EXHIBIT 10.52
AIRCRAFT LEASE AGREEMENT
BETWEEN
AIRCRAFT NO. 2, L.L.C.
AND
ALOHA AIRLINES, INC.
Counterpart No. 2 of 3 serially numbered manually executed
counterparts. To the extent, if any that this Lease constitutes
chattel paper under the UCC, no security interest in this Lease
may be created through the transfer and possession of any
counterpart other than Counterpart No. 1
TABLE OF CONTENTS
1. LEASE AND TERM, NET LEASE
2. DELIVERY AND RETURN OF AIRCRAFT
3. CHARGES
4. LIMITED WARRANTY, DISCLAIMER
5. SET-OFF; ABATEMENT
6. OPERATION, MAINTENANCE, REGISTRATION, and RECORDS
7. MODIFICATION OF THE AIRCRAFT
8. INSPECTION AND RECORDS
9. TAXES
10. INDEMNITY
11. LOSS OF OR DAMAGE TO AIRCRAFT, AGREED VALUE
12. INSURANCE
13. COMPLIANCE WITH LAWS
14. TITLE TO AIRCRAFT
15. ASSIGNMENT OR SUBLEASE; POSSESSION AND USE
16. EVENTS OF DEFAULT
17. REMEDIES
18. EXCUSABLE
19. DELAY IN RETURN OF AIRCRAFT
20. APPLICABLE LAW AND JURISDICTION
21. NOTICES
22. HEADINGS
23. CONFIDENTIALITY
24. REPRESENTATIONS, WARRANTIES AND COVENANTS
25. ASSIGNMENT AND COOPERATION WITH LESSOR'S LENDER
26. ENTIRE AGREEMENT
27. MISCELLANEOUS
28. BROKERS/FINDERS
29. SECURITY DEPOSIT
30. NO PURCHASE OPTION; NO HUSH KIT FINANCING
31. AUTHORIZATION; LESSEE'S CONDITIONS PRECEDENT
32. AUTHORIZATION; LESSOR'S CONDITIONS PRECEDENT
EXHIBIT A DESCRIPTION OF AIRCRAFT
EXHIBIT B RECORDS
EXHIBIT C REDELIVERY CONDITIONS
EXHIBIT D DELIVERY RECEIPT
EXHIBIT E REDELIVERY RECORDS
EXHIBIT F FORM OF LETTER OF CREDIT
EXHIBIT G PERMITTED SUBLESSEES
EXHIBIT H FINANCIAL TERMS
EXHIBIT I FORM OF LEASE SUPPLEMENT
EXHIBIT J ADDITIONAL ▇▇▇▇ OF WORK
1A. Summary of Transaction
The following is a summary of the lease transaction between Lessee and
Lessor. It is set forth for the convenience of the parties only and will not be
deemed in any way to amend, detract from or simplify the other provisions of
this Lease.
A. Description of Aircraft
One Boeing 737-282A, SN 23045, U.S. Reg N824AL
B. Scheduled Delivery Date and Location
On or Before March 15, 1998; over International Waters near
Christchurch Base, New Zealand
C. Basic Lease Term
96 Months from the Basic Lease Term Commencement Date
D. Security Deposit
As set forth in Exhibit H
E. Rent during the Basic Lease Term
See Exhibit H
F. Country of Aircraft Registration
United States
G. Initial Agreed Value of Aircraft
U.S. $11,000,000
▇. ▇▇▇▇▇▇'▇ Bank Account
▇▇▇▇▇▇▇ Bank
Miami Lakes, FL
Acct# 1596591379
ABA# ▇▇▇▇▇▇▇▇▇
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AIRCRAFT LEASE AGREEMENT.
THIS AGREEMENT, made and entered into as of the 11th day of
August, 1997, by and between AIRCRAFT NO. 2, L.L.C.,
(hereinafter referred to as "Lessor") and ALOHA AIRLINES,
INC., a Delaware corporation (hereinafter referred to as
"Lessee").
WITNESSETH:
WHEREAS, Lessor is the owner of the aircraft described in Exhibit A.
The aircraft, together with the engines, parts and equipment installed thereon,
including any replacements or substitutions therefor and (where the context
permits) the Records furnished herewith and required to be maintained hereunder,
are hereinafter collectively referred to as the "Aircraft"; and
WHEREAS, Lessee desires to hire and take from Lessor for operation and
Lessor is willing to lease to Lessee the Aircraft under the terms and conditions
hereinafter set forth;
NOW, THEREFORE, for and in consideration of the premises and of the
mutual covenants and agreements herein contained, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. LEASE AND TERM; NET LEASE
A. Subject to the provisions of this Agreement, Lessor agrees to and
does hereby lease to Lessee and Lessee agrees to and does hereby hire and take
from Lessor the Aircraft for a term commencing on the Delivery Date and ending
ninety-six (96) months after the Basic Lease Term Commencement Date (the
"Expiration Date"). The Term shall consist of (i) the Interim Term (which means
the period commencing on the Delivery Date of the Aircraft and ending on the
date immediately prior to the Basic Lease Term Commencement Date), (ii) the
Basic Lease Term (the ninety-six (96) month period referenced above), and (iii)
if actually entered into, any Renewal Term, as hereinafter defined. The Basic
Lease Term Commencement Date means the first day of the month following the
month in which the Delivery Date occurs. The Delivery Date means the date on
which Lessor delivers the Aircraft to Lessee and the Lease Supplement is
executed by Lessor and Lessee ("Delivery"). Lessor will furnish Lessee with 72
hours notice of intended delivery. Lessor and Lessee anticipate that the
Delivery Date will be on or before March 15, 1998 provided, however that Lessor
will have no responsibility or liability for any delay in delivering the
Aircraft or failure to deliver the Aircraft for reasons other than willful
default of Lessor, including but not limited to, the failure of the current
lessee, Transportes Aeros Portugueses, S.A. ("TAP"), to redeliver the Aircraft
to Lessor at the time and in the condition required by Lessor's lease with TAP.
The delivery to and acceptance of the Aircraft by Lessee will be confirmed by
execution of a lease supplement in the form of Exhibit I hereto. The Aircraft
shall be used by Lessee for the carriage of passengers, mail and freight in its
operations as an air carrier certified by the Federal Aviation Administration
("FAA") and for no other purposes whatsoever except for flight crew training;
provided however, any training or check
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flights performed with the Aircraft shall not exceed the average training/check
flights performed in other aircraft in Lessee's fleet. In no event shall the
Aircraft be operated in any area excluded from coverage by any insurance policy
required to be in effect with respect to the Aircraft under Section 12 hereof
B. At Delivery the Aircraft will be equipped with two (2) ▇▇▇▇▇ and
▇▇▇▇▇▇▇ model JT8D-9A engines each of which has 750 or more rated take off
horsepower, or the equivalent thereof (individually, an "Engine" and
collectively the "Engines"), and with the major components as described in
Exhibit A. Lessor will perform at its expense all necessary conversions from
metric to US measurements for manuals, supplements and any other documents, in
order for the Aircraft to be operated. Lessor will retain all parts removed from
the Aircraft as a result of such conversion.
▇. ▇▇▇▇▇▇ shall deliver and Lessee shall accept the Aircraft on the
Delivery Date in the following condition:
a. The Aircraft will have a U.S. Certificate of Airworthiness, a
fresh TAP "C" Check (Lessee shall be entitled to observe and will be notified by
Lessor of the performance of the C Check), TCAS and windshear installed, Hexcel
Interiors 737-200 PAX Quikbin Interior Kit, and having all Airworthiness
Directives ("ADs") requiring compliance by the FAA complied with.
b. The Aircraft will be painted in Lessee's livery. Lessee shall
supply the paint and the Pounce Pattern.
C. The Aircraft will have at least 3,000 hours remaining on the
Airframe's structural inspection.
d. Intentionally Omitted.
e. The APU, landing gear and time controlled components shall be in
a condition as delivered by TAP to Lessor.
f. The Lessor will perform the work set forth in Exhibit J on the
Aircraft prior to delivery to Lessee (the "Additional ▇▇▇▇ of Work"). Lessee
will reimburse Lessor for the Additional ▇▇▇▇ of Work by means of Supplemental
Rental.
g. The Aircraft otherwise shall be delivered to Lessee in an "AS
IS, WHERE IS" condition over International Waters near Air New Zealand's
maintenance facility located in Christchurch Base, New Zealand (or another
location as agreed by the parties, if required to reduce tax liability).
h. All SI inspection items required to be performed through 22,400
flight hours will be performed (compliance without sampling) prior to delivery
and no individual SI items will fall due within the next 4000 flight hours.
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i. All Engineering Orders that have been applied to the Aircraft
and maintenance records required for issuance of the U.S. Certificate of
Airworthiness and U.S. Registration will have been translated into English.
