts 2 and 3 of
Schedule 4, detailing the coverage and confirming the insurers'
agreement to the specified insurance requirements of this
Agreement within seven days after each renewal date;
(f) provide to the Lessor and the Lender copies of those documents
evidencing the Insurances which the Lessor and the Lender may
reasonably request;
(g) on request, provide to the Lessor and the Lender evidence that the
Insurance premiums have been paid;
(h) not make any modification or alteration to the Insurances material
and adverse to the interests of any of the Indemnitees;
(i) be responsible for any deductible under the Insurances; and
(j) provide any other insurance related information, or assistance, in
respect of the Insurances as the Lessor may reasonably request.
9.4 FAILURE TO INSURE
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If the Lessee fails to maintain the Insurances in compliance with this
Agreement, each of the Indemnitees will be entitled but not obligated
(without prejudice to any other rights of the Lessor under this Agreement):
(a) to pay the premiums due or to effect and maintain insurances
satisfactory to it or otherwise remedy the Lessee's failure in such
manner (including to effect and maintain an "owner's interest"
policy) as it considers appropriate. Any sums so expended by it
will become immediately due and payable by the Lessee to the Lessor
on demand (such demand being made as soon as reasonably practicable
following the incurring of such expenditure), together with
interest thereon at the Default Rate from the date of expenditure
by it up to the date of reimbursement by the Lessee (before and
after any judgment); and
(b) at any time while such failure is continuing to require the
Aircraft to remain at any airport or to proceed to and remain at
any airport designated by it until the failure is remedied to its
reasonable satisfaction.
9.5 CONTINUING INDEMNITY
The Lessor may require the Lessee to effect and to maintain insurance
after the Expiry Date with respect to its liability under the
indemnities in Clause 10 for such period as the Lessor may reasonably
require (but in any event not more than three years) providing for each
Indemnitee to be named as additional insured. The Lessee's obligation
under this Clause 9.5 shall not be affected by the Lessee ceasing to be
lessee of the Aircraft or any of the Indemnitees ceasing to have any
interest in respect of the Aircraft.
9.6 APPLICATION OF INSURANCE PROCEEDS
As between the Lessor and the Lessee:
(a) All insurance payments, up to the Agreed Value, received as the
result of a Total Loss occurring during the Term will be paid to
the Lender.
(b) All insurance proceeds in respect of any damage or loss to the
Aircraft, any Engine or any Part occurring during the Term not
constituting a Total Loss and involving insurance proceeds in
excess of the Damage Notification Threshold will be paid to the
Lender and applied in payment (or to reimburse the Lessee) for
repairs or replacement property upon the Lessor being reasonably
satisfied that the repairs or replacement have been effected in
accordance with this Agreement. Insurance proceeds in amounts below
the Damage Notification Threshold may be paid by the insurer
directly to the Lessee. Any balance remaining may be retained by
the Lessee.
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(c) All insurance proceeds in respect of third party liability will be
paid to the relevant third party.
(d) Notwithstanding Clauses 9.6(a) and (b), if at the time of the
payment of any such insurance proceeds a Default has occurred and
is continuing all such proceeds will be paid to or retained by the
Lender to be applied toward payment of any amounts that may be or
become payable by the Lessee in such order as the Lessor and the
Lender see fit or as the Lessor and the Lender may elect. In the
event that the Lessee remedies any such Default to the reasonable
satisfaction of the Lessor, the Lessor shall procure that all such
insurance proceeds then held by the Lender in excess of the amounts
(if any) applied by the Lessor in accordance with this sub-clause
(d) shall be paid promptly to the Lessee.
10. INDEMNITY
10.1 GENERAL
The Lessee shall defend, indemnify and hold harmless the Indemnitees
from and against any and all claims, proceedings, losses, liabilities,
suits, judgments, costs, expenses, penalties or fines (each a "CLAIM")
regardless of when the same is made or incurred, whether during or after
the Term (but not before):
(a) that may at any time be suffered or incurred directly or indirectly
as a result of or connected with possession, delivery, performance,
management, registration, control, maintenance, condition, service,
repair, overhaul, leasing, sub-leasing, use, operation or return of
the Aircraft, any Engine or Part (either in the air or on the
ground) whether or not the Claim may be attributable to any defect
in the Aircraft, any Engine or any Part or to its design, testing,
use or otherwise, and regardless of when the same arises or whether
it arises out of or is attributable to any act or omission,
negligent or otherwise, of any Indemnitee;
(b) that arise out of any act or omission that invalidates or that
renders voidable any of the Insurances;
(c) that may at any time be suffered or incurred as a consequence of
any design, article or material in the Aircraft, any Engine or any
Part or its operation or use constituting an infringement of
patent, copyright, trademark, design or other proprietary right or
a breach of any obligation of confidentiality owed to any person,
but excluding any Claim to the extent that:
(1) it arises directly as a result of the wilful misconduct or gross
negligence of an Indemnitee;
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(2) it arises directly as a result of a breach by the Lessor of
its express obligations under this Agreement or as a result of
a representation or warranty given by the Lessor in this
Agreement not being true and correct at the date when, or when
deemed to have been, given or made;
(3) it constitutes a Lessor Tax or Lessor Lien;
4) it represents a Tax or loss of tax benefits (the Lessee's
liabilities for which, to the extent thereof, are set out in
Clauses 5.5, 5.6 and 5.8);
(5) it constitutes a cost or expense that is required to be borne
by the Lessor in accordance with any other provision of this
Agreement;
(6) it results from any disposition not caused by Lessee of all or
any part of Lessor's rights, title or interest in or to the
Aircraft or under this Agreement, unless such disposition
occurs as a consequence of an Event of Default;
(7) it is attributable to an event occurring after the Term unless
the Claim results from or arises out of an act or omission by
the Lessee, or any circumstance existing, during the Term; or
(8) it is brought after the Term and relates to a claimed patent
infringement by the Manufacturer.
10.2 MITIGATION
(a) The Lessor agrees that it shall, as soon as reasonably
practicable after it becomes aware of any circumstances that
would, or would reasonably be expected to, become the
subject of a claim for indemnification pursuant to Clause
10.1, notify the Lessee in writing accordingly. The Lessor (and
any other Indemnitee seeking indemnification, as the case may
be) and the Lessee shall then consult with one another in good
faith in order to determine what action (if any) may
reasonably be taken to avoid or mitigate such Claim. The Lessee
shall have the right to take all reasonable action (on behalf
and, if necessary, in the name of the Lessor or such other
Indemnitee) in order to resist, defend or settle (provided
such settlement is accompanied by payment) any claims by third
parties giving rise to such Claim, provided always that the Lessee
shall not be entitled to take any such action unless adequate
provision, reasonably satisfactory to the Lessor and such other
Indemnitee, shall have been made in respect of the third party
claim and the costs thereof. The Lessee or, if the Claim is covered
by Lessee's Insurances, the Lessee's insurers shall be
entitled to select any counsel to represent it or them, the
Lessor and such other Indemnitee in connection with any such
action, subject in the case of Lessee to the approval of the
Lessor and such other Indemnitee
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(such approval not to be unreasonably withheld) and any action
taken by the Lessee shall be on a full indemnity basis in respect
of the Lessor and such other Indemnitee.
(b) Any sums paid by the Lessee to the Lessor or any Indemnitee in
respect of any Claim pursuant to Clause 10.1 shall be paid subject
to the condition that, in the event that the Lessor or such
Indemnitee is subsequently reimbursed in respect of that Claim by
any other person, the Lessor or such Indemnitee shall, provided no
Default shall have occurred and be continuing, promptly pay to the
Lessee an amount equal to the sum paid to it by the Lessee,
including any interest on such amount to the extent attributable
thereto and received by the Lessor or such Indemnitee, less any Tax
payable by the Lessor or such Indemnitee in respect of such
reimbursement.
10.3 DURATION
The indemnities contained in this Agreement will survive and continue in
full force after the Expiry Date.
11. EVENTS OF LOSS
11.1 TOTAL LOSS
(a) PRE-DELIVERY: If a Total Loss occurs prior to Delivery, this
Agreement will immediately terminate and, except as expressly
stated in this Agreement, neither party will have any further
obligation or liability under this Agreement except that the Lessor
will rebate to the Lessee the Security Deposit (if theretofore paid
pursuant to Clause 5.1) or, as the case may be, return the Letter
of Credit to the Lessee.
(b) POST-DELIVERY: If a Total Loss occurs after Delivery, the Lessee
will pay the Agreed Value to the Lender no later than 60 days after
the Total Loss Date (the "SETTLEMENT DATE") unless the Aircraft
is restored to the Lessor or the Lessee within that period (or, in
the case of a Total Loss coming within paragraph (c) of the
definition of Total Loss and involving the loss of the Lessor's
title to the Aircraft, if both the Aircraft and the Lessor's
title thereto are restored to the Lessor or, in the case of the
Aircraft, to the Lessee and the Lender's rights under the
Mortgage are fully restored). The receipt by the Lender of the
insurance proceeds in respect of the Total Loss on or prior to the
Settlement Date shall discharge the Lessee from its obligation
to pay the Agreed Value to the Lessor pursuant to this
sub-clause (b), provided such proceeds are not less than the
Agreed Value. In the event that the insurance proceeds are paid
initially to the Lessee and not to the Lender, they may be
retained by the Lessee if the Lessee shall have paid the Agreed
Value to the Lender, otherwise the Lessee shall pay the Agreed
Value to the Lender not later than the next Business Day following
receipt by the Lessee of such proceeds. In the event that the
Lessee pays the Agreed Value to the Lessor in accordance with this
sub-clause (b), the Lessor shall promptly assign to the
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Lessee its rights under the Insurances to receive the insurance
proceeds in respect of the Total Loss to the extent that such
proceeds shall not have been paid to the Lessee. Subject to the
rights of any insurers or other third parties, upon irrevocable
payment in full to the Lessor of that amount and all other amounts
that may be or become payable to the Lessor under this Agreement,
the Lessor shall:
(i) without recourse or warranty (except as to the absence of
Lessor Liens), and without further act, be deemed to have
transferred to the Lessee all of the Lessor's rights to any
Engines or Parts not installed when the Total Loss occurred,
all on an "as-is where is" basis, and shall, at the Lessee's
expense, execute and deliver such bills of sale and other
documents and instruments as the Lessee may reasonably
request to evidence (on the public record or otherwise) the
transfer and the vesting of the Lessor's rights in such
Engines and Parts in the Lessee, free and clear of all rights
of the Lessor and any Lessor Liens; and
(ii) pay to Lessee, as a rebate of prepaid Basic Rent, and amount
equal to the product of (1) one month's Basic Rent multiplied
by (2) a fraction the numerator of which is the number of
days remaining in the then current Rental Period and the
denominator of which is the number of days in the then
current Rental Period.
(c) ENGINE LOSS: Upon the occurrence of an Engine Loss (including,
for the avoidance of doubt, at a time when the Engine is not
installed on the Airframe) in circumstances in which there has
not also occurred a Total Loss, the Lessee shall give the Lessor
and the Lender written notice promptly upon becoming aware of
the same and shall (unless the Lessor has received the insurance
proceeds relating to such Engine Loss), within 60 days after the
Engine Loss Date, convey or cause to be conveyed to the Lessor,
as replacement for such Engine, title to a replacement engine
that is in the same or better operating condition, has the same
or greater value and utility as the lost Engine and that
complies with the conditions set out in Clause 8.13(a). The
Lessee shall, at the time of such conveyance, comply in all
respects with Clause 8.17(a) so that the replacement engine
becomes an Engine, whereupon the leasing of the replaced Engine
the subject of the Engine Loss shall cease and title to such
replaced Engine shall (subject to any salvage rights of
insurers) vest in the Lessee pursuant to Clause 8.17(c), free of
Lessor Liens. If the Lessor or the Lender subsequently receives
any insurance proceeds relating to such Engine Loss, the Lessor
shall promptly remit such proceeds or cause such proceeds to be
remitted to the Lessee. No Engine Loss with respect to any
Engine that is replaced in accordance with the provisions of
this Clause 11.1 (c) shall result in any increase or decrease in
Basic Rent or the Agreed Value.
11.2 REQUISITION
During any requisition for use or hire of the Aircraft, any Engine or
Part that does not constitute a Total Loss:
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(a) the Basic Rent and Supplemental Rent payable under this Agreement
will not be suspended or abated either in whole or in part, and the
Lessee will not be released from any of its other obligations under
this Agreement (other than operational obligations with which the
Lessee is unable to comply solely by virtue of the requisition); and
(b) so long as no Default has occurred and is continuing, the
Lessee will be entitled to any compensation payable by the
requisitioning authority in respect of the Term. The Lessee
will, as soon as practicable after the end of any such
requisition (with the Term being extended if and to the extent
that the period of requisition continues beyond the scheduled
Expiry Date), cause the Aircraft to be put into the condition
required by this Agreement. The Lessor will be entitled to all
compensation payable by the requisitioning authority in respect
of any change in the structure, state or condition of the
Aircraft arising during the period of requisition, and the
Lessor will apply such compensation in reimbursing the Lessee for
the cost of complying with its obligations under this Agreement
in respect of any such change, but so that, if any Default has
occurred and is continuing, the Lessor may apply the compensation
in or towards settlement of any amounts owing by the Lessee under
this Agreement. All such sums shall be held by the Lender.
12. RETURN OF AIRCRAFT
12.1 REDELIVERY
On the Expiry Date or termination of the leasing of the Aircraft under
this Agreement, the Lessee shall, unless a Total Loss has occurred, at
its expense, redeliver the Aircraft and Aircraft Documents to the Lessor
at the Redelivery Location or such other airport as is mutually
acceptable to Lessor and Lessee in a condition complying with this
Clause 12 and Schedule 3, free and clear of all Security Interests and
Permitted Liens (other than the Lessor Liens).
12.2 FINAL CHECKS
Immediately prior to return of the Aircraft, Lessee shall perform the
following:
(a) Lessee shall perform (or have performed by an Agreed
Maintenance Performer) a full and complete zonal, systems and
structural check ("C" or its equivalent), including the
corresponding lower checks ("A" and "B" or equivalent) and any
other maintenance and inspections tasks that are a part thereof,
all in accordance with the Agreed Maintenance Program. At
return, the Airframe will have zero Flight Hours since such "C"
check, except for the acceptance flights and the ferry flight to
the Redelivery Location. Lessee will also weigh the Aircraft.
Any discrepancies revealed during such inspection will be
corrected in accordance with Manufacturer's maintenance and
repair manuals or FAA-approved data. Lessee shall also perform
during such check, to the
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extent it is able, any other work reasonably required by Lessor
(and not otherwise required under this Agreement) so long as such
work does not prevent Lessee from returning the Aircraft on the
Expiry Date, and Lessor shall reimburse Lessee for such work at
Lessee's preferred customer rates.
(b) Lessee shall perform (or have performed by an Agreed Maintenance
Performer) an internal and external corrosion inspection in
accordance with the manufacturer's corrosion prevention and control
program ("CPCP") specified for the model type and correct any
discrepancies in accordance with the recommendations of the
manufacturer and the manufacturer's structural repair manual
("SRM"). In addition, all inspected areas will be properly treated
with corrosion inhibitor as recommended by manufacturer.
(c) If Lessee performed any structural inspections or tasks on a
sampling basis but did not perform such inspections on the
Aircraft, such work shall also be performed on the Aircraft.
(d) Lessee shall perform a videotape borescope inspection of the low
pressure and high pressure compressors and the turbine area of the
Engines. All items beyond the applicable Engine manufacturer's
maintenance manual limits will be rectified at Lessee's sole cost
and expense. No Engine win be "on watch" for any reason requiring
special or out of sequence inspection.
(e) In accordance with the applicable maintenance manual, Lessee shall
perform a maximum power assurance run and condition, acceleration
and bleed valve scheduling checks on the Engines. Lessee will
record and evaluate the Engine performance, with Lessor and/or its
representative entitled to be present. The performance and all
operating parameters of each Engine will be within the limits
specified in the Engine manufacturer's maintenance manual.
(f) Lessee shall have removed and blended all external and interior
markings.
(g) If the Engine historical and technical records and the condition
trend monitoring data of any Engine or the APU indicate an abnormal
acceleration in the rate of deterioration in the performance of
such Engine or APU, Lessee shall correct such conditions causing
the accelerated rate of deterioration.
12.3 FINAL INSPECTION
(a) During the 15 days prior to redelivery of the Aircraft, the Lessee
will make the Aircraft available to the Lessor and the Lender for
inspection ("FINAL INSPECTION") in order to verify that the
condition of the Aircraft complies with this Agreement. The Final
Inspection will be long enough to permit the Lessor and the Lender
to inspect, at their
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own cost, the Aircraft Documents, the Aircraft and uninstalled
Parts and the Engines. The Lessor and the Lender shall attend and
conduct the Final Inspection diligently and, without limiting their
right to conduct the full Final Inspection permitted by this
Agreement, will cooperate with the Lessee in order to complete the
Final Inspection as soon as reasonably practical.
(b) The Lessor and the Lender shall also be entitled, as part of the
Final Inspection, to require the Lessee to perform an acceptance
flight of up to three hours at the Lessee's cost (with the Lessor's
and the Lender's representatives as on-board observers) and such
further acceptance flights as may be necessary in the event that
the first or subsequent flights do not confirm that the Aircraft
complies with the requirements of this Agreement.
(c) At the request of Lessor, Lessee shall perform "bridging"
maintenance procedures for the purpose of standardizing the
Aircraft to the maintenance program of any subsequent operator of
the Aircraft; provided, however, that Lessor shall pay to Lessee
the Actual Cost of all "bridging" procedures that are in excess of
or not in lieu of the "C" Check to be performed pursuant to Clause
12.2 and Schedule 3.
12.4 NON-COMPLIANCE
To the extent that, at the time of Final Inspection, the condition of
the Aircraft does not comply with this Agreement, the Lessee shall at
the option of the Lessor and the Lender:
(a) immediately rectify-the non-compliance and, to the extent the
non-compliance extends beyond the Expiry Date, the Term will be
automatically extended until the non-compliance has been rectified;
or
(b) redeliver the Aircraft to the Lessor and indemnify the Lessor, and
provide security reasonably acceptable to the Lessor and the Lender
for that indemnity, against the cost of putting the Aircraft into
the condition required by this Agreement.
During any extension of the Term pursuant to sub-clause (a), this
Agreement will remain in full force and effect, including the obligation
to pay Basic Rent (which Lessee shall pay on a PER DIEM basis weekly in
advance); provided, however, that Lessee shall not operate, or permit
others to operate, the Aircraft after the Expiry Date except for
acceptance flights pursuant to Clause 12.2 and a ferry flight to the
Redelivery Location.
12.5 EXPORT DOCUMENTATION
Upon redelivery and upon request by the Lessor, the Lessee shall (a)
provide to the Lessor all documents necessary to export the Aircraft
from the State of Registration (including a valid and subsisting export
licence for the Aircraft), and (b) provide any documents
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requested by the Lessor in connection with, and otherwise cooperate
with, the deregistration of the Aircraft by the Aviation Authority,
including causing the Aviation Authority to issue an Export Certificate
of Airworthiness to a country specified by the Lessor.
12.6 ACKNOWLEDGMENT
Provided the Lessee has complied with its obligations under this
Agreement, following redelivery of the Aircraft by the Lessee to the
Lessor at the Redelivery Location, the Lessor will deliver to the Lessee
an acknowledgment confirming that the Lessor is satisfied that the
Aircraft is in the condition required by this Agreement and has been
redelivered to the Lessor in accordance with this Agreement.
12.7 MAINTENANCE PROGRAM
(a) During the 20 day period preceding the scheduled Expiry Date and
upon the Lessor's request, the Lessee will provide the Lessor or
its agent reasonable access to the Agreed Maintenance Program and
the Aircraft Documents in order to facilitate the Aircraft's
integration into any subsequent operator's fleet. The Lessor agrees
that it will not disclose the contents of the Agreed Maintenance
Program to any person or entity except to the extent necessary to
monitor the Lessee's compliance with this Agreement and/or to
bridge the maintenance program for the Aircraft from the Agreed
Maintenance Program to another program after the Expiry Date.
(b) Concurrent with providing the Aircraft Documents for Lessor's
review, Lessee shall provide to Lessor a written summary of all
sampling programs involving or affecting the Aircraft.
12.8 STORAGE
If the Lessor so requests, and subject to the availability of the
requisite space, the Lessee shall park and store the Aircraft at a
secure storage area, which may be at the Redelivery Location or at any
other suitable facility of the Lessee selected by the Lessee, wherever
located (the "STORAGE LOCATION"), on behalf of the Lessor for a period
not exceeding 30 days from the Expiry Date. During that period the
Aircraft shall be at the Lessee's risk (save as to any loss or damage
caused by the Lessor's wilful misconduct or gross negligence), and the
Lessee shall maintain and store the Aircraft in accordance with the
respective manufacturer's maintenance planning document and shall insure
the Aircraft in accordance with a "ground risk only" policy usual and
customary in the worldwide aviation insurance marketplace. All storage,
maintenance and insurance costs shall be borne by the Lessee. If the
Lessor so requests, and subject to the availability of the requisite
space, the Lessee shall continue to park and store the Aircraft at the
Storage Location on behalf of the Lessor for a further period not
exceeding 60 days. During that further period the Aircraft shall be at
the Lessor's risk (save as to any loss or damage caused by the Lessee's
wilful misconduct or
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gross negligence), but the Lessee shall continue to maintain, store and
insure the Aircraft in accordance with this Clause 12.8. All reasonable
storage, maintenance and insurance costs incurred by the Lessee
(excluding any profit element accruing to the Lessee) during such
further period shall be reimbursed by the Lessor promptly upon
presentation of supporting invoices and/or receipts.