These will include AD's, major repairs and major alterations.
j. The Aircraft will be delivered without seats or galleys.
k. The Aircraft will have no maintenance deferrals, all non-routine
maintenance items discovered during the TAP C check will have been performed,
(upon completion of such C check, the Aircraft will have no required maintenance
items in a deferred status, including but not limited to, any structural
repairs, corrosion, skin replacement requirements, or crack propagation).
l. All AD's will either be terminated or cleared for inspection for
a minimum of eighteen (18) months from the delivery date except for those
inspections required more frequently than every eighteen months in which case
that AD will be cleared for inspection for the applicable maximum period between
inspections.
D. Provided Lessee is not in default hereunder, Lessee may extend the
term of the lease for a one (1) year period ("Renewal Term") following
expiration of the Basic Lease Term stated in Section 1.A. hereof. Lessee shall
notify Lessor of its desire to extend said term not less than one hundred eighty
(180) days prior to expiration of the Basic Lease Term. Base Rental and Variable
Rental, as hereinafter defined, during the Renewal Term will be at the greater
of the then Fair Market Rental Value as hereinafter defined or the Base Rental
rates. Fair Market Rental Value means the amount agreed by Lessor and Lessee as
the price at which an aircraft of the type, age and condition of the Aircraft
could be leased in an orderly transaction under prevailing market conditions
between a willing Lessee and a willing Lessor on the date of such determination.
If Lessor and Lessee are unable to agree on such amount then the Lessor and
Lessee shall each select an independent appraiser skilled in evaluating
aircraft, who shall jointly make the determination of such amount. If Lessor's
and Lessee's appraisers are unable to agree on the Fair Market Rental Value of
the Aircraft, then such appraisers shall select a third appraiser who shall make
the determination. The determination of the independent appraiser(s) shall be
binding and conclusive on Lessor and Lessee. In all cases, Lessor and Lessee
shall bear the cost of the appraiser selected by them and shall share equally in
the cost of retaining the third independent appraiser, if required, to make such
determination.
E. The Lease is net to Lessor. Lessee will pay all Base Rental,
Variable Rental, Supplemental Rental, costs, charges, fees and expenses in
connection with the delivery of Hexcel Interiors 737-200 PAX Quikbin Interior
Kit, use, possession and operation of the Aircraft, including maintenance,
insurance, state and local taxes (except for taxes with respect to which Lessee
is not obligated to indemnify Lessor under Section 9), and risk of loss or other
casualty. Such obligations of Lessee will be absolute and unconditional under
any and all circumstances and regardless of other events, including any of the
following:
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(a) Any right of set-off, counterclaim, recoupment, defense or
other right (including any right of reimbursement) which Lessee may have against
Lessor, or any other person for any reason whatsoever, including any claim
Lessee may have for the foregoing.
(b) Unavailability or interruption in use of the Aircraft for any
reason, including a requisition thereof or any prohibition or interference with
or other restriction against Lessee's use, operation or possession of the
Aircraft (whether by Law, as hereinafter defined, or otherwise); any defect in
airworthiness, merchantability, fitness for any purpose, condition, design,
specification or operation of any kind or nature of the Aircraft; the
ineligibility of the Aircraft for any particular use or trade or for
registration or documentation under the Laws of any jurisdiction; or Total Loss
of the Aircraft; however, Lessee's obligation to pay Base Rental in the event of
Total Loss of the Aircraft shall terminate upon Lessor's receipt of the Agreed
Value of the Aircraft in accordance with Article I I hereof.
(c) Insolvency, bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, liquidation, receivership, administration or
similar proceedings by or against Lessor, Lessee or any other person.
(d) Invalidity or unenforceability or lack of due authorization of
or other defect in this Lease.
(e) Failure or delay on the part of any party to perform its
obligations under this Lease.
(f) Other cause which but for this provision would or might have
the effect of terminating or in any other way affecting any obligation of Lessee
hereunder.
F. Nothing in the foregoing Section 1E is intended as a waiver of any
rights of Lessee to bring a separate action for default by Lessor of any of its
obligations hereunder.
2. DELIVERY AND RETURN OF AIRCRAFT
A. The Aircraft, together with all pertinent log books, flight manuals
and other documents as described in Exhibit B, attached hereto and made a part
hereof (the "Records"), shall be delivered by Lessor to Lessee on the Delivery
Date of this lease over International Waters near Christchurch Base, New Zealand
or at such other location as is determined pursuant to Section l.C.g.
(hereinafter referred to as the "Delivery Point").
(a) Upon request by Lessee, Lessor will provide Lessee with a
demonstration flight of at least one hour, but less than two hours, duration,
prior to delivery of the Aircraft. If a demonstration flight is required prior
to delivery, it will be performed by and under the control of Lessor, with
Lessee's Right crew and/or other authorized personnel (not to exceed 3) on board
as observers if desired by Lessee. Lessor's captain will be the pilot in command
and will have the authority to cancel or terminate any flight at his discretion
short of one hour's duration without
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incurring any liability for Lessor. If any such flight is canceled or terminated
short of one hour's duration, it will be rescheduled at a mutually agreeable
time.
(b) Lessor will bear the costs of the demonstration flight
including but not limited to costs of crew, special insurance for such flight,
fuel and take off and landing rights.
(c) The demonstration flight will be for the sole purpose of
demonstrating to the Lessee the satisfactory operation of the Aircraft and its
equipment and systems. The demonstration flight will be conducted in accordance
with mutually acceptable procedures. Lessor will at its expense correct
Discrepancies (conditions exceeding manufacturer's specifications) revealed
during the demonstration flight.
(d) The Engines shall undergo a video borescope inspection and
power assurance run at or immediately prior to time of the demonstration flight
performed at Lessor's expense with Lessee as an observer. Any Discrepancies
found not to be in compliance with the manufacturer's maintenance manual shall
be corrected at Lessor's expense.
B. Upon expiration or termination of this Lease, Lessee will redeliver
the Aircraft at a mutually agreeable location in the continental United States
(the "Redelivery Location"). Subject to Section 6, upon redelivery of the
Aircraft, the Aircraft shall be in an airworthy condition in accordance with FAA
standards, without any maintenance deferrals, with a valid FAA certificate of
airworthiness in effect with respect thereto, in conformance with Federal
Aviation Regulations ("FAR") Part 12 1, and otherwise with the same equipment
and in the same condition and configuration as when delivered to Lessee, except
for reasonable wear and tear due to ordinary use. Notwithstanding anything
herein to the contrary, upon return the Aircraft will not be in compliance with
FAR Part 36 and ICAO 16 Chapter 3. In addition, the Aircraft upon completion of
the redelivery acceptance inspection (i) will be free and clear of all Liens, as
hereinafter defined, which result from Lessee's actions or inactions, (ii) will
be fresh from a full "C" check performed by Lessee, under Lessee's FAA approved
maintenance and structural programs including CPCP and all required non-routine
maintenance items discovered during such "C" check, without any deferrals will
have been performed, (upon completion of the "C" check, the Aircraft shall have
no required maintenance items in a deferred status, including but not limited to
any structural repairs, corrosion, skin replacement requirements, or crack
propagation discovered prior to or during the "C" check in accordance with
Lessee's Maintenance Program, and FAA Requirements), (iii) will be painted in
the livery designated by Lessor, and (iv) will meet the conditions listed in
Exhibit C. Upon Redelivery, all AD's will either be terminated or cleared for
inspection for a minimum of eighteen (18) months from the redelivery date except
for those inspections required more frequently than every eighteen (18) months,
in which case that AD will be cleared for inspection for the applicable maximum
period between inspections. If the Aircraft is not returned in the condition
required under this Agreement upon expiration or termination of this Lease,
unless lost, destroyed or so damaged as to constitute a constructive total loss
for insurance purposes, the provisions of this Agreement shall continue in full
force and effect with respect to the rights of Lessor and the obligations of
Lessee, including, without limitation, Lessee's obligation to pay rental at 150%
of the monthly rate and other
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charges set forth in Section 19 and to maintain insurance as set forth herein,
without prejudice to any other rights or remedies of Lessor.
C. At least fourteen (14) days prior to redelivery of the Aircraft,
Lessee, at its expense, will make the Aircraft available to Lessor for
inspection and at least twenty-one (21) days prior to such redelivery, Lessee
will make the Records available to Lessor for inspection ("Final Inspection") to
permit Lessor to verify that the condition of the Aircraft and Records complies
with the terms hereof. The period allowed for the Final Inspection shall be of
such duration as to permit the conduct by Lessor of the following:
(a) Inspection of Records;
(b) Inspection of the Aircraft, Engines (including a full video
engine borescope inspection) and Parts;
(c) A test flight of at least one hour but not more than two hours
(at Lessor's option, the first hour of the redelivery flight will constitute the
test flight) duration. The test flight will be performed by and under the
control of Lessee, with up to three of Lessor's authorized personnel on board as
observers. Lessee will bear the cost of the test flight including but not
limited to costs of crew, insurance, fuel, takeoff and landing rights. Lessee
will at its expense correct Discrepancies revealed during the test flight.
(d) The Engines shall undergo a video borescope inspection and
power assurance run at or before time of the redelivery test Right performed at
Lessee's expense with Lessor as an observer. Any Discrepancies found not to be
in compliance with the manufacturer's maintenance manual shall be corrected at
Lessee's expense.
If the condition of the Aircraft upon such Final Inspection does not
conform to the terms hereof, Lessee at its own expense will bring the Aircraft
into compliance. To the extent the time for such rectification extends beyond
the expiration date of the Lease, the term hereof shall be deemed automatically
extended, except that Lessee will pay monthly rental at 150% of the Base Rental
and 150% of the Variable Rental and the provisions hereof shall remain in force
until such rectification has been accomplished, unless Lessor terminates the
Lease in writing at its sole option.
D. Each transfer of possession of the Aircraft between the parties
shall be accompanied by the delivery to the transferring party of a receipt in
the form of Exhibit D attached hereto, executed by an authorized representative
of the receiving party.
E. Redelivery of the Aircraft under this Agreement will occur upon
physical redelivery of the Aircraft to Lessor at the Redelivery Location upon
execution and delivery by Lessor to Lessee of an aircraft redelivery receipt in
the form of Exhibit ▇. ▇▇▇▇▇▇ shall sign and deliver such receipt to Lessee upon
tender of delivery of the Aircraft to Lessor at the Redelivery Location in
compliance with all of the terms and conditions hereof.
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F. Lessee will ensure that at return of the Aircraft any and all
airport, navigation and other charges, including but not limited to Eurocontrol
charges, which give rise or may if unpaid give rise to any lien, claim, charge
or encumbrance, right of detention, right of sale or other security interest in
relation to the Aircraft, any Engine or any Part, whether incurred in respect of
the Aircraft or any other aircraft operated by Lessee, have been paid and
discharged in full (whether or not due) and will at Lessor's request produce
evidence thereof satisfactory to Lessor.
3. CHARGES
See Exhibit H.
4. LIMITED WARRANTY; DISCLAIMER
A. Lessor warrants that it will have good title to the Aircraft, free
and clear of all liens and encumbrances other than the lien of Lessor's Lender,
at the time of delivery to Lessee.
B. THE AIRCRAFT IS LEASED TO AND ACCEPTED BY LESSEE IN "AS IS"
CONDITION AND WITH ALL FAULTS. LESSOR MAKES NO WARRANTIES WHATSOEVER WITH
RESPECT TO THE AIRCRAFT, EXPRESS OR IMPLIED, EXCEPT THE WARRANTY AS TO TITLE
APPEARING IN SECTION 4A ABOVE.
C. THE WARRANTIES SET FORTH IN THIS SECTION 4 AND THE OBLIGATIONS AND
LIABILITIES OF LESSOR THEREUNDER, ARE EXPRESSLY IN LIEU OF AND LESSEE HEREBY
WAIVES AND RELEASES LESSOR FROM ANY AND ALL OTHER WARRANTIES, AGREEMENTS,
GUARANTEES, CONDITIONS, DUTIES, OBLIGATIONS, REMEDIES OR LIABILITIES, EXPRESS OR
IMPLIED, ARISING BY LAW OR OTHERWISE, INCLUDING WITHOUT LIMITATION ANY WARRANTY
OF MERCHANTABILITY AND FITNESS FOR INTENDED USE OR LOSS OF USE OR STRICT
LIABILITY IN TORT, WITH RESPECT TO ANY EQUIPMENT LEASED HEREUNDER OR LESSOR'S
PERFORMANCE HEREUNDER. NO AGREEMENT OR UNDERSTANDING VARYING, ALTERING OR
EXTENDING LESSOR'S LIABILITY WILL BE BINDING ON LESSOR UNLESS IN WRITING AND
SIGNED BY LESSEE'S AND LESSOR'S DULY AUTHORIZED OFFICER OR REPRESENTATIVE.
▇. ▇▇▇▇▇▇ will assign to Lessee any assignable warranties of overhaul
agencies performing any predelivery work for Lessor on the Aircraft and/or
Engines. In the event that Lessor contracts for performance of work on the
Aircraft or Engines prior to delivery, Lessor will use good faith efforts to
obtain industry standard warranties for that work and to assign such warranties
to Lessee.
5. SET-OFF; ABATEMENT
All payments provided for herein shall be paid without set-off,
defense, counterclaim or deduction of any nature whatsoever arising from this or
any other transaction or relationship, direct or indirect, which may exist
between the parties, except for taxes imposed on Lessee as a
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result of this Lease with respect to which Lessee is not obligated to indemnify
Lessor under Section 9. There shall be no abatement of Base Rental, Variable
Rental, Supplemental Rental, or other charges payable hereunder for any period
that the Aircraft shall be out of use or unserviceable for any reason
whatsoever, including by way of illustration but not by way of limitation, while
undergoing maintenance, suspension of certification or grounding of the Aircraft
resulting from fire, casualty, or administrative action or revocation or
limitation of government approval, license or permit. If Lessee is prohibited by
Law from making payment in full to Lessor, Lessee will gross up the payment
amount such that the net payment received by Lessor after any deduction or
withholding equals the amounts called for under this Lease. "Law" means any (i)
statute, decree, constitution, regulation, order or any directive of any
government entity, (ii) treaty, pact, compact or other agreement to which any
government entity is a signatory or party and (iii) judicial or administrative
interpretation or application. Nothing in this Section 5 is intended as a waiver
of any rights of Lessee to bring a separate action for default by Lessor of any
of its obligations hereunder.
6. OPERATION, MAINTENANCE, REGISTRATION, and RECORDS
A. Lessee shall conduct all flight operations of the Aircraft only with
properly qualified and properly certified flight crews and in accordance with
(i) the manufacturers recommended operating procedures and manuals and
instructions in effect from time to time, (ii) applicable rules, regulations and
requirements of the government of the United States of America, including
specifically, the FAA, and (iii) the applicable rules, regulations and
requirements of any other jurisdiction in which the Aircraft may be operated.
B. During the Term, Lessee, at its sole cost and expense, will service,
repair, overhaul and maintain the Aircraft in accordance with applicable
requirements of all U.S. governmental agencies including the FAA. In addition,
Lessee will (i) keep the Aircraft in as good operating condition as when
delivered to Lessee, reasonable wear and tear from ordinary use excepted, (ii)
keep the Aircraft in such condition as may be necessary to enable the
airworthiness certification for the Aircraft to be maintained in good standing
at all times under the laws of the United States, and (iii) maintain the
Aircraft in at least the same manner as Lessee maintains, services, repairs or
overhauls similar aircraft operated by Lessee without in any way discriminating
against the Aircraft, whether by reason of its leased status or otherwise;
provided however, that nothing in the foregoing shall be deemed to expand
Lessee's obligations or return of the Aircraft beyond the return provisions
expressly set forth herein. The Aircraft shall be maintained in accordance with
Lessee's FAA approved maintenance program. Such maintenance will include without
limitation all scheduled and unscheduled overhaul and maintenance, including
line maintenance, and replacement of components, parts, and Engines as may be
required. In addition, Lessee will replace or repair any loss or damage to the
Aircraft, regardless of cause. Lessee will fully comply, at its sole cost and
expense, with all instructions and Airworthiness Directives of the FAA falling
due during the Term ("AD") and will comply at its sole cost and expense with all
Alert Service Bulletins (service bulletins issued by the manufacturer requiring
compliance) falling due during the Term, all in accordance with the terms
thereof in the same manner as Lessee complies with such AD's and Alert Service
Bulletins on similar aircraft operated by
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Lessee without in any way discriminating against the Aircraft, whether by reason
of its leased status or otherwise.