13. DEFAULT
13.1 EVENTS
Each of the following events will constitute an Event of Default and a
repudiation of this Agreement by the Lessee:
(a) NON-PAYMENT: the Lessee fails to pay any amount payable by it under
this Agreement within 3 Business Days of the due date for payment;
or
(b) INSURANCE: the Lessee fails to comply with any provision of clause
9 or any insurance required to be maintained under this Agreement
is canceled or terminated; or
(c) BREACH: the Lessee fails to comply with any other provision of this
Agreement and, if such failure is, in the reasonable opinion of the
Lessor, capable of remedy, the failure continues for 30 days after
notice from the Lessor to the Lessee, PROVIDED HOWEVER that, if
such failure cannot reasonably be remedied within such 30 day
period and the Lessee is diligently undertaking all necessary
remedial action, the 30 day period shall be extended for a further
15 days; or
(d) REPRESENTATION: any representation or warranty made (or deemed to
be repeated) by the Lessee in this Agreement or in any document or
certificate furnished to the Lessor pursuant to or in connection
with this Agreement is or proves to have been incorrect in any
material respect when made or deemed to be repeated and the
Lessee's ability to comply with its obligations under this
Agreement, and/or the Lessor's rights, title and interest to and in
the Aircraft and/or under this Agreement, are thereby materially
and adversely affected; or
(e) CROSS DEFAULT:
(i) any Financial Indebtedness of the Lessee or any of its
Affiliates that exceeds $500,000 is not paid when due and any
applicable grace period shall have expired;
(ii) the security for any such Financial Indebtedness is enforced; or
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(iii) any lease, conditional sale, installment sale or forward
purchase agreement of the Lessee or any of its Affiliates in
respect of an aircraft is terminated as a consequence of an
event of default or termination event (however described);
provided always, in any such case, it shall not constitute an Event
of Default under this Agreement:
(1) if the relevant Financial Indebtedness constitutes
non-recourse borrowing or financing; or
(2) if the non-payment, acceleration, termination or event in
question is being contested by the Lessee in good faith and
on reasonable grounds and any declaration of default,
termination of agreement or enforcement of security has been
stayed by a court of competent jurisdiction; or
(3) if the non-payment, acceleration, termination or event in
question is being discussed by the Lessee with its creditors
in good faith and on reasonable grounds and there has been no
declaration of default, termination of agreement or
enforcement of security;
(f) APPROVALS: any consent, authorization, licence, certificate or
approval of or registration with or declaration to any Government
Entity in connection with this Agreement, including:
(i) any authorization required by the Lessee of, or in connection
with, the execution, delivery, validity, enforceability or
admissibility in evidence of this Agreement or the
performance by the Lessee of its obligations under this
Agreement; or
(ii) any airline licence, air transport licence, franchise,
concession, permit, certificate, right or privilege required
by the Lessee for the conduct of its business,
is modified, withheld, revoked, suspended, canceled, withdrawn,
terminated or not renewed, or otherwise ceases to be in full force
and is not reissued, reinstated or renewed within 30 DAYS, PROVIDED
HOWEVER that any such modification, withholding, revocation,
suspension, cancellation, withdrawal, termination or non-renewal
shall only constitute an Event of Default if it has a material
adverse effect on the Lessee's ability to perform its obligations
under this Agreement or the Lessor's rights, title and interest to
and in the Aircraft or under this Agreement; or
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(g) INSOLVENCY:
(i) the Lessee or any of its Affiliates is, or is deemed for the
purposes of any relevant law to be, unable to pay its debts
as they fall due or to be insolvent, or admits inability to
pay its debts as they fall due; or
(ii) the Lessee or any of its Affiliates suspends making payments
on all or any class of its debts or announces an intention to
do so, or a moratorium is declared in respect of any of its
indebtedness; or
(h) BANKRUPTCY AND SIMILAR PROCEEDINGS
(i) Lessee shall consent to the appointment of a receiver,
trustee or liquidator for itself or for a substantial part of
its property; or
(ii) Lessee shall admit in writing its inability to pay its debts
generally as they become due, or Lessee shall make a general
assignment for the benefit of creditors; or
(iii) Lessee shall file a voluntary petition in bankruptcy or a
voluntary petition or answer seeking reorganization in a
proceeding under the 11 U.S.C. Sections 101 ET SEQ. or under
any other laws dealing with bankruptcy, insolvency,
moratorium or creditors' rights generally (any or all of
which are hereinafter referred to as "BANKRUPTCY LAWS"), or
an answer admitting the material allegations of a petition
filed against Lessee in any such proceeding, or Lessee shall
by voluntary petition, answer or consent to or seek relief
under the provisions of any Bankruptcy Laws; or
(iv) any order, judgment or decree is entered by a court of
competent jurisdiction appointing a receiver, trustee or
liquidator of Lessee or a substantial part of its property,
or ordering a substantial part of Lessee's property is to be
sequestered, and instituted or done with the consent of
Lessee or, if instituted by another person, the order,
judgment or decree is not dismissed, remedied or relinquished
within 60 days; or
(v) a petition against Lessee in a proceeding under any
Bankruptcy Laws shall be filed and shall not be withdrawn or
dismissed within 60 days thereafter, or if, under the
provisions of any Bankruptcy Laws that may apply to Lessee,
any court of competent jurisdiction shall assume
jurisdiction, custody or control of Lessee or of any
substantial part of its property; or
(vi) any step (including petition, proposal or convening a
meeting) is taken with a view to a composition, assignment or
arrangement with any creditors of, or the reorganization,
rehabilitation, administration, liquidation, or dissolution
of, the
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Lessee or any of its Affiliates or any other
insolvency proceedings involving the Lessee or any of
its Affiliates; or
(i) OTHER JURISDICTION: there occurs in relation to the Lessee or any
of its Affiliates any event anywhere which, in the reasonable
opinion of the Lessor, corresponds with any of those mentioned in
Clause 13.1(h); or
(j) UNLAWFUL: it becomes unlawful for the Lessee to perform any of its
material obligations under this Agreement or this Agreement becomes
wholly or partly invalid or unenforceable, provided that any such
partial invalidity or unenforceability shall only constitute an
Event of Default if it has a material adverse effect on the
Lessee's ability to perform its obligations under this Agreement or
the Lessor's rights, title and interest in and to the Aircraft or
under this Agreement; or
(k) SUSPENSION OF BUSINESS: the Lessee or any of its Affiliates
suspends or ceases to carry on all or a substantial part of its
business; or
(l) DISPOSAL: the Lessee or any of its Affiliates disposes or threatens
to dispose of all or a material part of its assets, whether by one
or a series of transactions, related or not, other than pursuant to
a merger or consolidation as referred to in, and subject to, Clause
8.8(b) or for the purpose of any other reorganization or
amalgamation the terms of which have received the previous consent
in writing of the Lessor; or
(m) RIGHTS: the existence, validity, enforceability or priority of the
rights of the Lessor as owner and lessor in-respect of the Aircraft
or the rights of the Lender as mortgagee of the Aircraft and
assignee of this Agreement are challenged by the Lessee or any
other person claiming by or through the Lessee; or
(n) CHANGE OF OWNERSHIP: any single person or group of persons acquire
control, directly or indirectly, of the Lessee without the
previous consent in writing of the Lessor (which consent shall
not be withheld unless the Lessor is of the reasonable opinion
that such acquisition of control will have a materially adverse
effect on the Lessee's ability to perform its obligations under
this Agreement or the Lessor's rights, title and interest in
and to the Aircraft or under this Agreement), not including
(i) persons that are currently in control of Lessee, (ii) spouses
of such persons, (iii) any lineal ancestor or descendant of
such persons, (iii) any spouse of any person covered by clause
(iii), or (v) a partnership or trust set up for the benefit of
persons identified in clauses (i) through (iv); or
(o) DELIVERY: the Lessee fails to accept delivery of the Aircraft when
validly tendered pursuant to this Agreement by the Lessor (provided
that the Lessor shall have satisfied the conditions precedent set
out in Clause 3.4); or
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(p) ADVERSE CHANGE: any event or series of events occurs which, in the
reasonable opinion of the Lessor, could be expected to have a
material adverse effect on the financial condition or operations of
the Lessee and its Affiliates or on the ability of the Lessee to
comply with its obligations under this Agreement; or
(q) LETTER OF CREDIT: if the Lessee has elected to deliver the Letter
of Credit in lieu of the Security Deposit pursuant to Clause
5.1(b), the Letter of Credit ceases for any reason to be in full
force and effect or is not renewed or replaced before its
expiration in accordance with Clause 5.1(b) and the Lessee does not
immediately provide the Lessor with cash in an amount equal to the
Security Deposit.
13.2 RIGHTS
If an Event of Default occurs, and for as long as it shall continue, the
Lessor may at its option (and without prejudice to any of its other
rights under this Agreement), at any time thereafter:
(a) treat such event as a repudiation by the Lessee of its obligations
under this Agreement and by notice to the Lessee with immediate
effect terminate the leasing of the Aircraft (but without prejudice
to the continuing obligations of the Lessee under this Agreement),
whereupon all rights of the Lessee under this Agreement shall
cease; and/or
(b) proceed by appropriate court action or actions to enforce
performance of this Agreement or to recover damages for the breach
of this Agreement; and/or
(c) either:
(i) take possession of the Aircraft, for which purpose the
Lessor may enter any premises belonging to, occupied by or
under the control of the Lessee (for which purpose the Lessee
hereby grants to the Lessor an irrevocable licence to the
extent permitted by applicable law) where the Aircraft may be
located, or cause the Aircraft to be redelivered to the
Lessor at the Redelivery Location (or such other location as
the Lessor may require), and the Lessor is hereby irrevocably
authorized and empowered, to the extent permitted by
applicable law, to direct pilots of the Lessee or other
pilots to fly the Aircraft to that airport and will have all
the powers and authorizations necessary for taking such
action; or
(ii) by serving notice, require the Lessee to redeliver the
Aircraft to the Lessor at the Redelivery Location (or such
other location as the Lessor may require).
13.3 EXPORT
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If an Event of Default occurs, and for as long as it shall continue, the
Lessor may sell or otherwise deal with the Aircraft as if this Agreement
had never been made and the Lessee will, at the request of the Lessor,
take all steps necessary to export the Aircraft from the country where
the Aircraft is for the time being situated and any other steps
necessary to enable the Aircraft to be redelivered to the Lessor in
accordance with this Agreement. The Lessee hereby irrevocably and by way
of security for its obligations under this Agreement authorizes and
empowers the Lessor as its attorney to execute and deliver any
documentation and to do any act or thing required in connection with the
foregoing.
13.4 DEFAULT PAYMENTS
If a Default occurs, the Lessee will indemnify the Lessor on demand
against any loss, damage, expense, cost or liability which the Lessor
may sustain or incur directly or indirectly as a result, including:
(a) any loss of profit (calculated on an after-tax basis) suffered by
the Lessor because of the Lessor's inability to place the Aircraft
on lease with another Lessee on terms as favorable to the Lessor as
this Agreement or because whatever use, if any, to which the Lessor
is able to put the Aircraft upon its return to the Lessor, is not
as profitable (calculated on an after-tax basis) to the Lessor as
this Agreement would have been but for such Default or
non-delivery;
(b) in the event that the Aircraft is sold as a consequence of
the Lessor's inability to enter into a satisfactory lease
within a reasonable period, the amount (if any) by which (i) the
aggregate of (1) the net sale proceeds (calculated by
deducting the costs of sale together with the cost of preparing
the Aircraft for sale and the repayment of any outstanding
indebtedness in relation to the financing of the Aircraft) plus
(2) the present value of the anticipated after-tax net income
to be derived from such net sale proceeds up to the scheduled
Expiry Date, discounted on a monthly basis using 9.5% PER ANNUM
as the discount rate, are less than (ii) the aggregate of (1) the
anticipated net sale proceeds (computed on the same basis as the
net sale proceeds referred to in (i)(1) above), assuming that
the Aircraft would have been sold as soon as reasonably
practicable following the scheduled Expiry Date plus (2) the
present value of the income that would have been derived from the
future Basic Rent payable until the scheduled Expiry Date,
discounted on a monthly basis using 9.5% PER ANNUM as the discount
rate;
(c) any amount of principal, interest, fees or other sums whatsoever
paid or payable on account of funds borrowed in order to carry any
amount unpaid by the Lessee;
(d) any loss, premium, penalty or expense that may be incurred in
repaying funds raised to finance the Aircraft or in unwinding any
swap, forward interest rate agreement or other financial instrument
relating in whole or in part to the Lessor's financing of the
Aircraft; and
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(e) any loss, cost, expense or liability sustained or incurred by the
Lessor owing to the Lessee's failure to redeliver the Aircraft on
the date, at the place and in the condition required by this
Agreement.
For the avoidance of doubt, the provisions of Clause 5.8(a) will apply
to any sums payable by the Lessee pursuant to this Clause 13.4.
14. ASSIGNMENT AND TRANSFER
14.1 NO ASSIGNMENT BY LESSEE
The Lessee will not assign or create or permit to exist any Security
Interest over any of its rights under this Agreement.
14.2 LESSOR ASSIGNMENT
The Lessor may sell, assign or transfer all or any of its rights under
this Agreement and in the Aircraft (a "TRANSFER") and the Lessor will,
other than in the case of an assignment for security purposes, have no
further obligation under this Agreement following a Transfer but,
notwithstanding any Transfer, will remain entitled to the benefit of
each indemnity under this Agreement.
(a) In connection with any Transfer, the following conditions shall
apply:
(i) Lessor shall give Lessee written notice of such Transfer at
least 10 Business Days before the date of such Transfer,
specifying the name and address of the proposed purchaser,
assignee or transferee (the "Transferee");
(ii) the Transferee will be a person reasonably experienced in
aircraft leasing (or the Transferee's rights and powers under
this Agreement shall be exercised on its behalf pursuant to
an appropriate management agreement by a person having such
experience);
(iii) the Transfer will not adversely affect the Lessee's rights
and interests in the Aircraft and/or this Agreement, nor
subject the Lessee to any Tax or Claim or any other
obligation or liability to which it would not have been
subject had such assignment or transfer not taken place.
(iv) the Transferee will be a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Federal
Aviation Law and have full corporate power and authority to
enter into and perform the transactions contemplated by this
Agreement on the part of "Lessor";
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(v) on the Transfer date the Lessor and the Transferee shall
enter into an agreement or agreements in which the Transferee
confirms that it shall be deemed a party to this Agreement
and agrees to be bound by all the terms of, and to undertake
all of the obligations of, the Lessor contained in this
Agreement;
(vi) such Transfer shall not violate any applicable law including
the Federal Aviation Law, the Federal Aviation Regulations
and the Securities Act of 1933, as amended; and
(vii) the Transferee shall provide to Lessee an opinion of its
regular independent counsel as to the matters set forth in
sub-clause (iv), as to the legality, validity, binding effect
and enforceability of the agreement or agreements between
Lessor and Transferee referred to in sub-clause (v) and as to
such other matters as were contained in the opinion of
Lessor's counsel delivered on the Delivery Date.
(b) Upon any Transfer, the Transferee shall be deemed Lessor for all
purposes of this Agreement, each reference in this Agreement to the
"Lessor" shall thereafter be deemed for all purposes to refer to
the Transferee, and the transferor shall be relieved of all
obligations of the "Lessor" under this Agreement arising after the
time of such Transfer except to the extent attributable to acts or
events occurring prior to the time of such Transfer.
(c) Upon compliance by Lessor and a Transferee with the terms and
conditions of Clause 14.2(a), Lessee shall at the time of Transfer,
at the specific written request of Lessor and with Lessor paying
all of Lessee's out-of-pocket costs and expenses:
(i) execute and deliver to Lessor and to such Transferee an
agreement, in form and substance satisfactory to Lessor,
Lessee and such Transferee, dated the date of such transfer,
consenting to such transfer, agreeing to pay all or such
portion of the Basic Rent and other payments under Us
Agreement to such Transferee or its designee as such
Transferee shall direct, and agreeing that such Transferee
shall be entitled to rely on all representations and
warranties made by Lessee in this Agreement or in any
certificate or document furnished by Lessee in connection
with this Agreement as though such Transferee was the
original "Lessor";
(ii) execute and deliver to Lessor or such Transferee, as the case
may be, precautionary Uniform Commercial Code financing
statements or amendments reflecting the interests of such
Transferee in the Aircraft and this Agreement;
(iii) deliver to Lessor and to such Transferee a certificate,
signed by a duly authorized officer or Lessee, dated the date
of such transfer, to the effect that no Event of
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Default has occurred and is continuing or, if one is then
continuing, describing such Event of Default;
(iv) cause to be delivered to Lessor and such Transferee
certificates of insurance and broker's letter of undertaking
substantially in the form set out in Parts 2 and 3 of
Schedule 4, detailing the coverage and confirming the
insurers' agreement to the specified insurance requirements
of this Agreement and listing the Lessor and Transferee as
additional insureds and the Transferee as sole loss payee
(subject to other direction by the Lender);
(v) deliver to Lessor and to such Transferee an opinion of
Lessee's counsel (which may be Lessee's General Counsel),
addressed to Lessor and such Transferee to the effect that
the agreement referred to in sub-clause (i) has been duly
authorized and executed by Lessee and constitutes the legal,
valid and binding obligation of Lessee, enforceable against
Lessee in accordance with its terms (subject to customary
exceptions), and to the effect that such Transferee may rely
on the opinion delivered by such counsel or its predecessor
counsel in connection with this Agreement on the Delivery
Date with the same force and effect as if such Transferee was
an original addressee of such opinion when given;
(vi) deliver to Lessor and such Transferee information on the
location of the Airframe and Engines at all times requested
by Lessor in order to permit the Transfer to take place at a
time and on a date so as to eliminate or minimize any Taxes
applicable to the Transfer; and
(vii) such other documents as Lessor or such Transferee may
reasonable request, so long as such documents do not
adversely affect the rights or obligations of Lessee under
this Lease or otherwise adversely effect Lessee.
14.3 GRANTS OF SECURITY INTERESTS
The Lessor shall be entitled at any time after Delivery to grant a
security interest in the Aircraft or its right, title and interest in
this Agreement (each, an "ADDITIONAL MORTGAGE") in favor of any person
(each, an "ADDITIONAL MORTGAGEE"). Any Additional Mortgage may be a
successor mortgage to the Security Interest granted to the Lender, or
may be in addition to the Lender's Security Interest and previous
Additional Mortgages and with a priority senior, equal or subordinate to
the Lender's Security Interest and previous Additional Mortgages as the
Lender and previous Additional Mortgagees may permit. In the case of any
such grant by Lessor of an Additional Mortgage to an Additional
Mortgagee in all or any portion of Lessor's rights, title and interest
in and to the Aircraft and this Agreement, Lessee shall promptly, at the
specific written request of Lessor and with Lessor paying all of
Lessee's out-of-pocket costs and expenses:
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(a) execute and delivery to Lessor and to such Additional
Mortgagee an agreement, in form and substance satisfactory to
Lessor, such Additional Mortgagee and Lessee, dated the
date of the grant of such Additional Mortgage, (i) consenting
to such Additional Mortgage and to any assignment of Lessor's
rights, title and interest in and to this Agreement to such
Additional Mortgagee for security purposes, (ii) if requested
by Lessor and consented to by the previous payee, agreeing that
Lessee will pay the Basic Rent and other payments under this
Agreement to such Additional Mortgagee, and (iii) agreeing
that such Additional Mortgagee shall be entitled to rely on all
representations and warranties made by Lessee in this Agreement or
in any certificate or document furnished by Lessee in connection
with this Agreement Documents as though such Additional Mortgagee
was originally the "Lessor" or "Lender";
(b) execute and deliver to Lessor and such Additional Mortgagee such
agreements as the Lessor may reasonably require for the purposes of
effecting all necessary amendments to this Agreement (including
Clauses 8, 9 and 10 and Schedule 4);
(c) execute and deliver to Lessor or such Additional Mortgagee, as the
case may be, precautionary Uniform Commercial Code financing
statements or amendments reflecting the assignment of Lessor's
interests to such Additional Mortgagee;
(d) deliver to Lessor and such Additional Mortgagee a certificate,
signed by a duly authorized officer of Lessee, dated the date of
the grant of the Additional Mortgage, to the effect that no Event
of Default has occurred and is continuing or, if one is then
continuing, describing such Event of Default;
(e) cause to be delivered to Lessor and such Additional Mortgagee
certificates of insurance and broker's letter of undertaking
substantially in the form set out in Parts 2 and 3 of Schedule 4,
detailing the coverage and confirming the insurers' agreement to
the specified insurance requirements of this Agreement, adding such
Additional Mortgagee as an additional insured and, if requested by
Lessor and consented to by the previous loss payee, listing such
Additional Mortgagee as sole loss payee;
(f) deliver to Lessor and such Additional Mortgagee an opinion of
Lessee's counsel (which may be Lessee's General Counsel),
addressed to Lessor and such Additional Mortgagee (i) to the
effect that the agreements referred to in sub-clauses (a) and (b)
have been duly authorized and executed by Lessee and constitute
the legal, valid and binding obligations of Lessee, enforceable
against Lessee in accordance with their terms (subject to customary
exceptions), and (ii) to the effect that such Additional
Mortgagee may rely on the opinion delivered by such counsel or
its predecessor counsel in connection with this Agreement on
the Delivery Date with the same force and effect as if such
Additional Mortgagee was an original addressee of such opinion
when given; and
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(g) such other documents as Lessor or such Additional Mortgagee may
reasonably request so long as such documents do not adversely
affect the rights or obligations of Lessee under this Lease or
otherwise adversely affect Lessee.