C. Lessee, at its own cost and expense, will promptly replace or cause
to be replaced all Parts which may from time to time become unserviceable, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use for any reason whatsoever. All replacement Parts shall be
owned by Lessee free and clear of all Liens, except replacement Parts
temporarily installed on an emergency basis (Lessee will notify Lessor of any
such emergency replacement involving a Lien or Liens in excess of Ten Thousand
Dollars ($10,000. 00)), and shall be in as good operating condition as, and
shall have a value and utility at least equal to, and be in a modification
status and part number equal or greater than, the Parts replaced assuming such
replaced Parts were in the condition and repair required to be maintained by the
terms hereof. All Parts at any time removed from the Aircraft or any Engine
shall remain the property of the Lessor, no matter where located, until such
time as such Parts shall be replaced by Parts which meet the requirements for
replacement Parts specified above. Immediately upon any replacement Part
becoming incorporated or installed in or attached to the Aircraft or any Engine,
without further act, except replacement Parts temporarily installed on an
emergency basis, (i) such replacement Part shall become the property of Lessor
and shall become subject to this Lease and be deemed a Part for all purposes
hereof to the same extent as the Parts originally incorporated or installed in
or attached to the Aircraft or such Engine, and (ii) the replaced Part shall no
longer be the property of Lessor and shall no longer be deemed a Part hereunder
and provided Lessee is not in default, title to such removed Part shall transfer
to Lessee free and clear of Liens, except for Liens created by or through
Lessee. "Parts" means all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature other than
complete Engine or Engines, which are from time to time incorporated or
installed in or attached to the Aircraft or any Engine. Lessee, at its own
expense, may from time to time make such alterations and modifications in and
additions to the Aircraft or any Engine as Lessee may deem desirable in the
proper conduct of its business, including removal of parts which Lessee deems to
be obsolete or no longer suitable or appropriate for use on the Aircraft or such
Engine ("Obsolete Parts"); provided that no such alteration, modification,
removal or addition impairs the condition or airworthiness of the Aircraft or
such Engine, or diminishes the value, utility or remaining useful life of the
Aircraft or such Engine below the value, utility or remaining useful life
thereof immediately prior to such alteration, modification, removal or addition
assuming the Aircraft or such Engine was then in the condition required to be
maintained by the terms of this Lease. All Parts incorporated or installed in or
attached or added to the Aircraft or an Engine as the result of such or addition
(except those parts which Lessee has leased from others and which may be removed
by Lessee pursuant to the next sentence) (the "Additional Parts") shall, without
further act, become the property of Lessor. Notwithstanding the foregoing
sentence, Lessee may, at any time during the Term, so long as no Event of
Default shall have occurred and be continuing, remove or suffer to be removed
any Additional Part, provided that such Additional Part (i) is in addition to,
and not in replacement of or substitution for, any Part originally incorporated
or installed in or attached to such Aircraft or any Engine at the time of
delivery thereof hereunder or any Part in replacement of or substitution for any
such Part, (ii) is not required to be incorporated or installed in or attached
or added to the Aircraft or any Engine pursuant to the terms of Section 6 hereof
and (iii) can be removed from
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the Aircraft or such Engine without impairing airworthiness or diminishing the
value, utility or remaining useful life of the Aircraft or such Engine which the
Aircraft or such Engine would have had at such time had such alteration,
modification or addition not occurred. Upon the removal thereof as provided
above, such Additional Part shall no longer be deemed the property of Lessor or
part of the Aircraft or Engine from which it was removed. Any Additional Part
not removed as above provided prior to the return of the Aircraft or Engine to
Lessor hereunder shall remain the property of Lessor. Notwithstanding the above,
Lessee shall be permitted to install leased galleys and seats (the "Special
Equipment") on the Aircraft. Lessor agrees that it will claim no interest in the
Special Equipment.
▇. ▇▇▇▇▇▇ will cause the Aircraft to be registered in the name of
Lessor under regulations of the United States throughout the Term. Lessee will
assist Lessor in maintaining such registration during the Term. Lessee shall at
its own expense and responsibility cause this Agreement or appropriate financing
statements, so far as permitted by applicable law or regulation, to be kept
filed and recorded at all times during the Term, in such office or offices for
the registration of aircraft in the United States and in such other offices as
may be necessary, or as Lessor may reasonably request, to protect and preserve
Lessor's rights hereunder, and shall on request furnish to Lessor an opinion of
counsel or other evidence satisfactory to Lessor of such filing and recording.
E. (i) Lessee will maintain complete and accurate records, logs and
other materials required to be maintained in respect of the Aircraft by the FAA
and will provide them to Lessor on reasonable request. In addition, the Records
will include, but not be limited to, records of accomplishment of AD's, service
bulletins, and any modifications. In addition, all overhaul/maintenance Records
for the airframe, engines, APU and components required by Lessor will be
maintained and supplied by Lessee. All such Records shall be the property of
Lessor and will be deemed Records at the time generated. Lessee will report
hours and cycles of operation, and location of operation, to Lessor upon
request. If the Lessee is required pursuant to the terms hereof to pay Variable
Rent at the time a D Check is being performed on the Aircraft, Lessee will
obtain Lessor's prior written approval, which approval will not be unreasonably
withheld, of the "D" Check Vendor if Lessor has notified Lessee of such
requirement.
(ii) Upon redelivery of the Aircraft to Lessor, Lessee will return
all Records delivered to Lessee by Lessor as well as all Records generated by
Lessee. See Exhibit E; provided, however, Lessee shall not be responsible for
records and documentation with respect to the Aircraft (as the Aircraft was
delivered to Lessee) prior to the commencement of this Lease unless such records
were delivered to Lessee by Lessor. Lessee's obligation is to redeliver
originals of all such Records.
(iii) With respect to any Part installed by the Lessee during the
Lease and not removed prior to the return of the Aircraft, the Records returned
to Lessor will include:
(a) Part number, description, and serial number (if Part is
serialized); and
11
(b) Historical records, including but not limited to (i)
serviceability status of the Part at installation, (ii) for a time-controlled
Part, total time and cycles, time and cycles since overhaul as may be
applicable, and total time and cycles of the Aircraft or engine at the time of
Part installation, (iii) for a life-limited Part, documentation tracing usage of
the Part since new and all appropriate on-off logs, and (iv) past history,
modification status and overhaul records for components.
7. MODIFICATION OF THE AIRCRAFT
A. Except as provided in Section 6C and modifications relating to
seats, and galleys, Lessee shall not make any optional modifications to the
Aircraft, including but not limited to additions, alterations or improvements
without Lessor's prior written consent.
B. Upon termination of this Lease Agreement, Lessee shall return the
Aircraft to Lessor in its original configuration as delivered to Lessee, or as
otherwise agreed in writing between Lessor and Lessee.
8. INSPECTION AND RECORDS
A. While the Aircraft is leased to Lessee, Lessor shall have the right
to inspect the Aircraft and the required maintenance records at any reasonable
time and on reasonable notice (except in the case of an Event of Default where
no notice is required) so as not to delay Lessee's flights or unreasonably
interfere with Lessee's or any permitted Sublessee's operations, including
periods during which the Aircraft is undergoing maintenance. Subject to the
preceding sentence, such inspection shall not restrict Lessor from opening any
panels, bays, doors, etc., which are normally opened during such maintenance.
Upon request, Lessee will advise Lessor of the maintenance schedule of the
Aircraft for the following year and Lessor shall be entitled to have a
representative present at the location of any "C" check or "D" check at all
times during which the work is being performed.
B. Lessee agrees to furnish Lessor information in such form as Lessor
may reasonably request regarding Lessee's use and operation of the Aircraft
during the term of this Lease as may be necessary to permit Lessor to maintain
its records in accordance with the requirements of all applicable United States
governmental agencies.
9. TAXES
A. All payments to be made by Lessee under the Lease shall be paid
without deduction for, or on account of, any present or future taxes, levies,
imposts, value added type charges or taxes, customs, duties, charges, currency
surcharges, fees, assessments, deductions or withholdings of any nature
(collectively, together with interest and penalties thereon, called "Taxes")
imposed, levied, collected, withheld or assessed by any country or any political
subdivision or taxing authority thereof or therein, or by any group or
organization of which such country at the time of payment may be a member,
unless Lessee is compelled by law to make
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payment after deducting any of such Taxes, in which event Lessee shall pay to
Lessor such additional amounts as may be necessary to ensure that Lessor
receives an amount in U.S. Dollars equal to the full amount which it would have
received had payment not been made subject to any such taxes. Lessee shall pay
or cause to be paid, and shall indemnify and hold harmless Lessor from and
against, any and all Taxes imposed, levied, collected, withheld or assessed
against Lessee or Lessor by any country or political subdivision or taxing
authority thereof or therein, if and to the extent that such Taxes are payable
as a result of this Lease Agreement, the work performed as set forth in Exhibit
J, the delivery and installation of Hexcel Interiors 737-200 PAX Quikbin
Interior Kits, or the possession, use, operation or repair of the Aircraft.
Notwithstanding the provisions of the above paragraph, Lessee's obligations
under this Section 9 in respect of Taxes shall not include:
(i) Taxes on, based on, or measured by, net income of Lessor, or
United States federal value added or consumption type charges or taxes imposed
on Lessor, imposed by the United States of America or any United States federal,
state or local political subdivision or taxing authority;
(ii) Taxes imposed in a taxing jurisdiction (other than by the
United States federal government or by the jurisdiction in which Lessor is
incorporated in or maintains its principal place of business) for a tax period
during which neither the Aircraft nor any part thereof has been located or
operated in that taxing jurisdiction.
(iii) Any Taxes imposed as a result of a sale, transfer of title,
mortgaging, pledging, financing, voluntary transfer of other voluntary
disposition by Lessor of the Aircraft or part thereof or interest therein, or
any interest in the Rent or part thereof or any interest in the Lease or part
thereof, unless such sale, transfer, mortgage, pledge or disposition occurs by
reason of the exercise of Lessor's remedies under this Lease upon an Event of
Default, provided however, that Lessor shall comply with any reasonable request
as Lessee shall make concerning the appropriate jurisdiction in which such sale,
transfer or disposition shall be made (with Lessee bearing any costs associated
therewith) unless Lessor determines (and advises Lessee) that such compliance
with Lessee's request would generate an adverse consequence to Lessor.
(iv) Any penalties or interest caused solely by the negligence or
willful misconduct of Lessor in connection with its obligations under this
Section 9.
(v) Any Taxes caused solely by a failure by Lessor to furnish in a
timely manner notice or information which Lessor is required to furnish to
Lessee by the terms of this Section;
(vi) Taxes relating to the Aircraft or any part thereof, or interest
therein, for any taxable period or portion thereof, relating to events occurring
prior to commencement of the Term of this Lease with the exception of work
performed as set forth in Exhibit J and delivery and installation of Hexcel
Interiors 737-200 PAX Quikbin Interior Kit or after the expiration of the Term
of this Lease and the redelivery of the Aircraft in accordance with this Lease;
13
(vii) Taxes based on or measured by the value or principal amount of
any loan or promissory note (or security therefore) entered into by Lessor or
anyone claiming an interest in the Aircraft or any portion thereof through
Lessor.
B. In the event any report or return is required to be made with
respect to any obligation of the Lessee, under or arising out of this Section 9
(including but not limited to personal property tax returns), the Lessee shall
(a) to the extent required or permitted by law, make and file in its own name
such return, statement or report, and (b) in the case of any other such return,
statement or report required to be made in the name of Lessor advise Lessor of
such fact and prepare such return, statement or report for filing by Lessor or,
where such return, statement or report shall be required to reflect items in
addition to any obligation of the Lessee under or arising out of this Section 9,
provide Lessor with information sufficient to permit such return, statement or
report to be properly made with respect to any obligation of the Lessee under or
arising out of this Section 9. Lessee shall indemnify and hold Lessor harmless
from and against any liabilities, obligations, losses, damages, penalties,
interest, claims, actions, suits and costs arising out of any late or inadequate
payment of any such Taxes, or any failure to file, or insufficiency or
inaccuracy in any such return, statement, report or information, except to the
extent that the same is attributable to Lessor's failure to timely and properly
file returns which have been timely prepared by Lessee and delivered to Lessor.
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 such Taxes referred to in
this Section 9, Lessor shall promptly notify Lessee of such required report or
return. Lessor agrees to respond to any reasonable request of Lessee for
information within the control of Lessor with respect to the filing of any such
report or return, but Lessee agrees to pay any reasonable costs, fees or other
charges of independent counsel or independent accountants incurred by Lessor in
connection with such response or request.
C. If claim is made against Lessor for any Taxes with respect to which
Lessee has an obligation under this Section 9, Lessor shall promptly notify the
Lessee. If reasonably requested by the Lessee in writing and provided no Event
of Default shall have occurred and is continuing, Lessor, at the sole expense of
the Lessee, shall in good faith and diligently contest (and not settle without
Lessee's written consent) or shall permit the Lessee, if desired by the Lessee,
to contest in the name of the Lessee the validity, applicability or amount of
such Taxes. Lessee may contest, or require that Lessor contest, by (a) resisting
payment thereof if practicable, (b) not paying the same except under protest
with funds advanced by Lessee on an interest-free basis, if protest is necessary
and proper, and (c) if payments be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings; provided,
however, that, in each such instance, the Lessor shall not be required to
undertake any contest unless:
(i) Lessee shall have provided Lessor with an opinion of legal
counsel reasonably acceptable to Lessor to the effect that a reasonable basis
exists to contest such claim (provided, however, that no such opinion shall be
necessary in order to contest such claim in meetings with auditors, revenue
agents, or in other informal meetings with staff members of the applicable tax
authority) and, prior to the commencement of any appeal of an adverse judicial
decision, with an opinion of such tax counsel to the effect that a reasonable
basis exists to appeal.
14
such adverse judicial decision (which opinions shall be obtained at Lessee's
sole cost and expense);
(ii) Such proceedings do not involve any material risk or danger of
the sale, forfeiture or loss of the Aircraft or any part thereof or interest
therein or the imposition of criminal penalties or sanctions against Lessor or
the creation of any Lien other than a Lien for taxes not yet due or being
contested in good faith by appropriate proceedings, and for payment of which
such reserves if any, as are required to be provided under generally accepted
accounting principals have been made unless Lessee has provided to Lessor a bond
or other security reasonably satisfactory to Lessor (provided that in the case
of criminal penalties or sanctions such bond or other security shall be
satisfactory to Lessor in its sole discretion) to protect against such risk or
danger;
(iii) in the event that the subject matter of the contest is of a
continuing nature and has previously been decided adversely pursuant to the
contest provisions of this Section 9 by the highest court to which an appeal
could be taken (other than the U.S. Supreme Court), there has been a change in
the law (including, without limitation, amendments to statutes or regulations,
administrative rulings and court decisions) after such claim shall have been so
previously decided and Lessor shall have received an opinion of independent tax
counsel selected by the Lessee and reasonably acceptable to Lessor, which
opinion shall be obtained at the Lessee's sole expense, to the effect that, as a
result of such change, it is more likely than not that the position which Lessor
or the Lessee, as the case may be, had asserted in such previous contest would
prevail;
(iv) No Event of Default shall have occurred and be continuing;
(v) Prior to the commencement of any contest undertaken by the
Lessee or any contest undertaken by Lessor with respect to which Lessor is
required to follow the direction of the Lessee, the Lessee shall have delivered
to Lessor a written acknowledgment of its obligation to indemnify fully Lessor
to the extent that the contest is not successful;
(vi) If such contest is to be initiated by the payment of, and the
claiming of a refund for, such Taxes, Lessee shall have advanced to Lessor
sufficient funds (on an interest-free basis) to make such payments, provided,
however, that Lessee shall indemnify Lessor for any adverse tax consequences
resulting from such advance.
Lessee shall not be deemed to be in default under any of the above
indemnification provisions of this Section 9 so long as Lessee shall diligently
prosecute a contest in conformity with the requirements of this Section 9C, or
in the case where the Lessor shall be prosecuting such contest pursuant to this
Section 9C, Lessee has fulfilled all of its obligations under this Section 9C
with respect to such contest. Notwithstanding the foregoing, if a claim is made
against Lessor which, if successful, would result in the imposition of Taxes
under circumstances which would require the Lessee to indemnify Lessor, Lessor
shall be released from its responsibility to contest such claim, or part
thereof, if it agrees in writing with Lessee not to seek indemnification from
Lessee in respect of the claim, or such part thereof to be contested. In the
15
event Lessor fails diligently to contest, or refuses to permit the Lessee to
contest, a claim or part thereof which Lessor has the obligation to contest or
to permit Lessee to contest under this Section 9, then Lessee shall not be
obligated to indemnify Lessor for such claim or such part thereof and Lessor
shall refund to Lessee any amounts paid or advanced by Lessee in connection with
such Taxes that were the subject of such claim (plus interest from the date
payment is due at the rate established for refunds by the taxing authority
imposing such taxes).
D. If Lessor shall obtain a refund of all or any part of such tax, fee
or other charge paid by Lessee, Lessor shall pay the Lessee the amount of such
refund less the amount of any Taxes payable by Lessor in respect of the receipt
of such refund; provided that such amount shall not be payable (x) before such
time as the Lessee shall have made all payments or indemnities then due to
Lessor under the Lease, or (y) while any Event of Default is outstanding and
continues unremedied. If in addition to such refund, Lessor shall receive an
amount representing attorneys fees, interest or other amount with respect to
such refund, the Lessee shall be paid that proportion of such amounts which is
fairly attributable to Taxes paid by the Lessee prior to the receipt of such
refund.