14.4 SALE AND LEASEBACK BY LESSOR
In addition to the Transfers and grants of security interests permitted
by Clauses 14.2 and 14.3, Lessor shall be entitled to transfer its
right, title and interests in and to the Aircraft to any person and
lease the Aircraft from such person (a "HEAD LESSOR"), and in such event
Lessor shall retain its rights and obligations as the "Lessor" under
this Agreement. In the event of such a sale and lease-back by Lessor,
(a) the Head Lessor shall meet the requirements for a "Transferee" as
defined in Clause 14.2(a)(ii) above, (b) the Lessor shall be entitled to
assign its rights in this Agreement to such Head Lessor as security for
its obligations under the head lease, (c) the Head Lessor shall be
entitled to grant to one or more purchase money lenders, or to an
indenture trustee on behalf of such lenders, an Additional Mortgage
covering the Aircraft and this Agreement, (d) Lessee shall execute and
deliver to Lessor, such Head Lessor, such Additional Mortgagee and any
trustees on their behalf, as appropriate, the documents specified in
Clauses 14.2(c)(i) through (vii) and Clauses 14.3(a) through (g) above,
and Lessee shall cooperate with Lessor to make such other changes to
this Lease, such as including such Head Lessor, such Additional
Mortgagee and the trustees on their behalf as additional insureds and
"Indemnitees", as Lessor may reasonably request so long as such changes
do not adversely affect the rights or obligations of Lessee under this
Lease or otherwise adversely affect Lessee and with Lessor paying all of
Lessee's out-of costs and expenses.
14.5 FURTHER ACKNOWLEDGMENTS
Lessee further acknowledges that any Transferee or Additional Mortgagee
shall in turn have the rights of, and be subject to the conditions to,
transfer and grants of security interests set forth above in this Clause
14.
14.6 CERTAIN PROTECTIONS FOR LESSEE'S BENEFIT
The rights of Lessee under this Agreement shall be superior to the
rights of any Additional Mortgagee or Head Lessor, and the Lessor shall
require each Additional Mortgagee and Head Lessor to agree in writing
with the Lessee that such Additional Mortgagee's and Head Lessor's
rights in and to the Aircraft shall be subject to the terms of this
Agreement, including to the Lessee's rights to the quiet use, possession
and enjoyment provisions contained in this Agreement. Except as
expressly set forth in this Agreement, no Additional Mortgage or Head
Lease shall increase the responsibilities, obligations or liabilities of
the Lessee or deprive the Lessee of any of its rights or privileges
under this Agreement. The Lessor's obligations to perform the terms and
conditions of this Lease shall remain in full force and effect
notwithstanding the creation of any Additional Mortgage or Head Lease.
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Lessor shall not create any Additional Mortgage or enter into any Head
Lease that violates the terms of this Clause 14.6.
15. MISCELLANEOUS
15.1 WAIVERS, REMEDIES CUMULATIVE
The rights of either party under this Agreement:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of that party's rights under any
law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver of
that right.
15.2 DELEGATION
The Lessor or the Lender may delegate to any person or persons all or
any of the trusts, powers or discretions vested in it by this Agreement
and any such delegation may be made upon such terms and conditions and
subject to such regulations (including power to sub-delegate) as the
Lessor or the Lender, respectively, in its absolute discretion thinks
fit.
15.3 APPROPRIATION
If any sum paid or recovered in respect of the liabilities of the Lessee
under this Agreement is less than the amount then due, the Lessor may
apply that sum to amounts due under this Agreement in such proportions
and order and generally in such manner as the Lessor may determine.
15.4 CURRENCY INDEMNITY
(a) If the Lessor receives an amount in respect of the Lessee's
liability under this Agreement or if such liability is converted
into a claim, proof, judgment or order in a currency other than the
currency (the "CONTRACTUAL CURRENCY") in which the amount is
expressed to be payable under this Agreement:
(i) the Lessee will indemnify the Lessor, as an independent
obligation, against any loss arising out of or as a result of
such conversion;
(ii) if the amount received by the Lessor, when converted into the
contractual currency (at the market rate at which the Lessor
is able on the relevant date to
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purchase the contractual currency in New York City with that
other currency) is less than the amount owed in the
contractual currency, the Lessee will, forthwith on demand,
pay to the Lessor an amount in the contractual currency equal
to the deficit; and
(iii) the Lessee will pay to the Lessor on demand any exchange
costs and Taxes payable in connection with the conversion.
(b) The Lessee waives, to the extent permitted by applicable law, any
right it may have in any jurisdiction to pay any amount under this
Agreement in a currency other than that in. which it is expressed
to be payable.
15.5 PAYMENT BY THE LESSOR
The Lessor will not be obliged to pay any amounts to the Lessee under
this Agreement so long as any sums which are then due from the Lessee
under this Agreement remain unpaid and any such amounts which would
otherwise be due will fall due only if and when the Lessee has paid all
such sums.
15.6 SEVERABILITY
If a provision of this Agreement is or becomes illegal, invalid or
unenforceable in any jurisdiction, that will not affect:
(a) the legality, validity or enforceability in that jurisdiction of
any other provision of this Agreement; or
(b) the legality, validity or enforceability in any other jurisdiction
of that or any other provision of this Agreement.
15.7 REMEDY
If the Lessee fails to comply with any provision of this Agreement, the
Lessor may, without being in any way obliged to do so or responsible for
so doing and without prejudice to the ability of the Lessor to treat the
non-compliance as a Default, effect compliance on behalf of the Lessee,
whereupon the Lessee shall become liable to pay immediately any sums
expended by the Lessor together with all costs and expenses (including
reasonable legal costs) necessarily incurred in connection therewith.
15.8 EXPENSES
(a) The Lessor and the Lessee shall each bear their respective expenses
(including legal, professional and out-of-pocket expenses) incurred
or payable in connection with the
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(c) Service Bulletins complied with during Month:
4. AIRCRAFT DAMAGE OR ENGINE CHANGES:
Details of any repairs carried out to the Aircraft beyond SRM limits and
Engine changes, giving reasons for repair or change:
5. UPCOMING MAINTENANCE CHECKS
(a) Maintenance Checks (C segment and above) scheduled or expected to
be performed on the Airframe during the next 12 months:
(b) Scheduled shop visits or heavy maintenance visits scheduled or
expected to be performed on the Engines during the next 12 months:
(c) Overhauls, or replacements scheduled or expected to be performed on
the APU or Landing Gear during the next 12 months:
Date: ___________________,_____ CERTIFIED FOR AND ON BEHALF OF
ALOHA AIRLINES, INC.
By: __________________________
Name:
Title:
CERTIFICATE OF ACCEPTANCE 802
This Certificate of Acceptance 802 is delivered on the date set forth in
paragraph 1 below by Aloha Airlines, Inc. (the "LESSEE") to ACG
Acquisition VIII LLC (the "LESSOR") pursuant to
Lease Agreement 802,
dated January 15, 1997, between the Lessor and the Lessee (the
"AGREEMENT"). Capitalized terms used but not defined in this Certificate
of Acceptance 802 shall have the meaning given to such terms in the
Agreement.
1. DETAILS OF ACCEPTANCE
The Lessee hereby confirms to the Lessor that the Lessee has at 8:40
a.m. H.S.T. on this 15th day of January, 1997, over International Water,
accepted the following, in accordance with the provisions of the
Agreement and the Annex:
(a) Airframe: Boeing 737-2S5C airframe, Manufacturer's Serial No. 22148
and FAA Registration No. N802AL;
(b) Engines: two ▇▇▇▇▇ & ▇▇▇▇▇▇▇ JT8D-9A Engines, bearing
Manufacturer's Serial Nos. P656093B and P665630B, each having 750
or more rated take-off horsepower;
(c) All Parts installed on, attached to or appurtenant to the Airframe
and Engines; and
(d) Aircraft Documents as specified in Schedule I - Part 2 of the
Agreement.
2. LESSEE'S CONFIRMATION the Lessee confirms to the Lessor that as at the
time indicated above, being the time of Delivery:
(a) the Lessee's representations and warranties contained in Clauses
2.1 and 2.2 of the Agreement are hereby repeated;
(b) the Aircraft is insured as required by the Agreement; and
(c) the Lessee confirms that there have been affixed to the Aircraft
and the Engines the fireproof notices required by the Agreement.
3. LESSOR'S CONFIRMATION the Lessor confirms to the Lessee that, as at the
time indicated above, being the time of Delivery, the Lessor's
representations and warranties contained in Clause 2.4 of the Agreement
are hereby repeated.
IN WITNESS WHEREOF Lessor and Lessee have executed this Certificate of
Acceptance 802 on the date shown at the beginning of this Agreement.
SIGNED ON behalf of
ACG ACQUISITION VIII LLC
By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Manager
SIGNED ON behalf of
ALOHA AIRLINES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Sr. Vice President Finance &
Planning and CFO
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Staff Vice President - Finance
& Controller
COLLATERAL ASSIGNMENT OF LEASE
(N802AL)
THIS COLLATERAL ASSIGNMENT OF LEASE (hereinafter referred to as the
"Agreement"), dated as of January 15, 1997 by and between ACG ACQUISITION
VIII, LLC, a Delaware limited liability company ("Lessor"), and FINOVA
CAPITAL CORPORATION, a Delaware corporation ("Lender"),
W I T N E S S E T H :
WHEREAS, there is in effect a certain Aircraft
Lease Agreement dated as
of January 15, 1997 between Lessor and Aloha Airlines, Inc., an Hawaiian
corporation ("Lessee"), which will be filed for recording with the Federal
Aviation together herewith (the "Lease"), pursuant to which Lessor has leased
to Lessee, among other things, one Boeing 737-200 Advanced Aircraft and two
▇▇▇▇▇ & Whitney model JT8D-9A jet aircraft engines installed thereon, as more
particularly described in EXHIBIT A attached hereto (the "Flight Equipment");
and
WHEREAS, Lessor has obtained or will obtain financing from Lender in
order to finance the acquisition by Lessor of the Flight Equipment; and
WHEREAS, in order to secure the performance by Lessor of its obligations
under that certain Secured Loan Agreement dated as of September 26, 1996
between Lessor, as borrower, and Lender, as lender (the "Loan Agreement") as
the same may hereafter be amended, restated or otherwise modified, and the
other Loan Documents (as defined in the Loan Agreement), Lessor has agreed
to, among other things, assign to Lender all of Lessor's right, title and
interest (but none of its obligations) in and to the Lease, including, but
not limited to, all amounts payable by Lessee to Lessor under the Lease,
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Lessor and Lender hereby agree
as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. In this Agreement terms and expressions defined in the
foregoing recitals shall have effect as therein defined, and the following
terms and expressions shall have the meanings ascribed to such terms below.
"AIRCRAFT" shall mean, collectively, the Airframe and the Engines.
"AIRFRAME" shall mean the airframe described in EXHIBIT A hereto, any
and all equipment furnished by Lessee and incorporated therein in accordance
with the terms of the Lease, and any and all parts (except Engines) relating
thereto.
"ASSIGNED PROPERTY" shall mean, collectively, the Lease and the
Earnings.
"BUSINESS DAY" shall mean a day on which national banks are open for
business in Phoenix,
Arizona.
"AGREEMENT" SHALL mean this agreement as from time to time amended and
supplemented in accordance with the terms hereof.
"CLOSING DATE" shall mean the date on which the Lessor acquires title to
the Aircraft.
"DEFAULT" shall mean an event which, with the passage of time, or giving
of notice, or both, would constitute an Event of Default.
"EARNINGS" shall mean all moneys whatsoever from time to time due or
payable to Lessor arising out of the use or operation of the Aircraft
including (but without limiting the generality of the foregoing) all rental
payments, insurance proceeds, security deposits, maintenance reserves and
other monies due to Lessor under the Lease or any other document relating
thereto, including compensation payable to Lessor in the event the Aircraft
is requisitioned for hire, damages for breach of any contract for the
employment of the Aircraft or any documents relating thereto, any amounts
payable in consideration of the termination or variation of any lease or
charter or other such contract and any other earnings whatsoever due or to
become due to Lessor and any proceeds of the foregoing, but excluding in all
cases Excluded Amounts.
"ENGINES" shall mean, collectively, each of the engines (having 750 or
more rated take off horsepower or the equivalent thereof) described in
EXHIBIT A attached hereto and installed on the Airframe at the time the
Airframe was delivered to Lessee pursuant to the Original Lease, whether or
not from time to time hereafter installed on the Airframe or installed on
other aircraft, (ii) any Replacement Engine, and (ii) any and all parts,
accessories and accessions to any of the foregoing.
"EVENT OF DEFAULT" shall mean the occurrence of any of the events which
are listed in the Loan Agreement or any of the other Loan Documents and which
are referred to therein as constituting an "Event of Default."
"EVENT OF LOSS" shall mean, with respect to any item of the Flight
Equipment or any part thereof (a) the actual, constructive, compromised,
arranged or agreed total loss thereof; (b) the destruction or damage beyond
repair of such Flight Equipment or part thereof, or such Flight Equipment or
part thereof being rendered or becoming permanently unfit for normal use for
any reason whatever; (c) the requisition for title, confiscation, restraint,
detention, forfeiture or any compulsory acquisition or seizure or requisition
for hire of such Flight Equipment or part thereof (other than a requisition
for hire for a temporary period not
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exceeding one hundred and eighty (180) days) by or under the order of any
Government (whether civil, military or DE FACTO) or public or local authority;
or (d) the high-jacking, theft or disappearance, resulting in loss of
possession by Lessor or Lessee for a period of thirty (30) consecutive days
or longer, of such Flight Equipment or part thereof
"EXCLUDED AMOUNTS" SHALL mean (a) proceeds of public liability insurance
in respect of the Flight Equipment payable as a result of insurance claims
made, or losses suffered, by Lessor, any affiliate of Lessor or any director,
officer, employee, representative or agent of Lessor or any such affiliate to
the extent that such insurance claims made, or losses suffered, do not apply
to Lender, as assignee of Lessor, or to the Flight Equipment, (b) proceeds of
insurance which is maintained with respect to the Flight Equipment by Lessor
or any such affiliate and which insurance is not required under the Loan
Documents, (c) any interest paid or payable on any amounts described in
clauses (a) or (b) of this definition, and (d) the proceeds from the
enforcement of the payment of any amount described in clauses (a) through (c)
of this definition.
"FEDERAL AVIATION ACT" SHALL mean the Federal Aviation Act of 1958, as
amended, and the rules and regulations promulgated thereunder, as in effect
on the date of this Agreement, and as modified or amended hereafter or any
successor or substituted legislation at the time in effect and applicable.
"FAA" shall mean the Federal Aviation Administration provided for in the
Department of Transportation Act of 1966, as in effect on the date of this
Agreement and as modified or amended hereafter, or any successor or
substituted governmental authority at the time having jurisdiction over the
Flight Equipment.
"GOVERNMENT" shall mean any governmental body, or a political
subdivision thereof.
"Lien" shall mean any mortgage, pledge, lien, charge, encumbrance,
option, security interest or lease (including any conditional sale agreement,
equipment trust agreement, or other title retention agreement) or right or
claim of any person, whether voluntary or involuntary in nature.
"REPLACEMENT ENGINE" shall mean an engine on the Aircraft on the date of
return of the Aircraft to Lessor pursuant to the Lease, or an engine
replacing an Engine in the event of an Event of Loss with respect to such
Engine, which engine shall be (a) the same model, or an improved model, as
the Engine originally leased hereunder and (b) suitable for installation and
use on the Airframe without materially impairing the value or utility of the
Airframe and having a time to overhaul, time to next shop visit, time to hot
section, modification status, value, condition and utility at least equal to
the Engine it replaces (assuming the Engine so replaced had the time to
overhaul, time to next shop visit, time to hot section, modification status,
value, condition and utility required by the terms hereof
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immediately prior to being replaced) and which is free of all encumbrances
other than Permitted Liens.
"SECURED OBLIGATIONS" shall mean the obligations under and as defined in
the Loan Agreement.
"TAXES" shall mean all present and future taxes whatever, and value added
levies, imposts, duties or charges of any nature wherever imposed, including,
without limitation, value added taxes or similar taxes and any franchise,
transfer, sales, use, business, occupation, excise, personal property, real
property, stamp or other tax imposed by any national or local taxing or
fiscal authority or agency, together with any penalties, additions to tax,
fines or interest thereon.
1.2 TERMS DEFINED IN UNIFORM COMMERCIAL CODE. All terms used herein
which are defined in the
Arizona Uniform Commercial Code (the "Code") shall
have the meanings ascribed to such terms in the Code unless the context in
which such terms are used herein indicates otherwise.
1.3 TERMS DEFINED IN LOAN AGREEMENT. All capitalized terms used in this
Agreement which are defined in the Loan Agreement shall, unless otherwise
defined herein, have the respective meanings ascribed to such terms in the
Loan Agreement, the applicable provisions of which Loan Agreement are
incorporated herein.
2. ASSIGNMENT.
To secure the payment and performance by Lessor of the Secured
Obligations, Lessor hereby assigns, transfers, conveys and sets over to
Lender, and grants to Lender a security interest in (a) all of Lessor's
right, title and interest in, to and under the Lease (but none of its
obligations thereunder), including, without limitation, the right to collect
all rental payments, income, proceeds (including, but not limited to,
insurance proceeds), awards, revenues and other sums payable by Lessee to
Lessor pursuant to the Lease, (b) all of Lessor's rights under section 1110
of the Bankruptcy Code of the United States or any subsequently enacted
statutes of similar import, with respect to the Flight Equipment, (c) all
right, title and interest of Lessor to collect, hold and apply all security
deposits, maintenance reserves and similar amounts, as provided pursuant to
the terms of the Lease, and (d) all rights of Lessor to enforce Lessor's
rights and remedies under the Lease. Lender agrees that it shall not exercise
any rights of Lender to enforce Lessor's rights and remedies under the Lease
unless and until an Event of Default (as hereinafter defined) has occurred.
3. NOTICE OF ASSIGNMENT.
On or prior to the Closing Date, Lessor shall have delivered to Lessee a
Notice of Assignment of Lease in the form set out in EXHIBIT B attached
hereto and made a part hereof, and Lessor and Lessee shall each have executed
such Notice of
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Assignment of Lease and returned same to Lender. In the event that the
Aircraft is subject to any sublease by Lessee, Lessor shall, prior to such
sublease becoming effective, have delivered to the sublessee under such
sublease a Notice of Assignment of Lease in substantially the form set out in
EXHIBIT B attached hereto and made a part hereof, and Lessor and such
sublessee shall each have executed such Notice of Assignment of Lease and
returned same to Lender.
4. APPLICATION OF EARNINGS.
The Earnings shall be applied and credited in favor of Lessor in
accordance with the repayment provisions of the Loan Agreement.
5. UNDERTAKINGS.
Lessor hereby covenants and agrees with Lender as follows:
5.1 DURATION. The undertakings and obligations of Lessor under this
Agreement shall continue in full force and effect from and after the date
hereof and until the payment and performance in full of the Secured
Obligations.
5.2 PERFORMANCE OF OBLIGATIONS. Lessor shall:
(a) perform its obligations under the Lease and each other agreement
made between Lessor and Lessee in respect of the Aircraft and will not
without the prior written consent of Lender rescind, cancel or otherwise
terminate the Lease or any of such other agreements other than as permitted
by the Loan Agreement;
(b) promptly notify Lender (i) of any default of which it has knowledge
by Lessor, Lessee or any other Permitted Lessee under the Lease or any other
agreement made in respect of the Aircraft, and (ii) of the Lease or such
other agreement being frustrated or the performance thereof becoming
impossible or substantially different from that contemplated originally by
the parties thereto;
(c) institute and maintain all such proceedings as may be necessary to
preserve or protect this Agreement as a valid grant of a security interest in
Lessor's rights in the Assigned Property and each other agreement made in
respect of the Aircraft;
(d) not, without the prior written consent of Lender, take or omit to
take any action the taking or omission of which might result in any material
adverse alteration of any of the Lease or any other agreement made in respect
of the Aircraft;
(e) not, without the prior written consent of Lender, agree to any
variation, modification or amendment in the terms of the Lease or any other
agreement made in respect of the Aircraft, or release any party thereto from
any of its obligations thereunder, or waive any breach of the obligations of
such party, or
-5-
consent to any such act or omission of any such party as would otherwise
constitute such breach;
(f) not permit any sublease by Lessee of its interest in the Aircraft,
except as expressly permitted under the terms of the Lease as in effect on
the Closing Date;
(g) provide written notice to Lender of any sublease or purported
sublease of the Aircraft by Lessee, designating the name and address of such
sublessee and such other information as Lender may reasonably request; and
(h) cause counterpart No. 1 of the Lease to be delivered to Lender on
the Closing Date.