10. INDEMNITY
A. LESSEE HEREBY RELEASES AND AGREES TO INDEMNIFY, DEFEND AND SAVE
HARMLESS LESSOR, AND ITS DIRECTORS, OFFICERS, AGENTS, MEMBERS AND EMPLOYEES
(COLLECTIVELY THE "INDEMNITEES"), FROM ANY AND ALL LIABILITIES, DAMAGES, LOSSES,
EXPENSES, DEMANDS, CLAIMS, SUITS OR JUDGMENTS, INCLUDING ALL REASONABLE
ATTORNEYS' FEES, COSTS AND EXPENSES IN CONNECTION THEREWITH OR INCIDENT THERETO,
FOR THE DEATH OF OR INJURIES TO ANY PERSONS WHOMSOEVER (EXCLUDING EMPLOYEES OF
THE INDEMNITEES IN THEIR CAPACITY AS EMPLOYEES), AND FOR THE LOSS OF, DAMAGE TO
OR DESTRUCTION OF OR DELAY IN DELIVERY OF ANY PROPERTY WHATSOEVER, INCLUDING
PROPERTY OF THE PARTIES HERETO OR THAT OF THEIR DIRECTORS, OFFICERS, AGENTS,
MEMBERS AND EMPLOYEES, INCLUDING BUT NOT LIMITED TO THE AIRCRAFT, IN ANY MANNER
ARISING OUT OF POSSESSION, USE, MAINTENANCE, REPAIR OR OPERATION OF THE AIRCRAFT
DURING THE TERM HEREOF, (REGARDLESS OF NEGLIGENCE ON THE PART OF ANY INDEMNITEE,
WHETHER ACTIVE, PASSIVE OR OTHERWISE), PROVIDED, HOWEVER, THAT LESSEE'S
INDEMNITY OBLIGATION HEREUNDER SHALL NOT BE APPLICABLE TO ANY DEATH, INJURY,
LOSS, DAMAGE OR DESTRUCTION TO THE EXTENT CAUSED BY (1) THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF AN INDEMNITEE OR (2) BY ANY INDEPENDENT ACT OF NEGLIGENCE
ON THE PART OF ANY INDEMNITEE NOT RELATED TO THE PERFORMANCE OF THIS AGREEMENT.
Lessee shall be entitled, at its sole cost and expense, acting through
counsel reasonably acceptable to the respective Indemnitee, (i) in any judicial
or administrative proceeding that involves solely a claim for which payment or
indemnity is sought under this Section 10, to assume responsibility for and
control thereof, (ii) in any judicial or administrative proceeding
16
involving a claim for which payment or indemnity is sought under this Section
10, and other claims related to the transactions contemplated by this Lease, to
assume responsibility for the control of such claim for which payment or
indemnity is sought under this Section 10, to the extent that the same may be
and is severed from such other claim, and (iii) in any other case, to be
consulted by such Indemnitee with respect to judicial proceedings subject to the
control of such Indemnitee. Notwithstanding any of the foregoing to the
contrary, Lessee shall not be entitled to assume responsibility for and control
of any such judicial or administrative proceedings (1) while an Event of Default
shall have occurred and be continuing, or (2) if such proceedings will involve
the sale, forfeiture or loss of, or the creation of any Lien on the Aircraft. An
Indemnitee may participate at its own expense and with its own counsel in any
judicial proceeding controlled by Lessee pursuant to the preceding provisions of
this Section 10.
An Indemnitee shall supply Lessee with such information reasonably
requested by Lessee as is necessary or advisable for Lessee to control or
participate in any proceeding to the extent permitted by this Section 10. Lessee
shall not enter into a settlement or other compromise with respect to any claim
without the prior written consent of any Indemnitees affected thereby, which
consent shall not be unreasonably withheld or delayed provided that Lessee is
solely responsible for any recoveries or awards pursuant to such settlement or
other compromise.
B. Lessee shall be liable for and shall indemnify and save harmless
Lessor from any amounts payable by Lessor to any third party as a result of any
breach by Lessee of the terms and conditions of use of the Aircraft set forth in
this Agreement, together with any costs and expenses incurred by Lessor in
connection therewith.
C. The indemnities contained in this Section 10 will continue in full
force and effect notwithstanding the expiration or other termination of this
Agreement or the letting of the Aircraft hereunder.
11. LOSS OF OR DAMAGE TO AIRCRAFT; AGREED VALUE
A. Except to the extent that any loss or damage is caused by the
willful misconduct of Lessor, Lessee shall be liable to Lessor for, and shall
indemnify and save Lessor harmless from, any loss of or damage to the Aircraft
(including Engines, Parts, assemblies and components) occurring while leased to
Lessee hereunder or while in the possession, custody or control of Lessee and
arising from any cause whatsoever.
B. Total Loss with respect to the Aircraft, or any Engine means any of
the following with respect to such property: (i) the loss of such property or of
the use thereof due to the destruction of or damage to such property which
renders repair uneconomic or which renders such property permanently unfit for
the uses permitted in Section 1A above for any reason whatsoever; (ii) any
damage to such property which results in an insurance settlement with respect to
such property on the basis of a total loss, or a constructive total loss; (iii)
the theft or disappearance of such property, or the confiscation, condemnation,
or seizure of, or requisition of title to, or loss of such property by any
governmental authority which shall have resulted in the loss of title or
possession of such property by Lessee for a period in excess of sixty (60) days.
17
▇. ▇▇▇▇▇▇ and Lessee hereby agree and fix the Agreed Value of the
Aircraft (together with all assorted equipment installed therein) to be
$11,000,000. The Agreed Value will decrease by 5% on each annual anniversary of
the Delivery Date. In the event the Aircraft shall become a Total Loss, Lessee
shall immediately notify Lessor thereof and Lessee shall within sixty (60) days
of such loss pay to Lessor in cash the Agreed Value of the Aircraft less any
hull insurance proceeds paid to Lessor in accordance with Section 12.B. below,
and Lessee shall further continue to pay Lessor the Base Rental for each day
between the day the Aircraft is lost or damaged as provided above and the day
Lessor receives the full Agreed Value for the Aircraft.
D. Upon the Total Loss of an Engine not then installed in the Aircraft,
or a Total Loss of an Engine installed in the Aircraft not involving a Total
Loss of the Aircraft, Lessee shall give Lessor prompt written notice thereof and
Lessee shall replace such Engine within a reasonable time period but not to
exceed thirty (30) days of such Total Loss by duly conveying or causing to be
conveyed to Lessor as a replacement for such Engine, good and marketable title
to another engine reasonably acceptable to Lessor, which engine shall be free
and clear of all liens and encumbrances, shall have a value and utility at least
equal to and be in as good operating condition, as the Engine which sustained
the Total Loss, assuming such Engine was in the condition required to be
maintained hereunder. Such replacement engine, after reasonable approval and
acceptance by Lessor, shall be deemed an "Engine" as defined herein. Provided
Lessee is not in default hereunder, Lessor will then convey to Lessee title,
free and clear of all Liens, except for Liens created by or through Lessee, to
the Engine that sustained the Total Loss. Lessee's obligation to pay the Base
Rental, Variable Rental, Supplemental Rental, and other charges shall continue
in full force and effect, but Lessee shall be entitled to be reimbursed by
Lessor by the amount of insurance proceeds, if any, received by Lessor on
account of the insurance required to be carried by Lessee with respect to such
replaced Engine.
12. INSURANCE
Lessee will, at its own expense, procure and maintain in full force and
effect during the term of this Agreement (covering the Aircraft and the Engines
anywhere in the world where Lessee operates), a policy or policies of insurance,
with a responsible insurance company or companies active in the airline
industry, of the types and in the minimum amounts set forth below:
A. (i) Comprehensive Airline Insurance in an amount which will produce
single limit per occurrence coverage of at least Three Hundred Million Dollars
($300,000,000), provided that if Lessee carries a higher liability limit fleet
wide, then Lessee will furnish such higher limits hereunder.
(ii) Lessee shall cause the aforesaid insurance policies to be duly
and properly endorsed by Lessee's insurance underwriters:
(a) To name Lessor and its directors, officers, agents,
members and employees as additional insureds thereunder;
18
(b) To provide said insurance shall be primary insurance and
any other insurance policy or policies of Lessor shall be excess insurance;
(c) To cover the contractual liability assumed by Lessee under
this Agreement including, but not limited to, any liabilities and indemnities
assumed by Lessee under any supplements to this Lease hereafter executed by
Lessor and Lessee, however, such coverage is only to the extent of coverage
afforded under the policies;
(d) The policies will contain cross liability and severability
of interest clauses.
B. (i) Aircraft Hull Insurance -- All-Risk, in the amount designated in
Section 11.C., as the Agreed Value of the Aircraft.
(ii) Lessee shall cause said Aircraft hull insurance policy to be
duly and properly endorsed by Lessee's insurance underwriters:
(a) To provide that all physical damage losses with respect to
the Aircraft will be adjusted with Lessee (subject to the approval of Lessor).