6. EXERCISE OF REMEDIES.
6.1 REMEDIES. Following the occurrence and continuation of an Event of
Default under the Loan Agreement and at all times thereafter, Lender shall be
entitled:
(a) to exercise any and all rights of Lessor under or in connection
with the Lease or otherwise in respect of the Assigned Property, including
without limitation, any and all rights of Lessor to demand or otherwise
require payment of any amount under, or performance of, any provision of the
Lease;
(b) on 10 days' prior written notice to Lessor of any public sale or the
date after which any private sale may occur, to sell to any person all or any
part of Lessor's right, title and interest in and to the Assigned Property
upon such terms as Lender shall determine;
(c) collect, receive or compromise and give a good discharge for any
and all monies and claims for monies due and to become due in respect of or
under the Lease; and
(d) otherwise put into force and effect all rights, powers and remedies
available to it, at law or otherwise, as assignee of, and holder of a
security interest in, the Assigned Property.
6.2 NO LIABILITY FOR EXERCISE. To the extent permitted by applicable
law Lender may exercise its power of sale hereunder in such a way as it in
its absolute discretion may determine and, to the extent permitted by
applicable law, Lessor hereby agrees that Lender shall not in any
circumstances be answerable for any loss occasioned by any such sale or
resulting from any postponement thereof; PROVIDED, HOWEVER, that nothing in
this Section 6.2 shall be deemed to release Lender from its obligations and
liabilities arising from Lender's gross negligence or wilful misconduct.
-6-
6.3 NO LIABILITY AS ASSIGNEE. To the extent permitted by applicable law
Lender shall not be liable as assignee in respect of the Assigned Property to
account or be liable for any loss upon the realization thereof or for any
neglect or default of any nature whatsoever in connection therewith for which
an assignee of the Assigned Property may otherwise be liable as such;
PROVIDED, HOWEVER, that nothing in this Section 6.3 shall be deemed to
release Lender from its obligations and liabilities arising from Lender's
gross negligence or wilful misconduct.
6.4 LENDER'S AUTHORITY. Upon any sale by Lender of Lessor's right, title
and interest in and to the Assigned Property, or any part thereof, the
purchaser shall not be bound to see or inquire whether the power of sale of
Lender has arisen, the sale shall be deemed for all purposes hereof to be
within the power of Lender and the receipt of Lender for the purchase money
shall effectively discharge the purchaser who shall not be concerned with the
manner of application of the proceeds of sale or be in any way answerable
therefore.
7. POWER OF ATTORNEY.
Lessor hereby irrevocably appoints and constitutes Lender as its true
and lawful attorney-in-fact with full power (in the name of and on behalf of
Lessor or otherwise) following the occurrence and continuation of an Event of
Default, to demand, compound and give acquittance for any monies or claims
for monies due or to become due, to endorse any check or other instrument or
order in connection therewith and to file any claims or take any action or
institute any proceedings which may seem to Lender to be necessary or
advisable and otherwise to do any and all things which Lessor itself could do
in relation to the Assigned Property. The exercise of such power by Lender
shall not put any person dealing with Lender on inquiry as to whether any
such event has happened nor shall any person be in any way affected by notice
that no such event has happened and the exercise by Lender of such power
shall be conclusive evidence of its right to exercise it.
8. LIABILITY UNAFFECTED BY ASSIGNMENT.
Lessor agrees, to the extent permitted by law, that, notwithstanding the
assignment to Lender of, and the grant to Lender of a security interest in,
the Assigned Property (a) Lender shall not be obliged to make any inquiries
as to the nature or sufficiency of any payment received by Lender under the
Assigned Property or to make any claim or take any other action to collect
any moneys or to enforce any rights and benefits assigned to Lender or to
which Lender may at any time be entitled thereunder, and (b) Lessor shall
remain liable to perform all the obligations of Lessor under the Lease and
Lender shall be under no obligation of any kind whatsoever in respect
thereof, and Lender shall have no liability whatsoever in the event of any
failure by Lessor to perform its obligations thereunder; PROVIDED, that Lender
shall remain obligated to hold and retain any and all Maintenance Reserve
Collateral, and to remit same to Borrower and/or Lessee, in accordance with
the terms of the Loan Agreement applicable thereto.
-7-
9. CONTINUING SECURITY.
This Agreement and the assignment and security interest granted herein
shall continue in full force and effect until performance in full of the
Secured Obligations.
10. FURTHER ASSURANCES.
Lessor undertakes that it will, from time to time on being required to
do so by Lender, at the cost and expense of Lessor, do, and cause to be done,
all such further acts and/or execute or procure the execution of all such
further documents in a form satisfactory to Lender as Lender may reasonably
consider necessary for giving full effect to this Agreement or securing to
Lender the fun benefit of the rights, powers and remedies conferred upon
Lender in this Agreement.
11. FEES AND EXPENSES.
Lessor shall upon Lender's demand, pay to or reimburse Lender for all
out-of-pocket expenses of Lender incurred in connection enforcement of this
Agreement and the transactions contemplated hereby (including, without
limitation, all expert witness and legal fees and disbursements of Lender's
counsel, including special FAA counsel), and in connection with any actual or
proposed amendments hereof and in connection with the preservation and/or
enforcement of any Lender's rights and interest in the Assigned Property and
in any rights granted to Lender hereunder.
12. NOTICES.
Every notice or demand under this Agreement shall be (a) in writing and
may be given or made by registered mail, return receipt requested or by
internationally recognized overnight courier service, (b) deemed to have been
received in the case of an internationally recognized overnight courier
service or registered mail, upon acknowledgment of receipt or as of the date
on which receipt of such notice delivered by overnight courier or registered
mail is refused or such courier or the U.S. Postal Service advises that such
letter is not deliverable at the address designated in this Section, and (c)
sent, in the case of overnight courier or registered mail, to Lender or to
Lessor, as applicable, at the following addresses, or to such other address
as Lessor or Lender may designate for itself by notice to the other
conforming to the requirements for notice set forth in this Section:
-8-
If to Lessor: ACG Acquisition Corp. VIII
▇/▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President and
General Counsel
and
If to Lender: FINOVA Capital Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President-Law
Transportation Finance
and
FINOVA Capital Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President-Operations
Management
Transportation Finance
A copy of all notices sent to Lender shall be sent to ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., telefax number 602/222-9725.
13. ENTIRE AGREEMENT; AMENDMENTS.
This Agreement (including all Exhibits hereto) embodies the entire
agreement and understanding between Lessor and Lender relating to the subject
matter hereof and supersedes all prior agreements and understandings relating
hereto and none of the parties hereto shall be bound by or charged with any
oral or written agreements, representations, warranties, statements, promises
or understandings not specifically set forth herein or therein. This
Agreement may not be changed and no right granted or obligation imposed
hereunder may be waived, except pursuant to an instrument in writing signed
by the party against whom enforcement of any waiver, change, modification or
discharge is sought.
14. GOVERNING LAW. JURISDICTION AND VENUE.
(A) THE OBLIGATIONS OF LESSOR HEREUNDER ARE TO BE PERFORMED IN, AND THIS
AGREEMENT IS EXECUTED, DELIVERED AND ACCEPTED IN, AND THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY, THE LAWS AND DECISIONS OF THE
STATE
OF
ARIZONA, AND BY EXECUTION HEREOF LESSOR, AND BY ACCEPTANCE HEREOF LENDER,
EACH AGREES THAT SUCH LAWS AND DECISIONS OF THE STATE OF
ARIZONA SHALL GOVERN
THIS AGREEMENT NOTWITHSTANDING THE FACT THAT THERE MAY BE OTHER JURISDICTIONS
WHICH MAY BEAR A REASONABLE RELATIONSHIP TO THE TRANSACTIONS CONTEMPLATED
HEREBY.
(B) LESSOR AGREES THAT ALL ACTIONS OR PROCEEDINGS INITIATED BY LESSOR
AND ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS SHALL BE LITIGATED IN THE SUPERIOR COURT OF
ARIZONA, MARICOPA
COUNTY DIVISION, OR THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
ARIZONA OR, IF LENDER INITIATES SUCH ACTION, IN ADDITION TO THE FOREGOING
COURTS, ANY COURT IN WHICH LENDER SHALL INITIATE SUCH ACTION, TO THE EXTENT
SUCH COURT HAS JURISDICTION. LESSOR HEREBY EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY LENDER
IN ANY OF SUCH COURTS, AND HEREBY AGREES THAT SERVICE OF SUCH SUMMONS AND
COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO LESSOR AT THE ADDRESS TO WHICH NOTICES ARE TO BE SENT
PURSUANT TO THE FURTHER PROVISIONS OF THIS AGREEMENT. LESSOR WAIVES ANY CLAIM
THAT PHOENIX,
ARIZONA OR THE DISTRICT OF
ARIZONA IS AN INCONVENIENT FORUM OR
AN IMPROPER FORUM BASED ON LACK OF VENUE. THE EXCLUSIVE CHOICE OF FORUM FOR
LESSOR SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT, BY LENDER, OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE
TAKING, BY LENDER, OF ANY ACTION TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE
JURISDICTION, AND LESSOR HEREBY WAIVE THE RIGHT TO COLLATERALLY ATTACK ANY
SUCH JUDGMENT OR ACTION.
15. WAIVER OF JURY.
LESSOR AND LENDER IRREVOCABLY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BROUGHT TO ENFORCE ANY PROVISION OF THIS AGREEMENT.
16. ASSIGNMENT, SUCCESSORS AND ASSIGNS.
Lender may assign or obtain participations with other Lenders in regard
to its rights hereunder and under the Note and any other Loan Document and in
respect of the Loan, PROVIDED only that no such assignment or participation
shall impose any greater obligation on Lessor than set forth herein or
therein. Lessor shall not assign any rights under this Agreement nor shall
any of Lessor's duties hereunder be assigned or delegable without the prior
written consent of Lender. Nothing contained in this Agreement, express or
implied, is intended to confer upon any person or entity, other than the
parties hereto and their permitted
-10-
successors in interest and permitted assigns, any rights or remedies under or
by reason of this Agreement unless expressly herein stated to the contrary.
All covenants, representations, warranties and agreements of the parties
contained herein shall, subject to the provisions of the preceding sentence,
be binding upon and inure to the benefit of their respective successors and
permitted assigns.
17. CAPTIONS AND SECTION HEADINGS: CONSTRUCTION.
Captions and paragraph headings used herein are for convenience only and
are not a part of this Agreement and shall not be used in construing it. This
Agreement and all documents executed in connection herewith shall be
construed without regard to the identity of the party which prepared the
same, and no presumption shall arise as a result thereof
18. SEVERABILITY.
In the event that any one or more of the provisions of this Agreement
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
19. TIME OF THE ESSENCE.
Time is of the essence with respect to all of the payment and
performance obligations of Lessor hereunder. Time is of the essence with
respect to all of the performance obligations of Lender hereunder.
20. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall constitute an original and, when taken together, all of which
shall constitute one and the same Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-11-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers as of the day and year first
above written.
LENDER:
FINOVA CAPITAL CORPORATION
BY: [ILLEGIBLE]
-------------------------------------
ITS: GROUP VICE-PRESIDENT
-------------------------------------
LESSOR:
ACG ACQUISITION VIII LLC, a Delaware limited
liability company
BY: -------------------------------------
ITS: ------------------------------------
collateral assignment lease 802
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duty executed by their duty OFFICERS AS OF THE DAY and Year first above
written.
LENDER:
FINOVA CAPITAL CORPORATION
BY: -------------------------------------
ITS: ------------------------------------
LESSOR:
ACG ACQUISITION VIII LLC, a Delaware limited
liability company
BY: [ILLEGIBLE]
-------------------------------------
ITS: MANAGER
-------------------------------------
EXHIBIT A
TO
ASSIGNMENT OF LEASE
______________________________________________________________________________
DESCRIPTION OF AIRFRAME AND ENGINES
______________________________________________________________________________
The "Flight Equipment" as described in the foregoing Assignment of
Lease shall consist of the following:
(a) One (1) Airframe, identified as follows:
Manufacturer: Boeing
FAA Registration Number: N802AL
Manufacturer's Model Number: 737-2S5C
Manufacturer's Serial Number: 22148
together with all parts, equipment and accessories thereto
belonging, by whomsoever manufactured, now owned by ACG
Acquisition Corp. VIII or hereinafter acquired by ACG
Acquisition Corp. VIII and installed in or appurtenant to
said airframe; and
(b) Two (2) ▇▇▇▇▇ & ▇▇▇▇▇▇▇ JT8D-9A jet aircraft engines,
identified by manufacturer's serial numbers P656093 and
P665630, each such engine having 750 or more rated take-off
horsepower or the equivalent thereof, together with all parts,
equipment and accessories thereto belonging, by whomsoever
manufactured, now owned by ACG Acquisition Corp. VIII or
hereinafter acquired by ACG Acquisition Corp. VIII and
installed in or appurtenant to any one or more of said engines.
EXHIBIT B
NOTICE OF ASSIGNMENT OF LEASE
(N802AL)
THIS NOTICE OF ASSIGNMENT OF LEASE ("Agreement"), dated as of
_______________________________, 199__ by and among FINOVA CAPITAL
CORPORATION, a Delaware corporation ("FINOVA"), ALOHA AIRLINES, INC., an
Hawaii corporation ("Lessee"), and ACG ACQUISITION VIII LLC, a Delaware
limited liability company ("Lessor"),
WITNESSETH:
WHEREAS, pursuant to that certain
Lease Agreement 802 dated as of
even date herewith between Lessor and Lessee (the "Lease"), Lessor has agreed
to lease to Lessee one (1) Boeing 737-2S5C aircraft, together with two (2)
▇▇▇▇▇ & Whitney JT8D-9A engines associated therewith, all as more
particularly described in ANNEX I attached hereto (the "Flight Equipment");
and
WHEREAS, Lessor has obtained or will obtain financing from FINOVA in
order to FINANCE the acquisition by Lessor of the Flight Equipment; and
WHEREAS, in order to secure the performance by Lessor of its
"Obligations" to Lender, as defined in that certain Secured Loan Agreement
dated as of September 26, 1996 between Lessor and FINOVA (the "Loan
Agreement") as the same may hereafter be amended, restated or otherwise
modified, and the other "Loan Documents" (as defined in the Loan Agreement),
Lessor has granted to FINOVA a security interest in, all of Lessor's right,
title and interest (but none of its obligations) in and to the Lease,
including, but not limited to, all amounts payable by Lessee to Lessor under
the Lease, pursuant to that certain Collateral Assignment of Lease dated as
of even dare herewith between Lessor and FINOVA (the "Assignment of Lease"),
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, FINOVA, Lessor and Lessee hereby
agree as follows:
1. ACKNOWLEDGMENT OF LESSEE. Lessee hereby acknowledges and
consents to the assignment, pursuant to the Assignment of Lease, of Lessor's
rights under the Lease to FINOVA, and agrees that such assignment shall not
constitute a default under, or breach of, the Lease.
2. PAYMENTS UNDER LEASE. Until FINOVA otherwise directs in
writing, Lessee shall pay to FINOVA, as the same shall become due under the
Lease, all amounts from time to time payable by Lessee under the Lease,
including, without
limitation, all "Basic Rent" and all "Supplemental Rent" as each such term is
defined in the Lease, which are from time to time payable by Lessee to Lessor
under the Lease. All amounts payable by Lessee shall be paid to the account
at Citibank, N.A., described below;
BANK: Citibank, N.A.
New York, New York,
ACCOUNT OF: FINOVA Capital Corporation
ACCOUNT NO.: 000675126
ABA NO.: ▇▇▇▇▇▇▇▇▇
REFERENCE: Aloha Airlines/N802AL-N804AL
All such payments shall be made to the appropriate account by wire transfer
of same day funds.
3. REPRESENTATIONS. WARRANTIES AND COVENANTS OF LESSEE. Lessee
hereby represents and warrants to FINOVA, and covenants with FINOVA, as
follows:
(a) (i) A true, complete and correct copy of the Lease is attached
hereto as ANNEX II, (ii) the Lease is the entire agreement of lease with
respect to the Flight Equipment and the Lease has not been amended, modified
or supplemented, (iii) the "Delivery Date" under the Lease has occurred (or
will occur upon the effectiveness hereof), the Lease is in full force and
effect and Lessee's obligation to pay rent under the Lease has commenced in
accordance with the terms thereof, (iv) there is no event which has occurred
which constitutes or with the giving of notice or passage of time or both
would constitute a default by either parry under the Lease, and (v) there has
been no prepayment of any rent or other sums payable under the Lease;
(h) In the event that FINOVA, or any successor to the interest of
FINOVA in the Lease, shall succeed to the rights of Lessor under the Lease by
reason of FINOVA's (or such successor's) exercise of its rights and remedies
with respect to the Lease (FINOVA and such successors, as applicable, being
included within the meaning of the term "Lessor" hereunder), the Lease shall
continue in full force and effect, and Lessee shall perform its obligations
under the Lease for the benefit of FINOVA or such other successor, as
applicable, PROVIDED, however, that nothing herein contained shall impose any
greater or different obligation upon Lessee than SET FORTH IN the Lease;
(c) Lessee acknowledges that FINOVA has not made any
representations or warranties of any kind, nature or description in respect
of the Flight Equipment and that FINOVA has not assumed any of Lessor's
duties or obligations under the Lease and Lessee shall continue to look
solely to lessor for the performance and
-2-
fulfillment of the terms, covenants and conditions on Lessor's part to be
performed under the Lease;
(d) In the event of any default by Lessor under the Lease or any
provision thereof, Lessee agrees that, notwithstanding any provision of the
Lease to the contrary, Lessee shall take no action to effect a termination of
the Lease by reason of such default without fast giving FINOVA at least
thirty (30) days' written notice of such default and such proposed
termination, which thirty day period shall commence on the date of receipt
by FINOVA of such notice, during which thirty day period, FINOVA may cure
such default;
(e) Lessee shall not amend, or execute any document purporting to
amend, the Lease in any manner without the prior written consent of FINOVA.
With respect to any proposed amendment of the Lease which would (i) reduce
the remaining term of the Lease, (ii) reduce the Basic Rent payable by Lessee
thereunder, (iii) reduce the insurance coverage under the Lease or the
deductible amounts with respect to such insurance, (iv) permit the Flight
Equipment to be registered under the laws of any jurisdiction other than the
United States of America, (v) expand the rights of Lessee to transfer rights
to possession, custody, control or operation of the Flight Equipment, (vi)
reduce Lessee's obligations with respect to the maintenance, storage, repair
or reinstallation of the Flight Equipment or (vii) reduce Lessee's
obligations with respect to the condition of the Flight Equipment upon
termination or expiration of the Lease, FINOVA shall have the right to
provide or withhold such consent in its discretion. With respect to any
proposed amendment of the Lease which is not described in the preceding
sentence, FINOVA Shall not unreasonably withhold its consent to such
amendment;
(f) Each notice provided by Lessee to Lessor under the Lease,
shall be simultaneously forwarded to FINOVA by Lessee;
(g) FINOVA shall have the right to inspect the Flight Equipment
and the "Aircraft Documents" (as defined in the Lease) in accordance with the
provisions of Section 8.6 of the Lease, as fully and effectually as if each
reference to "Lessor" in such Section were a reference to FINOVA. Such right
of FINOVA to inspect the Flight Equipment AND the Aircraft Documents is
without derogation of the right of Lessor to inspect the Flight Equipment and
the Aircraft Documents in accordance with Section 8.6 of the Lease; and
(h) Until all of the "Obligations" are fully paid and discharged by
Borrower, Lessee shall submit to FINOVA, within thirty (30) days following
the receipt by Lessee of FINOVA's written request therefor (which requests
shall not be made more
-3-
frequently than once in each calendar quarter), an Aircraft Utilization and
Status Report in the form attached hereto as ANNEX III
4. NOTICES. All notices (a) to be directed to FINOVA pursuant
hereto shall be directed to FINOVA at the following address, or at such other
address as FINOVA shall specify to Lessee by notice provided in accordance
with this Section:
FINOVA Capital Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
Attention: Vice President-Law
and
FINOVA Capital Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
Attention: Vice President-
Operations Management
and (b) to be directed to Lessee pursuant hereto shall be directed to Lessee
at the following address, or at such other address as Lessee shall specify to
FINOVA by notice provided in accordance with this Section:
Aloha Airlines, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
Attention: Chief Financial Officer
5. QUIET ENJOYMENT BY LESSEE. BY acceptance hereof, FINOVA
agrees that, provided that no "Event of Default" (as defined in the Lease)
shall have occurred and be continuing, none of FINOVA or any person claiming
by, through or on account of FINOVA will interfere with the quiet use,
possession and enjoyment of the Flight Equipment by Lessee.
6. AGREEMENTS OF FINOVA AND LESSEE. FINOVA and Lessee agree as
follows: (a) wherever in the Lease rights are granted to the "Lender," FINOVA
shall be entitled directly to exercise such rights in accordance with the
terms of the Lease and without relying on its rights as a third party
beneficiary; and (b) wherever in the Lease the consent of Lessor is required
but is provided nor to be unreasonably withheld by the Lessor, if the Lessor
requires the consent of FINOVA in such matter, such consent shall not be
unreasonably withheld.
-4-
7. GOVERNING LAW. THIS AGREEMENT HAS BEEN DELIVERED IN, AND SHALL
BE DEEMED TO HAVE BEEN NEGOTIATED AND MADE IN, AND SHALL BE GOVERNED AND
INTERPRETED UNDER THE LAWS OF, THE STATE OF NEW YORK, UNITED STATES OF AMERICA,
APPLICABLE TO AGREEMENTS THEREOF TO BE WHOLLY PERFORMED THEREIN.