In the event of a Total Loss of the Aircraft, Lessor is named as sole loss payee
for all insurance proceeds up to the Agreed Value. With respect to damage or
loss not constituting a Total Loss of the Aircraft, the Lessor is named as sole
loss payee in respect of all insurance proceeds where such insurance proceeds
exceed US $500,000.00. Said proceeds will be applied by Lessor toward payment of
repairs of damage claimed unless Lessor waives this provision and permits
payment of insurance proceeds directly to Lessee or the facility effecting
repairs. 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 Lessor that a Default or an Event of
Default on the part of Lessee has occurred and is continuing, all payments up to
the Agreed Value will be made to Lessor. In all cases, any insurance proceeds,
as a result of policies carried by Lessee, in excess of the Agreed Value will be
payable solely to Lessee.
(b) To waive any and all rights to subrogation that insurers
may or could have against Lessor and its directors, officers, agents and
employees by virtue of such insurance policy, regardless of any negligence
(whether active, passive or otherwise) on the part of Lessor its directors,
officers, agents or employees in connection with the leasing of the Aircraft
hereunder or in the performance of this Lease, but such waiver of rights of
subrogation shall only be to the same extent Lessee has waived its rights of
recovery against or agreed to indemnify Lessor, its directors, officers, agents
and employees elsewhere in this Lease.
(iii) All Risk Property Insurance (including in-transit coverage on
any Engine covering any damage which may occur while in Lessee's care, custody
or control but not then attached to an aircraft) on a replacement value basis
during all periods from their delivery to Lessee by Lessor until their
redelivery to Lessor by Lessee.
19
C. Lessee shall cause the aforesaid insurance policies to be duly and
properly endorsed by Lessee's insurance underwriters to provide that Lessor be
given not less than thirty (30) days prior written notice in the event that
either Lessee or Lessee's insurance underwriters desire to amend, materially
change the policies in a manner adverse to Lessor, cancel or terminate said
policy or policies or any part or parts thereof, except war risk coverages, in
which case notice of cancellation shall not be less then seven (7) days or such
lesser period as may be customary in the industry from time to time.
D. Lessee shall, with respect to any losses payable in connection with
the Aircraft, Engines or any of its Parts, cause its insurers promptly to adjust
the same with Lessee, subject to Lessor's approval and shall be payable directly
to Lessor; provided, however: (i) final decision with respect to any adjusted
claim shall be made solely by Lessor, and (ii) the insurance proceeds of any
adjusted claim will be applied by Lessor toward payment of repairs of damage
claimed.
E. Lessee shall furnish Lessor with acceptable certificates of
insurance evidencing the coverage and endorsements as required herein. Such
certificates shall be delivered to Lessor not less than five days prior to the
delivery of the Aircraft. Renewal certificates shall be provided to Lessor not
less than 10 days prior to any policy expiration.
F. All policies shall contain a "Breach of Warranty" clause in behalf
of Lessor.
G. All insurance coverages listed in Section 12B above will include war
risk, hijack, terrorism and confiscation coverage in the amounts listed therein.
H. Lessee will not operate the Aircraft or any Engine in an area or on
any route excluded from coverage by any insurance required under this Section
12.
I. Lessor and Lessee shall each be permitted to carry insurance with
coverage limits which are in addition to/excess over what is required by
Sections 12A, 12B and 12G, provided such insurance does not adversely affect
and/or prejudice the insurance required by those sections.
13. COMPLIANCE WITH LAWS
Lessee agrees that the Aircraft leased hereunder shall not be used in
any manner which shall violate any law or regulation of any government or
governmental agency having jurisdiction and that any fine, penalty, or
forfeiture resulting from any such violation shall be the sole responsibility of
Lessee and Lessee agrees to indemnify and save Lessor harmless from all
liability therefor. Lessee agrees that it shall procure and maintain at its own
expense all certificates, permits and licenses, as may be required, and shall
give all notices required in connection with such possession, operation or use.
Lessee shall furnish Lessor with such documentary evidence of the procurement of
such certificates, permits and licenses as may be requested by Lessor. Lessee
agrees that while the Aircraft is leased hereunder, the Aircraft shall be
retained by Lessee in its possession, custody and control, unless otherwise
provided herein.
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14. TITLE TO AIRCRAFT
A. Except as otherwise expressly provided herein, title to the
Aircraft, including Engines, accessories and other equipment of every nature
which are physically attached to or in operation on the Aircraft and title to
any other engines and personal property furnished or supplied by Lessor to
Lessee hereunder shall be and remain in Lessor's name at all times. Lessee shall
have no right, title or interest in the Aircraft except as provided in this
Lease. Lessee shall not directly or indirectly create, incur, assume or suffer
to exist any Lien (any mortgage, pledge, lien, charge, encumbrance, lease,
exercise of rights, security interest or claim) on or with respect to the
Aircraft or any Engine, title thereto or any interest therein, except (i) the
respective rights of Lessor and Lessee as herein provided; (ii) Lessor's Liens
(Liens arising as a result of (a) claims against Lessor not related to the
transactions contemplated by this Lease; (b) acts of Lessor, not contemplated
and expressly permitted under this Lease; or (b) taxes imposed against Lessor
which are not indemnified against by Lessee pursuant to Article 9) with respect
to the Aircraft or any Engine; (iii) Liens for Taxes either not yet due or being
contested in accordance with Section 9 hereof and so long as adequate reserves
are maintained with respect to such Liens; and (iv) inchoate materialmen's,
mechanics', workmen's, repairmen's, employees' or other like Liens arising in
the ordinary course of business, which either are not delinquent or are begin
contested in good faith by Lessee, so long as the Aircraft or such Engine is not
in danger of being lost, sold, confiscated, forfeited or seized as a result of
any such Lien provided, however, that Lessee has established cash reserves in an
amount necessary to discharge any such Lien. Lessee shall promptly, at its own
expense, take such action as may be necessary to duly discharge any Lien (except
for the Liens referred to in clauses (i) and (ii) of this Section 14) if the
same shall arise at any time with respect to the Aircraft or any Engine. Lessee
shall promptly pay and discharge when due, or make adequate provision (by way of
security or otherwise) for, or procure that the same are paid and discharged,
all debts, claims, liabilities or obligations whatsoever created by it or any
other Person, or arising as a result of any matter concerning it or any other
Person, which may give rise to any Lien on the Aircraft or any Engine,
including, without limitation, any landing fee, air navigation or similar
charges. Lessee agrees to indemnify and save Lessor harmless from and against
all damages suffered by Lessor including costs and expenses incident thereto, as
the result of Lessee's failure to perform the undertaking herein in this
paragraph provided for.
B. Lessee shall attach a permanent placard, to be furnished by Lessor,
to the forward side of the cockpit and cabin door adjacent to the Certificate of
Aircraft Registration in the interior of the Aircraft indicating that the
Aircraft is being operated by Lessee in accordance with a Lease Agreement
between Lessee and Lessor and Lessee shall not remove same nor permit it to be
removed and shall immediately replace such placard if it should become lost,
illegible, damaged or destroyed. The placard shall state:
"Aircraft Serial No. 23045 is owned by Aircraft No. 2, L.L.C.
("Lessor") subject to a mortgage in favor of ▇▇▇▇▇▇▇ Bank,
N.A. It is being operated by Aloha Airlines, Inc., pursuant to
a Lease Agreement between Lessor and Aloha Airlines, Inc., as
Lessee.
21
Owner's Address: ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇"
C. Lessee shall also cause a placard, to be furnished by Lessor, to be
attached to each Engine at all times during the Lease Term and until redelivery
to Lessor pursuant to the Lease, as follows:
"This Engine is owned by Aircraft No. 2, L.L.C, ▇▇▇▇ ▇.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, subject to a
mortgage in favor of ▇▇▇▇▇▇▇ Bank, N.A."
15. ASSIGNMENT OR SUBLEASE; POSSESSION AND USE
A. Lessee shall neither assign this Agreement in whole or in part nor
sublease the Aircraft or transfer the custody or possession thereof to any third
party, except with the prior written consent of Lessor; provided, however,
Lessee may sublease the Aircraft to a commercial air carrier from the list
attached as Exhibit G or such other commercial air carrier as is approved in
writing by Lessor, such approval not to be unreasonably withheld (a "Permitted
Sublessee"); provided further, that at any time during the Term Lessor may, by
notice to Lessee, notify Lessee that any entity on said Exhibit G no longer
constitutes a Permitted Sublessee (which determination shall be made on a
reasonable basis by the Lessor) whereupon such entity shall no longer constitute
a Permitted Sublessee, provided that Lessor may not remove an entity from such
list during a lease to such Permitted Sublessee.