8. VALIDITY OF AGREEMENT NOT IMPAIRED. Lessee acknowledges and
agrees that FINOVA or its assigns, without affecting the validity of this
Agreement or the rights and obligations of the parties hereunder, may extend
the time of payment of the indebtedness of Lessor to FINOVA, or modify the
terms of such indebtedness or take or release any collateral securing such
indebtedness, Without the consent of or notice to Lessee.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
-5-
IN WITNESS WHEREOF, Lessee and FINOVA have executed this Agreement
as of the date first above written.
ALOHA AIRLINES, INC., Hawaii corporation
BY:______________________________________
ITS:_____________________________________
BY:______________________________________
ITS:_____________________________________
FINOVA CAPITAL CORPORATION, a Delaware
corporation
BY:______________________________________
ITS:_____________________________________
BY:______________________________________
ITS:_____________________________________
ACKNOWLEDGMENT AND AGREEMENT OF LESSOR
THE UNDERSIGNED ACG ACQUISITION VIII LLC, a Delaware limited
liability company, the "Lessor" referred to in the foregoing Notice of
Assignment of Lease, hereby acknowledges the terms thereof and agrees that
(a) to the extent the terms of such Notice of Assignment of Lease are
applicable to Lessor, Lessor SHALL be bound thereby, and (b) Lessor shall not
take any action inconsistent with the provisions of such Notice of Assignment
of Lease.
IN WITNESS WHEREOF, Lessor has hereunto set its hand.
ACG ACQUISITION VIII LLC, Delaware limited
liability company
BY:______________________________________
ITS:_____________________________________
ANNEX I
TO
NOTICE OF ASSIGNMENT OF LEASE
The "Flight Equipment" as described in the foregoing Notice of
Assignment of Lease shall consist of the following:
(a) One (1) Airframe, identified as follows:
Manufacturer: The Boeing Company
FAA Registration Number: N802AL
Manufacturer's Model Number: 737-2S5C
Manufacturer's Serial Number: 22148
together with all parts, equipment and accessories thereto
belonging, by whomsoever manufactured, now owned by ACG Acquisition
VIII LLC or hereinafter acquired by ACG Acquisition VIII LLC, and
installed in or appurtenant to said airframe; and
(b) Two (2) ▇▇▇▇▇ & ▇▇▇▇▇▇▇ JT8D-9A jet AIRCRAFT engines,
identified by manufacturer's serial numbers P656093 and P665630,
each such engine having 750 or more rated take-off horsepower or
the equivalent thereof, together with all parts, equipment and
accessories thereto belonging, by whomsoever manufactured, now
owned by ACG Acquisition VIII LLC or hereinafter acquired by ACG
Acquisition VIII LLC and installed in or appurtenant to any one or
more of said engines.
ANNEX II
TO
NOTICE OF ASSIGNMENT OF LEASE
______________________________________________________________________________
LEASE
______________________________________________________________________________
ANNEX III
TO
NOTICE OF ASSIGNMENT OF LEASE
______________________________________________________________________________
FORM OF AIRCRAFT UTILIZATION AND STATUS REPORT
______________________________________________________________________________
negotiation, preparation and execution of this Agreement, and shall
share equally the fees and expenses of special FAA counsel in
connection with the transactions contemplated by this Agreement.
(b) The Lessee shall pay to the Lessor on demand all expenses
(including legal, professional and out-of-pocket expenses) incurred
or payable by the Lessor in connection with the granting of any
waiver or consent under this Agreement.
(c) The Lessee will pay to the Lessor on demand all expenses (including
legal, survey and other costs) payable or incurred by the Lessor in
contemplation of, or otherwise in connection with, the enforcement
of or preservation of any of the Lessor's rights under this
Agreement, or in respect of the repossession of the Aircraft.
(d) The Lessor will pay to the Lessee on demand all expenses (including
legal costs) payable or incurred by the Lessee in contemplation of,
or otherwise in connection with, the enforcement of or preservation
of any of the Lessee's rights under this Agreement.
15.9 TIME OF ESSENCE
The time stipulated in this Agreement for all payments payable by the
Lessee to the Lessor and for the performance of the Lessee's other
obligations under this Agreement will be of the essence of this
Agreement (subject always to any applicable grace period).
15.10 NOTICES
(a) All notices and other communications given under or in connection
with this Agreement shall be in writing (including telefax) and
shall be deemed to have been received as follows:
(i) If sent by telefax, at the time of receipt by the sender
of a transmission report indicating that all pages of the
telefax transmission were properly transmitted (unless
the recipient notifies the sender promptly, or if received
after 5:30 p.m. local time, by no later than 10:00 a.m.
local time the following Business Day, that the transmission
was incomplete or illegible, in which case the telefax shall
be deemed to have been received at the time of receipt by
the sender of a further clear transmission report on
retransmitting the telefax), provided the relevant telefax
transmission (or retransmission, as the case may be) was
transmitted to the receiver between 9:00 a.m. and 5:30 p.m.
local time. If it was transmitted later, then it shall be
deemed to have been received at 9:00 a.m. local time on the
succeeding Business Day.
(ii) In any other case, when delivered to the address specified in
clause 15.10(b).
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(b) All such notices, requests, demands and other communications shall
be sent:
(i) if to the Lessor, to it at: c/o Aviation Capital Group Corp.
Three Stamford Landing
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇
Attention: Managing Director
Telefax No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to the Lender at: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President-Law--
Transportation Finance
Telefax No.: ▇▇▇-▇▇▇-▇▇▇▇
-and-
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President-
Operations Management--
Transportation Finance
Telefax No.: ▇▇▇-▇▇▇-▇▇▇▇
(ii) if to the Lessee, to it at: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President,
Finance and Planning, and
Chief Financial Officer
Telefax No.: 1-808-833-3100
or to such other address or telefax number as shall have been
notified by one party to the other in the manner set out in this
Clause 15.10.
15.11 LAW AND JURISDICTION
(a) THIS AGREEMENT SHALL, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS ENTERED INTO IN THE STATE OF NEW YORK BY
RESIDENTS OF SUCH STATE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE.
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(b) The Lessor and the Lessee hereby irrevocably agree to submit
to the non-exclusive jurisdiction of the United States
District Court for the Southern District of New York and the
Supreme Court of the State of New York located in the Borough of
Manhattan, County of New York (the "AGREED COURTS") in the event
of any claims or disputes arising under this Agreement. Such
submission to jurisdiction shall not be construed so as to limit
the right of either party to take proceedings against the other
in whatsoever jurisdiction shall to it seem fit nor shall the
taking of proceedings in any one or more jurisdictions
preclude the taking of proceedings in any other jurisdiction,
whether concurrently or not. Final judgment against Lessor or
Lessee in any such suit shall be conclusive and may be enforced in
any other jurisdiction by suit on the judgment or as otherwise
permitted by applicable law, a certified or true copy of which
shall be conclusive evidence of the facts and of the amount of
any indebtedness or liability of Lessor or Lessee. Each of
Lessor and Lessee hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue in any suit,
action or proceeding brought in any Agreed Court, and
irrevocably waives any claim that any such suit, action or
proceeding brought in any Agreed Court has been brought in an
inconvenient forum.
(c) THE LESSEE AND THE LESSOR HEREBY WAIVE TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING TO WHICH THEY ARE PARTIES INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
(d) Without prejudice to any other mode of service, each of the Lessor
and the Lessee consents to the service of process relating to any
proceedings involving, directly or indirectly, any matter arising
out of or relating to this Agreement by U.S. Postal Service
registered mail (prepaid, return receipt requested) of a copy of
the process to the Lessee's address identified in Clause 15.1 0(b).
15.12 SOLE AND ENTIRE AGREEMENT
This Agreement is the sole and entire agreement between the Lessor and
the Lessee in relation to the leasing of the Aircraft, and supersedes
all previous agreements in relation to that leasing. The terms and
conditions of this Agreement can only be varied by an instrument in
writing executed by both parties or by their duly authorized
representatives.
15.13 INDEMNITIES
All rights expressed to be granted to each Indemnitee under this
Agreement (other than the Lender) are given to the Lessor as agent for
and on behalf of that Indemnitee.
15.14 COUNTERPARTS
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This Agreement may be executed in counterparts each of which will
constitute one and the same document.
15.15 CONFIDENTIALITY
Neither the Lessor nor the Lessee shall, without the other's prior
written consent, communicate or disclose the terms of this Agreement or
any information or documents furnished pursuant to this Agreement
(except to the extent that the same are within the public domain) to any
third party (other than the Lender, any prospective Transferee, any
material investor in the Parent or creditor in Lessee, Additional
Mortgagees or Head Lessors, the respective external legal advisers,
auditors, insurance brokers or underwriters of Lessor, Lessee and such
parties, and the Airframe and Engine manufacturers); provided however
that disclosure will be permitted, to the extent required:
(a) pursuant to an order of any court of competent jurisdiction; or
(b) pursuant to any procedure for discovery of documents in any
proceedings before any such court; or
(c) pursuant to any law or regulation having the force of law; or
(d) pursuant to a lawful requirement of any authority with whose
requirements the disclosing party is legally obliged to comply; or
(e) in order to perfect any assignment of any assignable warranties.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF Lessor and Lessee have executed this Lease Agreement 802 on
the date shown at the beginning of this Agreement.
SIGNED on behalf of
ACG ACQUISITION VIII LLC
By: /s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Manager
SIGNED on behalf of
ALOHA AIRLINES, INC.
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
IN WITNESS WHEREOF Lessor and Lessee have executed this Lease Agreement 802 on
the date shown at the beginning of this Agreement.
SIGNED on behalf of
ACG ACQUISITION VIII LLC
By:
-------------------------------
Name:
Title:
SIGNED on behalf of
ALOHA AIRLINES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: SR. VICE PRESIDENT FINANCE &
PLANNING AND CFO
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: STAFF VICE PRESIDENT -
FINANCE & CONTROLLER
SCHEDULE 1
PART 1
AIRCRAFT SPECIFICATIONS
IDENTIFICATION:
Aircraft Type B737-2S5C
Registration N802AL
Serial Number 22148
Date of Manufacture. 5/80
WEIGHT DATA:
Maximum Taxi Weight 117,500 lbs.
Maximum Takeoff Weight 117,500 lbs.
Maximum Landing Weight 105,000 lbs.
Maximum Zero Fuel Weight 95,000 lbs.
Fuel Capacity 5168.7 U.S. Gals.
AIRFRAME AND INTERIOR EQUIPMENT:
Galleys 2 Locations: G-1 forward and G-4 aft
Lavatories 2 Locations: 1 forward and 1 aft
Air Stairs 1 Locations: -- forward and 1 aft
Passenger Seats 114 Locations/Types: 6 first class and 108 economy class
Overhead bins Standard 60" Heath Techna
Cargo Door Yes
ENGINES:
Position No.1 No.2
Type JT8D-9A JT8D-9A
Serial No. P656093B P665630B
APU:
Model: GTCP 85-129H
Serial No. PIOQ484
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LANDING GEAR:
Position Nose Left Main Right Main
Type ▇▇-▇▇▇▇▇-▇▇ ▇▇-▇▇▇▇▇-▇▇ ▇▇-▇▇▇▇▇-▇▇
Serial No. 129926B [MR01124P6001] [MR01713P895]
MAJOR AVIONICS EQUIPMENT:
DESCRIPTION MANUFACTURER PART NO. QUANTITY
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PART 2
AIRCRAFT DOCUMENTS
MANUALS
DESCRIPTION QUANTITY MEDIA
Maintenance Manual 3 Microfilm
Wiring Diagrams 3 Microfilm
Illustrated Parts Catalog 3 Microfilm
Systems Schematics 3 Microfilm
Weight & Balance Manual 1 Hard Copy
Operations Manual 1 Hard Copy
Flight Manual 1 Hard Copy
Structural Repair Manual 1 Microfilm
Rigging Document 1 Hard Copy
TECHNICAL RECORDS
Certificate of Airworthiness
Maintenance Certificate
Weight & Balance Report
Maintenance Time Control Report
Major Incident/Accident Statement
Summary of AD Status for the engines, components and the airframe
Summary of Service Bulletin Status for the engine, components and
the airframe
Component Listing including life status
Service Tags
Airframe log books
Flight Logs
Readiness Log
Full records for previous 'A' 'B', 'C' and 'D' Checks
Engine Shop Visit history including disk sheets
Emergency Equipment Listing including location
Cabin Layout Drawing
-78-
RECORDS FOR:
Last Compass Swing
Last Altimeters Calibration
Last ATC Transponder Calibration
-79-
[1996 AIRCRAFT SPECIFICATION WORKSHEET PROVIDED BY ALOHA TO BE INSERTED HERE.]
-80-
SCHEDULE 2
CERTIFICATE OF ACCEPTANCE 802
This Certificate of Acceptance 802 is delivered on the date set forth in
paragraph 1 below by Aloha Airlines, Inc. (the "LESSEE") to ACG
Acquisition VIII LLC (the "LESSOR") pursuant to Lease Agreement 802,
dated January _, 1997, between the Lessor and the Lessee (the
"AGREEMENT"). Capitalized terms used but not defined in this Certificate
of Acceptance 802 shall have the meaning given to such terms in the
Agreement.
1. DETAILS OF ACCEPTANCE
The Lessee hereby confirms to the Lessor that the Lessee has at :
.m. H.S.T. on this day of January, 1997, at ,
accepted the following, in accordance with the provisions of the
Agreement and the Annex:
(a) Airframe: Boeing 737-2S5C airframe, Manufacturer's Serial No. 22148
and FAA Registration No. N802AL;
(b) Engines: two ▇▇▇▇▇ & ▇▇▇▇▇▇▇ JT8D-9A Engines, bearing
Manufacturer's Serial Nos. and , each having 750 or more
rated take-off horsepower;
(c) All Parts installed on, attached to or appurtenant to the Airframe
and Engines; and
(d) Aircraft Documents as specified in Schedule 1 - Part 2 of the
Agreement.
2. LESSEE'S CONFIRMATION The Lessee confirms to the Lessor that as at the
time indicated above, being the time of Delivery:
(a) the Lessee's representations and warranties contained in Clauses
2.1 and 2.2 of the Agreement are hereby repeated;
(b) the Aircraft is insured as required by the Agreement; and
(c) the Lessee confirms that there have been affixed to the Aircraft
and the Engines the fireproof notices required by the Agreement.
3. LESSOR'S CONFIRMATION The Lessor confirms to the Lessee that, as at the
time indicated above, being the time of Delivery, the Lessor's
representations and warranties contained in Clause 2.4 of the Agreement
are hereby repeated.
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IN WITNESS WHEREOF Lessor and Lessee have executed this Certificate of
Acceptance 802 on the date shown at the beginning of this Agreement.
SIGNED on behalf of
ACG ACQUISITION VIII LLC
By: ________________________________
Name:
Title:
SIGNED on behalf of
ALOHA AIRLINES, INC.
By: ________________________________
Name:
Title:
By: ________________________________
Name:
Title:
-▇▇-
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ AT DELIVERY
DATE: ,19
AIRFRAME TIME:
Total Flight Hours [ ]
Total Cycles [ ]
AIRFRAME LIMITS:
Type of Check:
Check Interval:
Time Since Last Check:
ENGINE DATA:
Position No.1 No.2
Type JT8D-9A JT8D-9A
Serial Number [ ] [ ]
Total Flight Hours: [ ] [ ]
Total Cycles: [ ] [ ]
Flight Hours Since Last Shop Visit: [ ] [ ]
Cycles Since Last Shop Visit: [ ] [ ]
Flight Hours to Next Hard Limit: [ ] [ ]
Cycles to Next Hard Limit: [ ] [ ]
APU:
Type: [ ]
Serial Number: [ ]
Total Flight Hours: [ ]
Total Cycles: [ ]
Flight Hours Since Last HSI Inspection: [ ]
Cycles Since Last HSI Inspection: [ ]
Flight Hours Remaining on Turbine and Compressor LLPs: [ ]
Cycles Remaining on Turbine and Compressor LLPs: [ ]
-83-
LANDING GEAR LIMITS:
Position: Nose Left Right
Overhaul Interval:
Time Since Overhaul:
Time to Next Overhaul:
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SCHEDULE 3
OPERATING CONDITION AT REDELIVERY
On the Expiry Date the Aircraft, subject to fair wear and tear generally, will
be in the condition set out below.
1. GENERAL CONDITION
The Aircraft will:
(a) be clean by United States airline standards;
(b) have installed the full complement of engines and other equipment,
parts and accessories and loose equipment required under the Agreed
Maintenance Program and usually installed in the other Boeing
737-200 aircraft operated by Lessee (together with any additions
and improvements thereto, or replacements thereof, effected
pursuant to and in accordance with this Agreement) and be in a
condition suitable for immediate operation in commercial service;
(c) be airworthy, conform to type design and be in a condition for safe
operation with all equipment, components and systems
operating in accordance with their intended use and within limits
established by the manufacturer and approved by the Aviation
Authority, and all pilot discrepancies and deferred maintenance
items cleared on a terminating action basis;
(d) have a U.S. Standard Transport Category Certificate of
Airworthiness issued by the FAA in accordance with FAR Part 21 (or
if required by the Lessor, a valid export certificate of
airworthiness with respect to the Aircraft issued by the
Aviation Authority) and unconditionally meet all FAA
requirements for immediate operations under FAR Part 121, subject
to the special exemptions permitted Lessee regarding
compliance with the Airport Noise and Capacity Act of 1990,
as amended, and the regulations promulgated by the FAA
thereunder;
(e) comply with the manufacturer's original specification to the extent
that it so complied on the date of this Agreement and subject
to any alterations made pursuant to and in accordance with
this Agreement after such date;
(f) have undergone, immediately prior to redelivery, a "C" Check in
accordance with the Agreed Maintenance Program so that all Airframe
inspections falling due within the next
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following 3,000 Flight Hours of operation in accordance with
the Agreed Maintenance Program have been accomplished;
(g) the Airframe shall have at least 50% of the Flight Hours, Cycles
and calendar time (whichever is applicable and, if more than one
are applicable, most limiting) remaining until the next
block "D" check (or equivalent heavy maintenance check) under the
Agreed Maintenance Program, and if the Flight Hours, Cycles or
calendar time of the Airframe are less than 50% of the interval
between "D" checks then the Lessee shall pay to the Lessor an
amount equal to the product of (i) the number of Flight Hours,
Cycles or calendar days (whichever is applicable and most
limiting) by which the Airframe is less than 50% of the interval
between "D" checks, multiplied by (ii) a fraction (1) the
numerator of which is the average cost of a "D" check (including
routine and non-routine items) for an airframe similar to the
Airframe determined in accordance with the Appraisal Procedure
and (2) the denominator of which is the number of Flight Hours,
Cycles or calendar days (whichever is applicable and most limiting)
between "D" checks;
(h) have had accomplished all outstanding airworthiness directives and
mandatory orders affecting that model of Aircraft issued by the FAA
that are due during the Term on a terminating action basis;
airworthiness directives and mandatory orders that do not have a
terminating action will be accomplished at the highest level of
inspection or modification permitted;
(i) no special or unique manufacturer inspection or check requirements
specific to the Aircraft will exist unless there is no terminating
action available from any source;
(j) have installed all applicable vendor's and manufacturer's service
bulletin kits received free of charge by the Lessee that are
appropriate for the Aircraft and, to the extent not installed,
those kits retained by Lessee will be furnished free of charge to
the Lessor;
(k) be free of any system-related leaks;
(1) all fluid reservoirs (including fuel, oil, oxygen, hydraulic and
water) will be full, and the waste tank serviced in accordance with
the manufacturer's instructions;
(m) all fuel tanks will have recently undergone an
anti-fungus/biological growth contamination laboratory evaluation,
and any excessive levels of contamination corrected;
(n) have an FAA-approved aging aircraft program in operation and
up-to-date; and
(o) have all signs and decals clean, secure and legible.
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2. PARTS
(a) Each life limited or hard time controlled Part, excluding Engine
Parts, shall have not less than 50% of the number of Flight Hours
or Cycles (whichever is the more limiting factor) remaining to the
next scheduled removal in accordance with the Agreed Maintenance
Program;
(b) Each calendar limited Part (including hard time controlled Parts
with calendar limits) will have 50% of its life or time between
removals, as the case may be (but not less than 12 months),
remaining to its next scheduled removal in accordance with the
Agreed Maintenance Program; and
(c) Each "on-condition" and "condition monitored" Part will be
serviceable in accordance with the Aviation Authority prescribed
parameters.
3. ENGINES
Each engine installed on the Aircraft shall be an Engine and (if not the
engine installed at Delivery) shall, to the extent not previously
provided to the Lessor, be accompanied by all documentation the Lessor
may require to evidence that title thereto is properly vested in the
Lessor in accordance with Clause 8.17(a) and will:
(a) have not more than 4,000 Flight Hours since the last removal under
the Agreed Maintenance Program, and if an Engine has more than
3,500 Flight Hours since the last removal then the Lessee shall pay
to the Lessor an amount equal to the product of (i) the number of
Flight Hours since the last removal in excess of 3,500, multiplied
by (ii) a fraction (1) the numerator of which is the average cost
of the next scheduled removal and overhaul (including routine and
non-routine items) for an engine similar to such Engine determined
in accordance with the Appraisal Procedure and (2) the denominator
of which is the number of Flight Hours between such scheduled
removals under the Agreed Maintenance Program;
(b) have no defect that reduces the Flight Hours of remaining life
pursuant to manufacturer's or airworthiness requirements until
overhaul to less than 3,000; and
(c) be in a condition that can operate at maximum rated take-off power
at sea level at a temperature of 28 deg. C.
4. FUSELAGE, WINDOWS AND DOORS
(a) the fuselage will not contain any dents, corrosion or abrasions
that exceed the prescribed parameters under the SRM and shall be
free of scab patches and loose, pulled or missing rivets;
-87-
(b) the windows will not contain any delamination, blemishes or crazing
that exceed the prescribed parameters under the Manufacturer's
maintenance manual and will be properly sealed; and
(c) the doors will be free moving, correctly rigged and fitted with
serviceable seals;
5. WINGS AND EMPENNAGE
(a) leading edges will not contain any damage that exceeds the
prescribed parameters under the SRM;
(b) unpainted cowlings and fairings will be polished; and
(c) wings will be free of fuel leaks.
6. INTERIOR
(a) the interior will be fully serviceable and in the configuration as
at the date of this Agreement;
(b) emergency equipment having a calendar life will have a minimum of 1
year or 100% of its total approved life remaining, whichever is
less; and
(c) curtains, carpets, seat covers and seat cushions will be clean and
free from stains and worn out (threadbare) areas and will conform
to FAR fire resistance regulations as applicable to an FAR Part 121
operator.
7. COCKPIT
(a) fairing panels shall be free of stains and cracks, clean, secure
and repainted as necessary;
(b) floor coverings will be clean and effectively sealed;
(c) seat covers will be in good condition, clean and free of stains and
will conform to FAR fire resistance regulations as applicable to an
FAR Part 121 operator; and
(d) seats will be serviceable, in good condition and repainted as
necessary.
8. CARGO COMPARTMENTS
(a) panels will be in good condition and effectively sealed;
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(b) nets will be in good condition; and
(c) the compartments will comply with FAR fire resistance and
containment regulations as applicable to an FAR Part 121 operator.
9. LANDING GEAR
(a) The installed main and nose landing gear components and their
associated actuators and parts will be cleared of all inspections
for not less than 12 months, 3,000 Flight Hours or 3,000 Cycles of
operation (whichever is more limiting).
(b) The installed main and nose landing gear will have at least 50%
of the full allotment of Flight Hours, Cycles or calendar time
(whichever is most limiting) remaining until the next
scheduled removal for inspection or overhaul under the Agreed
Maintenance Program, and if the Flight Hours, Cycles or calendar
time of any Landing Gear is less than 50% of the interval between
scheduled removals then the Lessee shall pay to the Lessor an
amount equal to the product of (i) the number of Flight Hours,
Cycles or calendar days (whichever is most limiting) by which such
Landing Gear is less than 50% of the interval between scheduled
removals, multiplied by (ii) $4.50 in the case of the main
Landing Gear and $2.50 in the case of the nose Landing Gear.
(c) The tires and brakes will have 50% of the wear, as specified by the
manufacturer as serviceable limits, remaining until next removal.
(d) The landing gear and wheel ▇▇▇▇▇ will be clean, free of leaks and
repaired as necessary.
10. APU
(a) The APU shall be serviceable in accordance with the Approved
Maintenance Program parameters.
(b) The APU shall have not more than 1,500 Flight Hours of operation
since its last hot section inspection.
11. CORROSION
(a) The Aircraft will be in compliance with the CPCP and will have been
inspected and treated with respect to corrosion as required by the
CPCP; and
(b) Fuel tanks will be free from contamination and corrosion and a tank
treatment program will be in operation and up-to-date.
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SCHEDULE 4
PART 1
(INSURANCE REQUIREMENTS)
1. The Insurances required to be maintained are as follows:
(a) HULL "ALL RISKS" of Loss or Damage while flying and on the ground
with respect to the Aircraft for the Agreed Value and with a
deductible not exceeding $500,000.
(b) HULL WAR AND ALLIED PERILS, covering those war risks excluded from
the Hull "All Risks" Policy to the extent such coverage is
available from the leading international insurance markets,
including confiscation and requisition by the State of
Registration, for the Agreed Value;
(c) "ALL RISKS" PROPERTY INSURANCE (INCLUDING WAR AND ALLIED RISK
except when on the ground or in transit other than by air or sea)
on all Engines and Parts when not installed on the Aircraft (to the
extent not covered under the Aircraft hull insurances described in
paragraphs (a) and (b) above), including Engine test and running
risks, in an amount equal to replacement value in the case of the
Engines;
(d) AIRCRAFT THIRD PARTY, BODILY INJURY/PROPERTY DAMAGE, PASSENGER,
BAGGAGE, CARGO AND MAIL AND AIRLINE GENERAL THIRD PARTY (INCLUDING
PRODUCTS) LEGAL LIABILITY for a combined single limit (Bodily
Injury/Property Damage) of an amount not less than the Minimum
Liability Coverage for the time being in respect of any one
occurrence (but, in respect of products liability, this limit
may be an aggregate limit for any and all losses occurring
during the currency of the policy, and in respect of liability
arising out of certain offences, the limit (within the said
combined single limit) may be $25,000,000 in respect of any one
offence and in the aggregate, and cargo and mail legal liability
may be subject to a limit of $1,000,000 any one occurrence); War
and Allied Risks are also to be covered under the Policy to the
extent available from the leading international insurance
markets. The Minimum Liability Coverage may be adjusted upwards
from time to time to such an amount as the Lessor may be advised by
its insurance brokers constitutes the standard Minimum Liability
Coverage applicable to Boeing 737-200 series aircraft operating in
North America by an airline similarly situated as Lessee. If the
Lessee disputes any such adjustment, the matter shall be referred
to a reputable independent insurance broker in the United
States of America appointed by the Lessor, whose decision, acting
as expert, shall be conclusive and binding on the Lessee.
2. All required hull and spares insurance (specified in (1)(a), (b) and (c)
above), so far as it relates to the Aircraft, will:
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(a) provide that any loss will be settled with the Lessee (who
undertakes to consult with the Lessor and the Lender in regard
thereto), and any claim that becomes payable on the basis of a
Total Loss shall be paid in Dollars to the Lender as sole loss
payee up to the Agreed Value, and loss proceeds in excess of the
Agreed Value shall be payable to Lessee, with any other claim being
payable as may be necessary for the repair of the damage to which
it relates;
(b) if separate Hull "All Risks" and "War Risks" insurances are
arranged, include a 50/50 provision in the terms of Lloyd's
endorsement AVS 103 or its equivalent; and
(c) confirm that the Insurers are not entitled to replace the Aircraft
in the event of a Total Loss.
3. All required liability insurances (specified in (1)(d) above) will:
(a) include the Lessor, the Lender, their respective successors and
assigns and their respective shareholders, Affiliates,
subsidiaries, directors, officers, agents, employees and
indemnitees as additional assureds for their respective rights and
interests, warranted (each as to itself only) no operational
interest; but the coverage provided will not include claims arising
out of their legal liability as manufacturer, repairer or servicing
agent of the aircraft or any part thereof;
(b) include a severability of interest clause;
(c) contain a provision confirming that the policy is primary without
right of contribution and that the liability of the insurers will
not be affected by any other insurance of which the Lessor, the
Lender or the Lessee have the benefit; and
(d) accept and insure the indemnity provisions of this Agreement to the
extent of the risks covered by the relevant policy or policies.
4. All Insurances will:
(a) be in accordance with normal industry practice of persons operating
similar aircraft in similar circumstances;
(b) provide coverage on a worldwide basis subject to those territorial
exclusions which are usual and customary for carriers similarly
situated with Lessee in the case of War Risks and Allied Perils
coverage which are advised to and approved by Lessor, such approval
not to be unreasonably withheld;
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(c) acknowledge that the insurers are aware that the Aircraft is owned
by the Lessor and is subject to this Agreement;
(d) provide that, in relation to the interests of each of the
additional assureds, the Insurances will not be invalidated by any
act or omission of the Insured which results in a breach of any
terms, conditions or warranty of the policies;
(e) provide that the Insurers will waive any rights of recourse and/or
subrogation against each additional assured to the same extent that
Lessee has waived or has no rights of recovery against-such
additional assured in the Lease;
(f) provide that the additional assureds will have no obligation or
responsibility for the payment of any premiums (but reserve the
right to pay the same should any of them elect to do so) and that
the Insurers will waive any right of offset or counterclaim against
the respective additional assureds other than for outstanding
premiums in respect of the Aircraft, any Engine or Part;
(g) provide that, except in the case of any provision for cancellation
or automatic termination specified in the policies or endorsements
thereof, the Insurance can only be canceled or materially altered
in a manner adverse to the additional assureds by giving at least
30 days' written notice to the Lessor and the Lender, except in the
case of war risks (or radioactive contamination), for which seven
days' written notice (or such lesser period as is or may be
customarily available in respect thereof) will be given; and
(h) include a services of suit clause.
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[LOGO]
SEDGWICK
SCHEDULE 4, PART 2
No. AQ-T.B.A.
DATE: January __, 1997
TO: FINOVA Capital Corporation ("Lender")
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
and
ACG Acquisition VIII LLC ("Owner"/"Lessor")
Three Stamford Landing
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Broker's Report
Lease Agreement N802AL dated as of January __, 1997
between ACG Acquisition VIII LLC ("Owner"/"Lessor"), FINOVA
Capital Corporation ("Lender") and Aloha Airlines, Inc. ("Lessee")
(the "Lease") regarding One (1) B737-MC Aircraft, Registration Number
N802AL, Serial Number 22148 including two (2) ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
▇▇▇▇-▇▇ engines, Serial Numbers 656093 and 665630 (the "Engines")
(hereinafter the "Aircraft")
To Whom It May Concern:
We hereby certify that as the independent aviation insurance brokers duly
appointed by Lessee, and acting on their behalf that, as of this date, the
insurance described in the attached Certificate of Insurance (No. AQ-T.B.A.)
complies with the requirements of the Lease as far as said requirements relate
to the insurance described in said Certificate and that said insurance is in
full force and effect on the Aircraft and that all premiums due as of this
date (per the accounting procedures arranged between Lessee and ourselves)
have been paid.
We also confirm that, as of this date, all such policies of insurance as
described in aid Certificate as are carried by Lessee are in such amounts and
cover such perils and are placed with insurers of recognized reputation and
responsibility in the worldwide aviation insurance marketplace so that the
protection afforded thereby is not less than that which would customarily be
maintained for aircraft of a similar character by corporations engaged in the
same or similar business, similarly situate with Lessee.
The perils, limits of liability, and insurers relating to the above mentioned
insurance policies are more fully described in the attached Certificate of
Insurance, No. AQ-T.B.A.
[LOGO]
SEDGWICK
It is our opinion that only an Insured (i.e., the Named Insured and/or the
Additional Insureds) can breach or violate any warranty, condition or
declaration of the policy.
We undertake to advise you:
1. promptly of any cancellation or adverse material changes notified
to us which are proposed to be made in the terms of the insurance;
2. upon written application from you not later than thirty (30) days
prior to the expiration date of said insurance to notify you within
seven (7) days of the receipt of said application if we have not
received renewal instructions from Lessee and in the event of our
receiving instructions to renew, to advise you promptly thereof;
3. promptly if premiums are not paid to us by the due date as per the
accounting procedures between Lessee and ourselves;
4. promptly if our appointment as Insurance Broker by Lessee is
terminated or not timely renewed.
The above is given subject to:
1. our continuing appointment for the time being as Insurance Brokers
to Aloha Airlines, Inc.
2. our lien, if any, on the policies referred to in our Certificate of
Insurance for premiums due under such policies in respect of the
Aircraft
3. Insurers' right of cancellation on default in payment of premiums
4. a hull claim proceeds and all premiums are to be collected through
ourselves as the Insurance Broker for Aloha Airlines, Inc.
This letter shall be governed and construed in all respect in accordance with
the laws of United States of America.
Sincerely,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Director
[LOGO]
SEDGWICK
SCHEDULE 4, PART 3
CERTIFICATE OF INSURANCE No. AQ-T.B.A.
This is to verify to: FINOVA Capital Corporation ("Lender")
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and
ACG Acquisition VIII LLC ("Owner"/"Lessor")
Three Stamford Landing
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that the insurers/underwriters/companies listed below, each for their own part
AND NOT ONE FOR THE OTHER, are providing the following insurance:
NAMED INSURED: Aloha Airlines, Inc.
NAMED INSURED'S Honolulu International Airport
ADDRESS: ▇.▇. ▇▇▇ ▇▇▇▇▇
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INSURANCE COVERAGES: A) All Risks (Ground and Flight) Aircraft Hull
Insurance (including All Risks Aircraft Spare
Parts Insurance)
B) War Risks Aircraft Hull Insurance (including
War Risks Spare Parts Insurance) (Coverage
amended to include coverage for confiscation by
government of registry)
C) Comprehensive Airline Liability Insurance
(including, but not limited to: Comprehensive
General Liability, Public Liability, Passenger
Liability, Personal Injury Liability;
Contractual Liability, Passengers' Checked and
Unchecked Baggage Liability, Premises,
Products, and Completed Operations Liabilities,
Ground Hangarkeepers Liability, Cargo Legal
including Mail Legal Liability) and the AAU
equivalent of AV.-52C (War Risks Liability
Clause.)
[LOGO]
SEDGWICK
POLICY PERIOD: November 1, 1996 to November 1, 1997 on both
dates at 12:01 A.M. Local Standard Time at the
address of the Named Insured.
GEOGRAPHICAL LIMITS: Worldwide*
LIMITS OF LIABILITY: A) As respects Aircraft Hulls: Agreed Value as
stated below, subject to a deductible of
US$500,000.00 each and every loss (Deductibles
not applicable in the event of Total
Loss/Constructive Total Loss/Arranged Total
Loss.)
NOTE: AGGREGATE As respects Aircraft Spare Parts: US$60,000,000.00
LIMITS MAY BE any one loss/any one location, US$25,000,000.00
REDUCED DUE TO any one transit, subject to a deductible of
PAID CLAIMS US$10,000.00 any one loss but the applicable
aircraft hull deductible stated above shall
apply in respect of spare engine running or
testing losses.
B) As respects Aircraft Hulls: Agreed Value as
stated below. As respects aircraft spares
parts: US$60,000,000.00 any one loss/any one
location, US$25,000,000.00 any one transit.
Subject to an annual aggregate of
US$125,000,000.00. Subject to nil deductibles.
C) Combined Single Limit Bodily Injury (including
passengers), Property Damage and Personal
Injury (Passengers only): US$300,000,000.00 any
one occurrence/offense, in the aggregate
annually as respects Products, Completed
Operations and Personal Injury Liabilities.
However, the following sublimits apply as part
of and not in addition to the limit stated
above.
As respects Personal Injury to third parties
other than passengers: US$25,000,000.00 any one
occurrence any one offense, in the aggregate
annually. As respects Cargo Legal Liability:
US$1,000,000.00 each occurrence
[LOGO]
SEDGWICK
AIRCRAFT INSURED: One (1) B737-2S5C aircraft, Registration
Number: N802AL, Manufacturer's Serial Number:
22148, Agreed Value: US$6,000,000 inclusive of
two (2) ▇▇▇▇▇ & ▇▇▇▇▇▇▇ JT8D-9A Engines,
Manufacturers Serial Numbers 656093 and 665630
(the "Engines") while attached to the Aircraft or
removed from the Aircraft, but not replaced
(hereinafter, the "Aircraft")
* As respects Coverage B - War Risks Aircraft Hull Insurance, the Geographical
Limits of the policy are:
Worldwide but excluding Africa, Columbia, Peru, Iraq, Afghanistan, Former
Republics of the U.S.S.R. and Yugoslavia.
[LOGO]
SEDGWICK
SECURITY
AS RESPECTS COVERAGES A AND C
QUOTA SHARE
PARTICIPATION POLICY
INSURERS (PART OF 100%) NUMBER
-------- ----------------- ------
One or More Member Companies
of Associated Aviation Underwriters T.B.A. T.B.A.
Certain Underwriters at Lloyds, London
through Sedgwick Aviation Limited T.B.A. T.B.A.
Certain U.K. Insurance Companies and
Others through Sedgwick Aviation Limited T.B.A. T.B.A.
La Reunion Aerienne through
La Concorde T.B.A. T.B.A.
Insurance Company of North America
Navigators Insurance Company through
Somerset Aviation T.B.A. T.B.A.
Assurance France Aviation T.B.A. T.B.A.
Mutual Marine Office T.B.A. T.B.A.
American Home Assurance Company
Through AIG Aviation T.B.A. T.B-A.
SEVERAL LIABILITY NOTICE
The Subscribing insurers' obligations under contracts of insurance to which
they subscribe are several and not joint and are limited solely to the extent
of their individual subscriptions. The subscribing insurers are not
responsible for the subscription of any co-subscribing insurer who for any
reason does not satisfy all or part of its obligations.
LSW 1001 (insurance)
[LOGO]
SEDGWICK
SECURITY
AS RESPECTS COVERAGES B
QUOTA SHARE
PARTICIPATION POLICY
INSURERS (PART OF 100%) NUMBER
-------- ----------------- ------
Certain Underwriters at Lloyds,
London through Sedgwick Aviation
Limited T.B.A. T.B.A.
Certain U.K. Insurance Companies
and Others through Sedgwick Aviation
Limited T.B.A. T.B.A.
Navigators Insurance Company
through Somerset Aviation T.B.A. T.B.A.
Assurance France Aviation T.B.A. T.B.A.
La Reunion Aerienne through
La Concorde T.B.A. T.B.A.
Mutual Marine Office T.B.A. T.B.A.
SEVERAL LIABILITY NOTICE
The subscribing insurers' obligations under contracts of insurance to which
they subscribe are several and not joint and are limited solely to the extent
of their individual subscriptions. The subscribing insurers are not
responsible for the subscription of any co-subscribing insurer who for any
reason does not satisfy all or part of its obligations.
LSW 1001 (Insurance)
[LOGO]
SEDGWICK
SPECIAL PROVISIONS
Solely as respects coverages A, B and c and solely as respects Lease
Agreement N802AL dated as of January _, 1997 between ACG Acquisition VIII LLC
("Owner"/"Lessor"), FINOVA Capital Corporation ("Lender") and Aloha
Airlines, Inc, ("Lessee") (the "Lease") regarding the Aircraft subject to
policy terms, conditions, limitations, deductibles, warranties and exclusions
the following provisions apply:
I. SOLELY AS RESPECTS COVERAGES A AND B:
1. All losses will be adjusted with Lessee. In the event of a Total
Loss of the Aircraft, Lender is named as Sole Loss Payee for all
insurance proceeds up to the Agreed Value (as defined in the
Lease). With respect to damage or loss not constituting a Total
Loss of the Aircraft, Lender is named as Sole Loss Payee in respect
of all insurance proceeds where such insurance proceeds exceed
US$500,000.00. Such insurance proceeds which are not in excess of
US$500,000.00 shall be payable solely to Lessee provided that upon
receipt by Insurers and the Insurance Broker of written notice from
Lender or Owner Lessor that an Event of Default on the part of
Lessee has occurred and is continuing, a payments up to the Agreed
Value will be made to Lender. In all cases, any insurance proceeds
in excess of the Agreed Value will be payable solely to Lessee.
2. Hull All Risks insurers and Hull War Risks and Allied Perils
insurers agree to a 50/50 claims settlement provision per the terms
of AVS103 (or its equivalent),
3. Underwriters are not entitled to replace the Aircraft in the event
of a Total Loss of the Aircraft.
II. SOLELY AS RESPECT COVERAGE C
1. Lender, Owner/Lessor and their respective successors and assigns
and their respective shareholders, affiliates, subsidiaries,
directors, officers, employees, agents and indemnitees are included
as Additional Insureds ("the Additional Insureds") as their
respective interests may appear, warranted no operational interest,
However, no party shall be included as an Additional Insured as
respects its legal liability as manufacturer, repairer, supplier or
servicing agent of the Aircraft or any part thereof.
[LOGO]
SEDGWICK
2. This insurance is primary without right of contribution from any
other insurance as may be carried by an Additional Insured.
3. Such insurance as is afforded Lessee under the policy applies to
liability assumed by Lessee under the Lease, specifically Article
10--INDEMNITY of the Lease, but only to the extent of the coverage
otherwise afforded under the policy.
4. Each of Additional Insureds shall have the same protection as would
have been available had this policy been issued individually to
each of them except that this fact shall not in any event increase
the Insurers' total liability beyond the limits set forth in the
policy.
III. SOLELY AS RESPECTS COVERAGES A, B AND C:
1. Insurers waive their rights to any set-off or counter claim or any
other deduction, whether by attachment or otherwise, in respect of
any liability to the Additional Insureds (save in respect of unpaid
premium in respect of the Aircraft only).
2. The Additional Insureds have no responsibility for premiums,
commissions, assessments or calls (save as is provided for in
Special Provision III.1).
3. Insurers waive their rights of subrogation against the Additional
Insureds but only to the same extent that Lessee has waived its
rights of recovery against the Additional Insureds in the Lease.
4. In respect of the interests of each Additional Insured, the
insurance shall not be invalidated by any act or omission by Lessee
or any other insured. The Additional Insureds are held covered for
their respective interests notwithstanding any breach or violation
of any warranty, condition or declaration of the policy by Lessee
or any other insured. However, such protection as is afforded an
Additional Insured under this clause will not apply in the event
such Additional Insured breaches or violates any warranty,
condition or declaration of the policy, nor does this clause apply
in the event of exhaustion of policy limits or to losses/claims
arising from pails specifically excluded from coverage under the
policies.
[LOGO]
SEDGWICK
5. In the event of cancellation or material change of the policies by
Insurers, which would adversely affect the interests of the
Additional Insureds, Insurers agree that Such cancellation or
change shall not be effective as to the Additional Insureds until
thirty (30) days (seven (7) days or such shorter period as may be
customary in the case of War Risks insurance) after issuance of
notice thereof to Lender and Owner/Lessor.
6. Insurers note the existence of the Lease and acknowledge ACG
Acquisition VIII LLC as Owner of the Aircraft.
The undersigned has been authorized by the above insurers to issue this
certificate on their behalf the undersigned is not an insurer and has no
liability of any sort under the above policies nor as a result of this
certification. This certificate does not alter, extend or amend any policy
terms, conditions, limitations, deductibles, warranties or exclusions.
DATE OF ISSUE SEDGWICK AVIATION, NORTH AMERICA
__________________________________ _________________________________
AUTHORIZED REPRESENTATIVE
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ATTORNEYS AT LAW
SCHEDULE 5
, 1997
ACG Acquisition VIII LLC
c/o Aviation Capital Group Corp.
Three Stamford Landing
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FINOVA CAPITAL CORPORATION
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Re: LEASE AGREEMENT 802 dated as of , 1997 between
ACG ACQUISITION VIII LLC ("Lessor") and ALOHA AIRLINES, INC.
("Lessee") with respect to one (1) The Boeing Company Model
737-2S5C Aircraft, bearing manufacturer's serial no. 22148
and U.S. registration no. N802AL, together with two (2)
▇▇▇▇▇ & Whitney Model JT8D-9A engines bearing engine
manufacturer's serial nos. P656093B and P665630B (the
"Aircraft").
Gentlemen:
We are counsel to Aloha Airlines, Inc. in regard to the above-referenced
transaction.
You have asked us to render an opinion in connection with the transactions
governed by the following documents:
1. Lease Agreement 802 (as described above) dated as of
, 1997 by and between Lessor and Lessee
("Lease Agreement");
2. Acceptance Certificate dated as of , 1997
executed by Lessee ("Acceptance Certificate"); and
3. Acknowledgment and Consent dated as of , 1997
relating to Lessor's assignment of Lease Agreement to
FINOVA Capital Corporation, as Lender ("Acknowledgment").
The documents listed above collectively referred to as the "Operative
Documents." Except as otherwise expressly stated herein, words and expressions
used herein shall bear the same meanings as defined in the Operative Documents.
A LAW CORPORATION Suite 850, Davies Pacific Center, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
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ATTORNEYS AT LAW
ACG ACQUISITION VIII LLC
FINOVA CAPITAL CORPORATION
, 1996
Page 2
In rendering the opinions expressed below, we have examined the (a) the
Operative Documents, (b) the Articles of Association and By-Laws of Lessee, (c)
certain certificates executed by officers of Borrower and (d) other documents,
in our judgment and to our knowledge, necessary or appropriate to examine to
enable us to give the opinions expressed below.
Having reviewed the foregoing described documents, and having regard to the
relevant laws of the State of Hawaii and the United States of America, it is
our opinion that:
A. Lessee (i) is a corporation duly formed, validly existing and in good
standing under the laws of the State of Hawaii, (ii) is qualified to
do business in all jurisdictions in which the nature of its business
or its properties requires it to be qualified, (iii) presently
maintains its principal place of business and chief executive office
in Honolulu, Hawaii, (iv) has full power to carry on its business as
it is now being conducted and to enter into, legally bind itself by,
and perform its obligations under the Operative Documents and (v) to
our knowledge and without any inquiry except review of a
certification as to the following provided by Lessee, has complied
with all material statutory and other requirements relative to its
businesses;
B. To our knowledge and without any inquiry except review of a
certification as to the following provided by Lessee, (i) all
consents, resolutions and authorizations necessary or advisable in
order for Lessee to enter into the Operative Documents and to lease
the Aircraft in accordance with the terms and conditions of the
Operative Documents have been obtained, and (ii) no further consents
or authorizations are necessary for the lease of the Aircraft by
Lessee pursuant to the provisions of the Operative Documents and for
the performance by Lessee of all of its obligations pursuant to the
provisions of the Operative Documents;
C. The Operative Documents far constitute valid and binding obligations
of Lessee, enforceable in accordance with their respective terms,
(ii) are in
A LAW CORPORATION
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ISHII
& ▇▇▇
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ATTORNEYS AT LAW
ACG ACQUISITION VIII LLC
FINOVA CAPITAL CORPORATION
, 1996
Page 3
full force and effect, and (iii) the provisions of the Operative
Documents with respect to choice of substantive law to govern the
interpretation and enforcement of such Operative Documents and
consent to jurisdiction and choice of forum in connection with such
interpretation and enforcement are legal, valid and binding;
however, the state and federal courts in the State of Hawaii may not
apply the procedural law, including without limitation, law relating
to remedies or provisional remedies, of a non-forum state, such as,
without limitation, New York and Arizona;
D. To our knowledge and without any inquiry except review of a
certification as to the following provided by Lessee, (i) the
execution and delivery of and the performance of the provisions of the
Operative Documents and of the transactions contemplated thereby and
hereby do not contravene in any material respect any applicable law,
regulation, decree, order, permit or contractual or other
restriction now existing and binding on Lessee or on any of the
properties of Lessee, and (ii) the performance of the provisions of
the Operative Documents in effect on this date, and of the
transactions contemplated thereby will not contravene in any
material respect any applicable law, regulation, decree, order or
permit currently in effect or contractual or other restriction now
existing and binding on Lessee or on any of the properties of Lessee;
E. To our knowledge and without inquiry except review of a certification
as to the following provided by Lessee, (i) there are no outstanding
judgments against Lessee and (ii) no action, claim, suit or proceeding
pending or threatened (including, but not limited to, tax liens or tax
actions) against or affecting Lessee or any of the property of Lessee
before any court, board of arbitration or administrative agency which
would likely result in any material adverse change in the business or
condition (financial or otherwise) of Lessee;
F. To our knowledge and without inquiry except review of a certification
as to the following provided by Lessee, Lessee is not in default under
any agreement to which
A LAW CORPORATION
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ISHII
& ▇▇▇
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ATTORNEYS AT LAW
ACG ACQUISITION VIII LLC
FINOVA CAPITAL CORPORATION
, 1996
Page 4
it is a party or by which it may be bound, nor in default of any kind
in respect of any financial commitment or obligation (including
obligations under guarantees) which could have a material adverse
effect on the ability of Lessee to perform its obligations under the
Operative Documents nor is there any fact which by giving of notice
or by lapse of time or otherwise might constitute such default by
Lessee;
G. None of the Operative Documents or any other document executed in
connection with the Operative Documents or contemplated thereby nor any
filing required or permitted thereunder is subject to any registration
tax, any stamp duty or similar tax;
H. To our knowledge and without inquiry except for review of a
certification as to the following provided by Lessee, Lessee has
furnished Lessor with consolidated financial statements of Aloha
Airgroup, Inc., the corporate parent of Lessee, reflecting the
financial results of Aloha Airgroup, Inc. and its subsidiaries
(including Lessee) as of , 199 .
I. Lessee is (i) a "United States citizen" as that term is used and
defined in the Federal Aviation Act of 1958, as amended and recodified
as Title 49 of the United States Code, and (ii) a duly certified
United States Air Carrier pursuant to the provisions of 14 C.F.R. 121;
J. To our knowledge and without inquiry except for review of a
certification as to the following provided by Lessee, no written
information given by Lessee in relation to the Operative Documents
contains any misstatement of fact or omits to state a fact which would
be adverse to the interest of Lessor or which would be necessary to
make any statement or representation or warranty contained herein or
therein not misleading;
K. To our knowledge and without inquiry except for review of a
certification as to the following provided by Lessee, there has
occurred no event which, with the giving of notice or lapse of time or
both, would
A LAW CORPORATION
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& ▇▇▇
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ATTORNEYS AT LAW
ACG ACQUISITION VIII LLC
FINOVA CAPITAL CORPORATION
, 1996
Page 5
constitute an Event of Default or Default under the Operative
Documents;
L. To our knowledge and without inquiry except for review of a
certification as to the following provided by Lessee, Lessee does not
do business under any assumed or trade names;
M. Except for the filing of appropriate financing statements (UCC-1s) with
the Bureau of Conveyances, State of Hawaii and the filing of the Lease
Agreement with the Federal Aviation Administration, no further actions
are necessary to record or perfect Lessor's interest in the Lease in
the United States or in the State of Hawaii;
N. The Operative Documents do not violate any law relating to the
charging, contracting for or payment or collection of interest or the
like; and
0. In the event that Lessee files a petition for relief under Chapter 11
of the United States Bankruptcy Code, as amended, or has such a
petition filed against it, Lessor will be entitled to the rights
provided to a "lessor" under the provisions of Section 1110(a)(1) of
Title 11 of the United States Code.
The opinion expressed above is qualified to the extent that:
1. We are members of the Bar of the State of Hawaii and do not hold
ourselves out as being conversant with, and express no opinion as to,
the laws of any jurisdiction other than those of the State of Hawaii
and the United States of America.
2. The opinions expressed herein are solely for your benefit and may not
be relied upon in any manner or for any purpose by any other person.
3. In conducting our examination, we have assumed the genuineness of all
signatures (other than the signatures of Lessee), the correctness of
all certificates, the authenticity of all documents submitted to us as
originals, the conformity to
A LAW CORPORATION
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ISHII
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ATTORNEYS AT LAW
ACG ACQUISITION VIII LLC
FINOVA CAPITAL CORPORATION
, 1996
Page 6
original documents of all documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such
copies, and the accuracy and completeness of all records made
available to us by Lessee. In making our examination of documents
and instruments, we have assumed that each party to such documents
and instruments (other than Lessee and its affiliates) has: (i) the
power and capacity to enter into and perform all its obligations
under such documents and instruments, (ii) duly authorized all
requisite action with respect to such documents and instruments, and
(iii) duly executed and delivered such documents and instruments.
4. The opinions expressed above are qualified to the extent that (i)
enforceability of the Operative Documents and transactions contemplated
thereby may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application from time to time
affecting the rights of creditors, lessors and secured parties
generally and providing relief for debtors; and (ii) a particular court
may refuse to grant certain equitable or legal remedies, including
without limiting the generality of the foregoing, specific performance
or foreclosure, with respect to the enforcement of any provisions of
the Operative Documents.
5. This opinion letter is limited to the matters stated herein and no
opinion may be implied or inferred beyond the matters expressly stated
herein.
6. The opinions given herein are as of the date hereof and we assume no
obligation to update or supplement such opinions to reflect any facts
or circumstances which
A LAW CORPORATION
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ATTORNEYS AT LAW
ACG ACQUISITION VIII LLC
FINOVA CAPITAL CORPORATION
, 1996
Page 7
may hereafter come to our attention or any changes in law which may
hereafter occur.
Very truly you
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▇▇▇▇ ▇▇▇▇▇▇▇ Banbury
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A LAW CORPORATION
SCHEDULE: 6
IRREVOCABLE STANDBY LETTER OF CREDIT
BENEFICIARY:
ACG Acquisition VIII LLC
c/o Aviation Capital Group Corp.
Three Stamford Landing
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Gentlemen:
We hereby establish our Irrevocable Standby Letter of Credit No. S/B ____
in your favor, effective , 19 , available by your
draft(s) on Fire Hawaiian Bank, International Banking, Honolulu, Hawaii, at
eight for the account of Aloha Airlines, Inc., P. 0. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇, up to an aggregate amount of U.S. $227,000 (two hundred twenty
seven thousand United States Dollars), accompanied by:
A statement purportedly signed by a duly authorized officer Of ACG
Acquisition VIII LLC certifying that "an 'Event of Default' has occurred
and is continuing under that certain Lease Agreement 802 by and between
Aloha Airlines, Inc. and ACG Acquisition VIII LLC.
Payment of amounts drawn under this Letter of Credit shall be made in full,
without any offset or counterclaim whatsoever and free and clear of any
deductions or withholdings. Until all amounts which may be or become payable
to the Lessor or the Lender by the Lessee have been irrevocable paid in full we
shall not by virtue of this Letter of Credit be subrogated to any of the
Lessor's or the Lender's rights or claim in competition with the Lessor or the
Lender against the Lessee.
It is a condition of this Letter of Credit that it shall be deemed
automatically extended without amendment for an additional period of one (1)
year each from the present or each future expiration date unless at least
thirty (30) days prior to any such expiry date we shall notify you in writing
by certified mail at the above address, tot we elect not to consider this
Letter of Credit renewed for such additional period. Upon receipt of such
notice, you may draw hereunder by means of your draft on us as sight
accompanied by this Letter of Credit and your written certification stating
that "FINOVA Capital Corporation has received a notice of non-renewal from
First Hawaiian Bank to its Letter of Credit No. S/B ".
Partial drawings permitted.
All drafts must bear the clause "Drawn under Credit No. S/B of
First Hawaiian Bank, Honolulu, Hawaii dated , 19 .
This Letter cf Credit is transferable only by Beneficiary. Notice of such
Transfer, if any, must be mailed immediately to First Hawaiian Bank,
International Banking, at ▇.▇. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇.
All bank charges relating to this Letter of Credit are for the account of
applicant.
Alternatively, drawings may be sent via fax to our International Banking at
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇, originals to follow by mail. Drawings by fax or by
presentment of original documents must be received by First Hawaiian Bank,
International Banking on or before 3:00 P.M. Hawaii Standard Time on _________
19 , the expiration date or any automatically extended date.
Except as otherwise expressly stated, this Credit is subject to the
"Uniform Customs and Practice for Documentary Credits" (1993 Revision)
International Chamber of Commerce Publication No. 500.
We hereby engage with you that all drafts drawn under and in compliance
with the terms of this Credit shall be duly honored upon presentation if drawn
on or before , 19 , the expiration date, at our
International Banking counters in Honolulu, Hawaii.
Sincerely,
FIRST HAWAIIAN BANK
_________________________________ _______________________________
Authorized Signature Authorized Signature
SCHEDULE 7
FORM OF SEMI-ANNUAL STATUS REPORT
AIRCRAFT TYPE REG. ▇▇▇▇ SERIAL NO. MONTH ENDING
------------- --------- ---------- ------------
Boeing 737-2S5C N802AL 22148 ............
1. AIRCRAFT UTILIZATION:
--------------------
(a) Airframe Total Flight Hours ............................
(b) Airframe Total Cycles ............................
(c) Airframe Flight Hours for Month ............................
(d) Airframe Flight Cycles for Month ............................
2. POWERPLANT STATUS: No.1 No.2
----------------- ---- ----
(a) Serial Nos. of Delivered Engines .......... ..........
(b) Serial Nos. of Replacement Engines .......... ..........
(if applicable)
(c) Serial Nos. of Installed Engines .......... ..........
(if different from (a) or (b) above)
(d) Current Location of Delivered or .......... ..........
Replacement Engines (as applicable)
(if not installed on Airframe)
(e) Total Time Since New of Delivered .......... ..........
or Replacement Engines (as applicable)
(f) Total Cycles Since New of Delivered .......... ..........
or Replacement Engines (as applicable)
(g) Total Flight Hours for the Month for .......... ..........
each Delivered or Replacement Engine
(as applicable)
(h) Total Cycles for the Month for each .......... ..........
Delivered or Replacement Engine
(as applicable)
(i) Serial No. of Delivered APU ..........
(j) Serial No. of Replacement APU ..........
(if applicable)
(k) Serial No. of Installed APU ..........
(if different from (a) or (b) above)
(1) Current Location of Delivered or ..........
Replacement APU (as applicable)
(if not installed on Airframe)
(m) Total Time Since New of Delivered ..........
or Replacement APU (as applicable)
(n) Total Cycles Since New of Delivered ..........
or Replacement APU (as applicable)
(o) Total Hours for the Month for ..........
Delivered or Replacement APU
(as applicable)
(p) Total Cycles for the Month for ..........
Delivered or Replacement APU
(as applicable)
3. ROUTINE CHECKS / A.D. AND S.B. COMPLIANCE:
-----------------------------------------
(a) Routine Checks (A and above) performed during Month:
(b) Airworthiness Directives complied with during Month:
RECORDED
FEDERAL AVIATION ADMINISTRATION
DATE 5-17-01 TIME 8:05 AM
------------ ---------
CONVEYANCE NUMBER BB34836
--------------
BY ▇. ▇▇▇▇
-----------------------------
LEASE AMENDMENT 802 NO. 1
This Lease Amendment 802 No. 1, dated April 30, 2001 (this
"Amendment"), is between ACG Acquisition VIII LLC ("Lessor") and Aloha Airlines,
Inc. ("Lessee") and relates to the lease documents for one Boeing Model 737-2S5C
aircraft bearing manufacturer's serial number 22148 and U.S. registration ▇▇▇▇
N802AL, including two ▇▇▇▇▇ & ▇▇▇▇▇▇▇ Model JT8D-9A engines bearing
manufacturer's serial numbers P656093B and P665630B, which engines have 750 or
more rated takeoff horsepower (the "Aircraft").
RECITALS:
(1) Lessor is leasing the Aircraft to Lessee pursuant to Lease Agreement
802, dated January 15, 1997 (the "Original Lease Agreement"), between
Lessor and Lessee, as supplemented by Certificate of Acceptance 802,
dated January 15, 1997, between Lessor and Lessee (the "Acceptance
Certificate"). The Original Lease Agreement, as supplemented by the
Acceptance Certificate, is referred to in this Amendment as the Lease
Agreement.
(2) The Original Lease Agreement and the Acceptance Certificate were
recorded by the FAA and were assigned conveyance numbers by the FAA as
set forth on the attached Schedule 1.
(3) Lessor and Lessee wish to amend the Lease Agreement to extend the term
of the Lease Agreement for one year, to amend the monthly rent during
the extended term, to grant Lessee a further one-year extension option
and to make certain other changes as set forth in this Amendment.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable
consideration the receipt and sufficiency of which are acknowledged, Lessor and
Lessee agree as follows:
1. DEFINITIONS.
Capitalized terms used but not defined in this Amendment shall have the
meanings ascribed to such terms in the Lease Agreement.
2. AMENDMENT OF LEASE AGREEMENT.
The Lease Agreement is amended as follows:
(a) The definition of "Expiry Date" in Clause 1. 1 of the Lease
Agreement is amended and restated in its entirety as follows:
- 1 -
"September 25, 2002 or, if extended pursuant to Clause
4.1(b), September 25, 2003 or, if earlier than either of
those dates, as applicable, the date on which:
(a) the Aircraft has been redelivered in accordance
with this Agreement and all obligations of
Lessee have been satisfied; or
(b) the Lessor receives the Agreed Value following a
Total Loss and any other amounts then due and
owing in accordance with this Agreement."
(b) The definition of "Lender" in Clause 1.1 of the Lease Agreement
is amended to delete the words "FINOVA Capital Corporation, a
Delaware corporation, and".
(c) The definition of "Mortgage" in Clause 1. 1 of the Lease
Agreement and all references to "Mortgage" in the Lease
Agreement are deleted.
(d) The definition of "Security Deposit" in Clause 1.1 of the Lease
Agreement is amended and restated in its entirety as follows:
"the amount of $100,000".
(e) Clause 4.1(b) of the Lease Agreement is designated Clause
4.1(c), and a new Clause 4.1(b) is added to the Lease
Agreement as follows:
(b) By written notice delivered to Lessor on or
before December 26, 2001, Lessee may elect to
extend the scheduled "Expiry Date" by one year,
to September 25, 2003. Except as set forth in
the preceding sentence, there shall be no
renewals or extensions of the Term.
(f) Clause 5.3(b)(ii) of the Lease Agreement is amended and restated
in its entirety as follows:
"(ii) The Basic Rent payable in respect of each
subsequent Rental Period will be (1) for Rental
Periods ending on or before September 25, 2001,
the amount of $110,000, and (2) for Rental
Periods beginning on or after September 26,
2001, the amount of $80,000."
(g) Clause 5.4(a) of the Lease Agreement is amended and restated in
its entirety as follows:
"(a) All payments of Rent by the Lessee to the Lessor
under this Agreement will be made for value on
the due date, for the full amount due, in
Dollars and in same day funds, settled through
the New York Clearing House System or such other
funds as may for the time being be customary for
the settlement in New York City of payments in
Dollars by telegraphic transfer to the account
of the Lessor at Chase
- 2 -
Manhattan Bank, N.A., New York, New York, ABA
No. ▇▇▇▇▇▇▇▇▇, Account No. 249-500-335-765."
(h) The text of the plates required pursuant to Clause 8.7(d) of the
Lease Agreement is amended and restated in its entirety as
follows:
"This Aircraft/Engine is owned by ACG Acquisition VIII
LLC and is leased to Aloha Airlines, Inc. It may not be
operated by any other person without the prior written
consent of ACG Acquisition VIII LLC."
(i) Clause 15.10(b)(i) of the Lease Agreement is amended and
restated in its entirety as follows:
"(i) if to Lessor, to it at:
c/o Aviation Capital Group Corp.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Managing Director
Telefax No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Aviation Capital Group Corp.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Managing Director
Telefax No.: ▇▇▇-▇▇▇-▇▇▇▇."
(j) Clause 1(g) of Schedule 3 of the Lease Agreement is deleted, and
the text "[Intentionally Omitted]" is substituted in its place.
(k) Clause 3(a) of Schedule 3 of the Lease Agreement is amended to
add the following text after the word "removal" in the first
line: "(including removal for a hot section inspection)".
(1) Clause 2(a) of Schedule 4, Part 1 of the Lease Agreement is
amended to delete the words "Lender as sole loss payee" in the
third line and substitute the words "Lessor as sole loss payee".
3. RATIFICATION.
Except as amended in Section 2 above, the Lease Agreement remains in
full force and effect in accordance with its terms.
4. LESSEE'S REPRESENTATIONS AND WARRANTIES.
- 3 -
Lessee represents and warrants to Lessor as follows:
(a) After giving effect to this Amendment, (i) each of the
representations and warranties set forth in Clauses 2.1 and 2.2
of the Lease Agreement is true and correct in all respects as if
made on the date of this Amendment, and (ii) no Default or Event
of Default exists under the Lease Agreement.
(b) Lessee has the power to execute, deliver and perform, and has
taken all necessary corporate action to authorize the execution,
delivery and performance of, this Amendment and the other
agreements, instruments and documents to be executed by it in
connection with this Amendment. No consent or approval of any
Person, no consent or approval of any mortgagee, no waiver of
any Lien or light of distraint or other similar right and no
consent, license, certificate of need, approval, authorization
or declaration of, or filing with, any governmental authority,
bureau or agency is or will be required in connection with the
execution, delivery or performance by Lessee, or in connection
with the validity or enforcement against Lessee, of this
Amendment and the other agreements, instruments and documents
executed in connection with this Amendment, except for the
filing of this Amendment for recordation with the aircraft
registry of the FAA.
(c) The execution, delivery and performance by Lessee of this
Amendment and each of the agreements, instruments and documents
executed in connection with this Amendment to which it is a
party will not (i) violate any provision of law, (ii) conflict
with or result in a breach of any order, writ, injunction,
ordinance, resolution, decree or other similar document or
instrument binding on Lessee of any court or governmental
authority, bureau or agency, domestic or foreign, (iii) conflict
with or result in a breach of the certificate of incorporation
or by-laws of Lessee, (iv) create (with or without the giving of
notice or lapse of time, or both) a default under or breach of
any agreement, bond, note or indenture to which Lessee is a
party, by which Lessee is bound or by which any of its
properties or assets is affected, or (v) result in the
imposition of any Lien of any nature whatsoever upon any of the
properties or assets owned by or used in connection with the
business of Lessee.
(d) This Amendment and each of the other agreements, instruments and
documents executed in connection with this Amendment to which
Lessee is a party have been duly executed and delivered by
Lessee and constitute the valid and legally binding agreements
of Lessee, enforceable in accordance with their respective
terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other
similar laws, now or hereafter in effect, relating to or
affecting the enforcement of creditors' rights generally and
except that the remedy of specific performance and other
equitable remedies are subject to judicial discretion.
- 4 -
5. LESSOR'S REPRESENTATIONS AND WARRANTIES.
Lessor represents and warrants to Lessee as follows:
(a) After giving effect to this Amendment, each of the
representations and warranties set forth in Clause 2.4 of the
Lease Agreement is true and correct in all respects as if made
on the date of this Amendment.
(b) Lessor has the power to execute, deliver and perform, and has
taken all necessary limited liability company action to
authorize the execution, delivery and performance of, this
Amendment and the other agreements, instruments and documents to
be executed by it in connection with this Amendment. No consent
or approval of any Person, no consent or approval of any
mortgagee, no waiver of any Lien or right of distraint or other
similar right and no consent, license, certificate of need,
approval, authorization or declaration of, or filing with, any
governmental authority, bureau or agency is or will be required
in connection with the execution, delivery or performance by
Lessor, or in connection with the validity or enforcement
against Lessor, of this Amendment and the other agreements,
instruments and documents executed in connection with this
Amendment, except for the filing of this Amendment for
recordation with the aircraft registry of the FAA.
(c) The execution, delivery and performance by Lessor of this
Amendment and each of the agreements, instruments and documents
executed in connection with this Amendment to which it is a
party will not (i) violate any provision of law, (ii) conflict
with or result in a breach of any order, writ, injunction,
ordinance, resolution, decree or other similar document or
instrument binding on Lessor of any court or governmental
authority, bureau or agency, domestic or foreign, (iii) conflict
with or result in a breach of the certificate of formation or
operating agreement of Lessor, (iv) create (with or without the
giving of notice or lapse of time, or both) a default under or
breach of any agreement, bond, note or indenture to which Lessor
is a party, by which Lessor is bound or by which any of its
properties or assets is affected, or (v) result in the
imposition of any Lien of any nature whatsoever upon any of the
properties or assets owned by or used in connection with the
business of Lessor, except the Lien of the Security Trust
Agreement.
(d) This Amendment and each of the other agreements, instruments and
documents executed in connection with this Amendment to which
Lessor is a party have been duly executed and delivered by
Lessor and constitute the valid and legally binding agreements
of Lessor, enforceable in accordance with their respective
terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other
similar laws, now or hereafter in effect, relating to or
affecting the enforcement of creditors' rights generally and
except that the
- 5 -
remedy of specific performance and other equitable remedies are
subject to judicial discretion.
6. GOVERNING LAW.
This Amendment shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts executed in the
State of New York by residents of such State and to be performed
entirely within such State.
7. SUCCESSORS AND ASSIGNS.
This Amendment shall be binding upon, inure to the benefit of and be
enforceable by Lessor, Lessee, and their respective successors,
transferees and assigns. Neither Lessor nor Lessee shall assign or
delegate its rights and obligations under this Amendment except in
accordance with an assignment or delegation of its rights and
obligations under, and in accordance with the terms of, the Lease
Agreement, and any other purported assignment or delegation shall be
null and void AB INITIO.
8. SEVERABLE PROVISIONS.
The provisions of this Amendment are severable, and if any section or
provision shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect
only such section, provision or part in such jurisdiction and shall not
in any manner affect such section, provision or part in any other
jurisdiction or any other section or provision in this Amendment in any
jurisdiction.
9. COUNTERPARTS.
This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same Amendment.
10. EXPENSES.
Each of Lessor and Lessee shall bear its own expenses, including the
legal fees and expenses of its counsel, in connection with the
negotiation, execution and delivery of this Amendment and all other
documents executed and delivered in connection with this Agreement, and
Lessor and Lessee shall share equally the legal fees and expenses,
including filing fees, incurred by [▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇], special
counsel for FAA matters.
11. CHATTEL PAPER COUNTERPART.
TO THE EXTENT, IF ANY, THAT THE LEASE AGREEMENT, AS AMENDED BY THIS
AMENDMENT, CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE
UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY
- 6 -
11. CHATTEL PAPER COUNTERPART.
TO THE EXTENT, IF ANY, THAT THE LEASE AGREEMENT, AS AMENDED BY THIS
AMENDEMENT, CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE
UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO
SECURITY INTEREST IN THE LEASE AGREEMENT AS AMENDED BY THIS AMENDMENT
MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OF
THIS AMENDMENT OTHER THAN THE ORIGINAL COUNTERPART MARKED "CHATTEL PAPER
COUNTERPART".
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease Amendment
804 No. 1 on the date first above written.
ACG ACQUISITION VIII LLC, as Lessor
By: "R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇"
-------------------------------
Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: MANAGER
ALOHA AIRLINES, INC., as Lessee
By: "▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇"
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
By: "▇▇▇▇▇ ▇. ▇▇▇▇▇▇"
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President & CEO
- 7 -
Schedule 1
to Lease Amendment 802 No. 1
Description of Lease
Lease Agreement 802 dated January 15, 1997, between ACG Acquisition VIII
LLC as lessor and Aloha Airlines, Inc. as lessee, as supplemented by Certificate
of Acceptance 804 dated January 15, 1997, recorded by the Federal Aviation
Administration on January 27, 1997, as Conveyance No. TT008434.
- 8 -
LEASE AMENDMENT 802 NO. 2
This Lease Amendment 802 No. 2, dated as of November 9, 2001 (this
"Amendment"), is between ACG Acquisition VIII LLC ("Lessor") and Aloha Airlines,
Inc. ("Lessee") and relates to the lease documents for one Boeing Model 737-2S5C
aircraft bearing manufacturer's serial number 22148 and U.S. registration ▇▇▇▇
N802AL, including two ▇▇▇▇▇ & ▇▇▇▇▇▇▇ Model JT8D-9A engines bearing
manufacturer's serial numbers P656093B and P665630B, which engines have 750 or
more rated takeoff horsepower (the "Aircraft").
RECITALS:
(1) Lessor is leasing the Aircraft to Lessee pursuant to Lease Agreement
802, dated January 15, 1997 (the "Original Lease Agreement"), between
Lessor and Lessee, as supplemented by Certificate of Acceptance 802,
dated January 15, 1997, between Lessor and Lessee (the "Acceptance
Certificate") and as amended by Lease Amendment 802 No. 1, dated April
30, 2001, between Lessor and Lessee ("Amendment No. 1"). The Original
Lease Agreement, as supplemented by the Acceptance Certificate and
amended by Amendment No. 1, is referred to in this Amendment as the
Lease Agreement.
(2) The Original Lease Agreement, the Acceptance Certificate and Amendment
No. 1 were recorded by the FAA and were assigned conveyance numbers by
the FAA as set forth on the attached Schedule 1.
(3) Lessor and Lessee wish to amend the Lease Agreement to extend the term
of the Lease Agreement for approximately three months, to amend the
monthly rent during the remainder of the term and to make certain other
changes as set forth in this Amendment.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable
consideration the receipt and sufficiency of which are acknowledged, Lessor and
Lessee agree as follows:
1. DEFINITIONS.
Capitalized terms used but not defined in this Amendment shall have the
meanings ascribed to such terms in the Lease Agreement.
2. AMENDMENT OF LEASE AGREEMENT.
The Lease Agreement is amended as follows:
- 1 -
(a) The definition of "Agreed Value" in Clause 1.1 of the Lease
Agreement is amended to read "as set forth in Appendix 1".
(b) The definition of "Expiry Date" in Clause 1.1 of the Lease
Agreement is amended and restated in its entirety as follows:
"December 25, 2002 or, if extended pursuant to Clause 4.
1(b), December 25, 2003 or, if earlier than either of
those dates, as applicable, the date on which:
(a) the Aircraft has been redelivered in accordance
with this Agreement and all obligations of
Lessee have been satisfied; or
(b) the Lessor receives the Agreed Value following a
Total Loss and any other amounts then due and
owing in accordance with this Agreement."
(c) The definitions of "Letter of Credit" and "Security Deposit" in
Clause 1.1 of the Lease Agreement are deleted in their entirety,
and all references in the Lease Agreement to such terms shall
have no force or effect.
(d) Clause 4.1(b) of the Lease Agreement is amended and restated
in its entirety as follows:
"(b) By written notice delivered to Lessor on or
before June 26, 2002, Lessee may elect to extend
the scheduled "Expiry Date" by one year, to
December 25, 2003. Except as set forth in the
preceding sentence, there shall be no renewals
or extensions of the Term."
(e) Clause 5.1 of the Lease Agreement is deleted in its entirety.
(f) Clause 5.3(b)(ii) of the Lease Agreement is amended and restated
in its entirety as follows:
"(ii) The Basic Rent payable in respect of each
subsequent Rental Period will be the Basic Rent
Amount, as set forth in Appendix 1."
(g) The Lease Agreement is amended to add Appendix 1 in the form
attached to this Amendment as Schedule 2.
3. APPLICATION OF LETTER OF CREDIT.
Lessor is holding the Letter of Credit (as defined in the Lease
Agreement, without giving effect to Section 2(c) above). Lessor and
Lessee agree that Lessor shall be entitled to present
- 2 -
the Letter of Credit to the issuing bank, and that the resulting
proceeds paid to Lessor shall constitute payment in full for the Basic
Rent due for the Rental Periods beginning on or after September 26, 2001
and ending on or before December 25, 2001 under the Lease Agreement, as
amended by this Amendment. Lessee further agrees (a) notwithstanding the
effect of this Amendment, Lessor may represent to the bank issuing the
Letter of Credit that an Event of Default has occurred and may make such
other statements and representations as are necessary for drawing the
full amount under the Letter of Credit, and (b) Lessee shall take all
such actions and grant to Lessor and the issuing bank all such waivers
of the provisions of the Lease Agreement and the Letter of Credit as are
necessary for Lessor to draw the full amount under the Letter of Credit.
4. RATIFICATION.
Except as amended in Section 2 above, the Lease Agreement remains in
full force and effect in accordance with its terms.
5. LESSEE'S REPRESENTATIONS AND WARRANTIES.
Lessee represents and warrants to Lessor as follows:
(a) After giving effect to this Amendment, (i) each of the
representations and warranties set forth in Clauses 2.1 and 2.2
of the Lease Agreement is true and correct in all respects as if
made on the date of this Amendment, and (ii) no Default or Event
of Default exists under the Lease Agreement.
(b) Lessee has the power to execute, deliver and perform, and has
taken all necessary corporate action to authorize the execution,
delivery and performance of, this Amendment and the other
agreements, instruments and documents to be executed by it in
connection with this Amendment. No consent or approval of any
Person, no consent or approval of any mortgagee, no waiver of
any Lien or right of distraint or other similar right and no
consent, license, certificate of need, approval, authorization
or declaration of, or filing with, any governmental authority,
bureau or agency is or will be required in connection with the
execution, delivery or performance by Lessee, or in connection
with the validity or enforcement against Lessee, of this
Amendment and the other agreements, instruments and documents
executed in connection with this Amendment, except for the
filing of this Amendment for recordation with the aircraft
registry of the FAA.
(c) The execution, delivery and performance by Lessee of this
Amendment and each of the agreements, instruments and documents
executed in connection with this Amendment to which it is a
party will not (i) violate any provision of law, (ii) conflict
with or result in a breach of any order, writ, injunction,
ordinance, resolution, decree or other similar document or
instrument binding on Lessee of any
- 3 -
court or governmental authority, bureau or agency, domestic or
foreign, (iii) conflict with or result in a breach of the
certificate of incorporation or by-laws of Lessee, (iv) create
(with or without the giving of notice or lapse of time, or both)
a default under or breach of any agreement, bond, note or
indenture to which Lessee is a party, by which Lessee is bound
or by which any of its properties or assets is affected, or (v)
result in the imposition of any Lien of any nature whatsoever
upon any of the properties or assets owned by or used in
connection with the business of Lessee.
(d) This Amendment and each of the other agreements, instruments and
documents executed in connection with this Amendment to which
Lessee is a party have been duly executed and delivered by
Lessee and constitute the valid and legally binding agreements
of Lessee, enforceable in accordance with their respective
terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other
similar laws, now or hereafter in effect, relating to or
affecting the enforcement of creditors' rights generally and
except that the remedy of specific performance and other
equitable remedies are subject to judicial discretion.
6. LESSOR'S REPRESENTATIONS AND WARRANTIES.
Lessor represents and warrants to Lessee as follows:
(a) After giving effect to this Amendment, each of the
representations and warranties set forth in Clause 2.4 of the
Lease Agreement is true and correct in all respects as if made
on the date of this Amendment.
(b) Lessor has the power to execute, deliver and perform, and has
taken all necessary limited liability company action to
authorize the execution, delivery and performance of, this
Amendment and the other agreements, instruments and documents to
be executed by it in connection with this Amendment. No consent
or approval of any Person, no consent or approval of any
mortgagee, no waiver of any Lien or right of distraint or other
similar right and no consent, license, certificate of need,
approval, authorization or declaration of, or filing with, any
governmental authority, bureau or agency is or will be required
in connection with the execution, delivery or performance by
Lessor, or in connection with the validity or enforcement
against Lessor, of this Amendment and the other agreements,
instruments and documents executed in connection with this
Amendment, except for the filing of this Amendment for
recordation with the aircraft registry of the FAA.
(c) The execution, delivery and performance by Lessor of this
Amendment and each of the agreements, instruments and documents
executed in connection with this Amendment to which it is a
party will not (i) violate any provision of law, (ii) conflict
with or result in a breach of any order, writ, injunction,
ordinance,
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resolution, decree or other similar document or instrument
binding on Lessor of any court or governmental authority, bureau
or agency, domestic or foreign, (iii) conflict with or result in
a breach of the certificate of formation or operating agreement
of Lessor, (iv) create (with or without the giving of notice or
lapse of time, or both) a default under or breach of any
agreement, bond, note or indenture to which Lessor is a party,
by which Lessor is bound or by which any of its properties or
assets is affected, or (v) result in the imposition of any Lien
of any nature whatsoever upon any of the properties or assets
owned by or used in connection with the business of Lessor,
except the Lien of the Security Trust Agreement.
(d) This Amendment and each of the other agreements, instruments and
documents executed in connection with this Amendment to which
Lessor is a party have been duly executed and delivered by
Lessor and constitute the valid and legally binding agreements
of Lessor, enforceable in accordance with their respective
terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other
similar laws, now or hereafter in effect, relating to or
affecting the enforcement of creditors' rights generally and
except that the remedy of specific performance and other
equitable remedies are subject to judicial discretion.
7. GOVERNING LAW.
This Amendment shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts executed in the
State of New York by residents of such State and to be performed
entirely within such State.
8. SUCCESSORS AND ASSIGNS.
This Amendment shall be binding upon, inure to the benefit of and be
enforceable by Lessor, Lessee, and their respective successors,
transferees and assigns. Neither Lessor nor Lessee shall assign or
delegate its rights and obligations under this Amendment except in
accordance with an assignment or delegation of its rights and
obligations under, and in accordance with the terms of, the Lease
Agreement, and any other purported assignment or delegation shall be
null and void AB INITIO.
9. SEVERABLE PROVISIONS.
The provisions of this Amendment are severable, and if any section or
provision shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect
only such section, provision or part in such jurisdiction and shall not
in any manner affect such section, provision or part in any other
jurisdiction or any other section or provision in this Amendment in any
jurisdiction.
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10. COUNTERPARTS.
This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same Amendment.
11. EXPENSES.
Each of Lessor and Lessee shall bear its own expenses, including the
legal fees and expenses of its counsel, in connection with the
negotiation, execution and delivery of this Amendment and all other
documents executed and delivered in connection with this Agreement, and
Lessor and Lessee shall share equally the legal fees and expenses,
including filing fees, incurred by ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, special
counsel for FAA matters.
12. CHATTEL PAPER COUNTERPART.
TO THE EXTENT, IF ANY, THAT THE LEASE AGREEMENT, AS AMENDED BY THIS
AMENDMENT, CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE
UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO
SECURITY INTEREST IN THE LEASE AGREEMENT AS AMENDED BY THIS AMENDMENT
MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OF
THIS AMENDMENT OTHER THAN THE ORIGINAL COUNTERPART MARKED "CHATTEL PAPER
COUNTERPART".
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease Amendment
802 No. 2 as of the date first above written.
ACG ACQUISITION VIII LLC, as Lessor
By: "▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇"
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Manager
ALOHA AIRLINES, INC., as Lessee
By: _______________________________
Name:
Title:
By: _______________________________
Name:
Title:
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IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease Amendment
802 No. 2 as of the date first above written.
ACG ACQUISITION VIII LLC, as Lessor
By:
----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Manager
ALOHA AIRLINES, INC., as Lessee
By: "▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇"
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: EXECUTIVE VICE PRESIDENT & CFO
By: "▇▇▇▇▇ ▇. ▇▇▇▇"
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: SENIOR VICE PRESIDENT PLANNING
AND BUSINESS DEVELOPMENT
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Schedule 1
to Lease Amendment 802 No. 2
Description of Lease
Lease Agreement 802, dated January 15, 1997, between ACG Acquisition
VIII LLC as lessor and Aloha Airlines, Inc. as lessee, as supplemented by
Certificate of Acceptance 804 dated January 15, 1997, recorded by the Federal
Aviation Administration on January 27, 1997, as Conveyance No. TT008434.
Lease Amendment 802 No. 1, dated April 30, 2001,
between ACG Acquisition VIII LLC as lessor and Aloha
Airlines, Inc. as lessee, recorded by the Federal
Aviation Administration on May 17, 2001 as Conveyance No.
BB34836.
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Schedule 2
to Lease Amendment 802 No. 2
[INTENTIONALLY OMITTED AS CONTAINING CONFIDENTIAL INFORMATION]1
APPENDIX 1 TO LEASE AGREEEMENT 802
ADDITIONAL DEFINITIONS
In addition to the definitions set forth in Clause 1.1, the following
expressions shall have the following respective meanings in this Agreement:
AGREED VALUE $5,000,000
BASIC RENT AMOUNT means (1) for Rental Periods ending on or before
September 25, 2001, the amount of $110,000, (2) for
Rental Periods beginning on or after September 26, 2001
and ending on or before December 25, 2001, the amount of
$33,333.33, and (3) for Rental Periods beginning on or
after December 26, 2001, the amount of $90,000.
---------------
1 For inclusion on FAA filed copies of this Amendment in lieu of the following
information.
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