The following conditions must be met in connection with any such
sublease:
(i) the sublease agreement is assigned to Lessor as security on or
before its effective date pursuant to documentation in form and content
reasonably acceptable to Lessor;
(ii) all rent payable by the sublessee under such sublease agreement
shall be payable directly by the sublessee to Lessor, provided that so long as
no Event of Default has occurred and is continuing hereunder, Lessor shall pay
to Lessee out of each payment received from sublessee, the excess of the
sublease rental over the amounts due hereunder.
Further, with respect to any such sublease:
(a) the term of such sublease (including without limitation, any option
of the sublessee to renew or extend the sublease) shall not extend beyond the
Term;
(b) the rights of the sublessee shall be subject and subordinate to all
the terms of this Lease, including without limitation the right of repossession
pursuant to Section 17 and to avoid such sublessee's right to possession upon
such repossession;
(c) the Lessee shall remain primarily liable hereunder for the
performance of all the terms of this Lease to the same extent as if any such
sublease had not occurred;
22
(d) any sublease permitted by Section 15.A. shall provide that (i) the
Aircraft, Airframe or Engine may not be operated or used other than as provided
in Sections 6 and 15 hereof, (ii) Lessor may avoid or terminate such sublease
following an Event of Default hereunder, and (iii) to the extent not
accomplished by an assignment of sublease, upon an Event of Default such
sublease shall automatically be deemed assigned to Lessor until such time as the
event of default has been cured;
(e) no sublease of the Aircraft or any Engine shall in any way destroy
or diminish any of Lessor's rights hereunder and such rights shall continue as
if such sublease or transfer has not occurred;
(f) with respect to any sublease permitted by Section 15.A., at least
ten (10) Business Days prior to such sublease becoming effective Lessee shall
furnish a copy of such sublease to Lessor for Lessor's review to determine that
the sublease is in compliance with the provisions hereof. Lessee shall reimburse
Lessor for Lessor's out-of-pocket costs and legal fees in connection with its
review of such document;
(g) any sublease permitted by Section 15.A. shall expressly provide (x)
that such sublessee will not transfer possession or control of the Aircraft,
Airframe or Engine to anyone other than Lessee or Lessor, except to the extent
permitted pursuant to Section 15B of this Lease, and (y) that all rights of the
sublessee are subject and subordinate to all the terms of this Lease including,
without limitation, in each instance, Lessor's rights to repossession pursuant
to Section 17 and Lessor's rights to avoid such sublessee's right to possession
upon such repossession;
(h) such sublease shall include appropriate provisions (whether by
requiring such obligations to be performed by the sublessee, Lessee, or both)
for the operation, maintenance and insurance of the Aircraft and the Engines
subleased thereby which are comparable to, or more restrictive than, the
provisions of this Lease; provided the foregoing conditions are met, sublessee
will be permitted to operate the Aircraft under the maintenance program of the
sublessee and in accordance with applicable laws governing sublessee's
operations and, provided, that Lessor and Lessor's lender have received an
opinion of counsel satisfactory to Lessor and Lessor's lender with respect to
title and perfection of security interests, sublessee will be permitted to
operate the Aircraft on the registry and with a certificate of airworthiness
where the sublessee is located; and
(i) any such sublease shall expressly prohibit any assignment or
further sublease of the Aircraft, the Airframe or any Engine and any of the
rights under such sublease.
B. Lessee shall not transfer possession of the Aircraft to any person
provided that, so long as no Event of Default or event which could constitute an
Event of Default (as defined herein), but for the lapse of time or the giving of
notice or both, shall have occurred and be continuing, Lessee may, without the
prior written consent of Lessor:
23
(i) subject any Engine to, in each case, agreements (customary in
the airline industry and entered into in the ordinary course of its business)
with an FAA certified licensed engine overhaul agency, provided that: (a) no
such agreement or arrangement results in or requires the transfer of title to
such Engine; or (b) if Lessor's title to such Engine shall be divested under any
such agreement or arrangement, such divestiture shall be deemed to be a Total
Loss with respect to such Engine and Lessee shall comply with Section 11 hereof
in respect thereof;
(ii) deliver possession of the Aircraft, the Airframe (Airframe
shall mean (i) the aircraft described on Exhibit A, but not including any Engine
installed thereon, and (ii) any and all Parts so long as the same shall be
incorporated or installed on or attached to the Airframe, or so long as title
thereto shall remain vested in Lessor in accordance with the terms of Section 6,
after removal from the Airframe) or any Engine or any Part to the manufacturer
thereof for testing or other similar purposes or to any organization for
service, repair, maintenance, testing or overhaul work on such Aircraft,
Airframe or Engine or any Part thereof or for alterations or modifications in or
additions to such Aircraft, Airframe or Engine to the extent required or
permitted by the terms of Sections 6 and 7 hereof;
(iii) install an Engine on an airframe (other than the Airframe)
owned by Lessee during the term hereof free and clear of all Liens except: (a)
those Liens of the type permitted under Section 14 hereof and those which apply
only to the engines (other than Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment (other than Parts)
installed on such airframe (but not to the airframe as an entirety; and (b) the
rights of United States participants under normal interchange agreements which
are customary in the airline industry and do not contemplate, permit, result in
or require the transfer of title to the Airframe, Engines or Parts installed
thereon;
(iv) install an Engine on an airframe leased to Lessee or owned by
Lessee subject to a conditional sale or other security agreement, provided that:
(a) such airframe is free and clear of all Liens except the right of the parties
to the lease or conditional sale or other security agreement covering such
airframe and except Liens of the type permitted by Section 14 hereof which
insofar as they relate to such Engine are subordinate to the rights of the
Lessor hereunder, and the Lien of any mortgage which either by its terms does
not apply to the Engine or which effectively provides that each Engine leased to
Lessee hereby shall not become subject to the Lien thereof or to any rights of
any party thereunder other than Lessee (with respect to Lessee's rights
expressly granted hereunder), notwithstanding the installation of such Engine on
any airframe subject to the Lien of such mortgage, unless and until Lessee shall
become the owner of such Engine and Lessor shall have no further interest
therein, all pursuant to the express terms of this Lease; and (b) there shall be
in effect a written agreement of the lessor or secured party of such airframe
(which may be the lease or conditional sale or other security agreement covering
such airframe) substantially similar in effect to the agreement of Lessor in
Section D below whereby such lessor or secured party effectively and expressly
agrees that neither it nor its successors or assigns will acquire or claim any
right, title or interest in any Engine or any Part thereof by reason of such
Engine being installed on such airframe at any time while such Engine is subject
to this Lease or owned by Lessor, and a copy of such agreement shall be provided
to
24
Lessor upon written request of Lessor. In the event Lessee installs on the
Airframe an engine that is leased by Lessee from a lessor, or is owned by Lessee
subject to a conditional sale agreement or other security agreement held by a
secured party, Lessor hereby agrees for the benefit of such lessor or secured
party that Lessor will not acquire or claim, as against such lessor or secured
party, any right, title or interest in any such engine as the result of such
engine being installed on the Airframe at any time while such engine is subject
to such lease or conditional sale or other security agreement and owned by such
lessor or subject to a security interest in favor of such secured party;
(v) subject (i) any Engine or Part to normal interchange agreements
or other similar agreement customary in the airline industry and entered into by
Lessee in the ordinary course of its business and (ii) any Engine or Part to
short-term pooling or borrowing, reciprocal leasing or other arrangement
customarily entered into by major U.S. air carriers and entered into by Lessee
in the ordinary course of its business; provided that no transfer of the
registration of the Aircraft shall be effected in connection therewith and
Lessor's title to and interest in the Aircraft, such Engine or Part shall not be
divested or impaired and that if Lessor's title or interest shall be divested or
impaired, such event shall be deemed to be a Total Loss with respect thereto;
and further provided that the foregoing shall be subject to approval by Lessor
of the air carriers who participate with Lessee in such interchange, pooling or
other similar agreements; and
(vi) transfer possession of the Aircraft, Airframe or any Engine to
the United States Government pursuant to a contract not extending beyond the
Term of this Lease or to the Civil Reserve Air Fleet Program or any similar or
substitute programs so long as Lessee shall promptly notify Lessor upon
transferring possession of the Aircraft, Airframe or any Engine pursuant to such
program or contract.
C. With respect to any transfer pursuant to Section 15 A or 15 B:
(i) the rights of any transferee that received possession by reason
of a transfer permitted by Section 15B shall be subject and subordinate to all
the terms of this Lease, including but not limited to, Lessor's rights to
repossession pursuant to Section 17 and to terminate and avoid such transfer
upon such repossession and to require such transferee forthwith to deliver the
item which is subject to such transfer upon repossession;
(ii) Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
transfer had not occurred; and
(iii) no relinquishment of possession pursuant to the terms of
Section 15B shall in any way discharge or diminish any of Lessee's obligations
to Lessor hereunder.
D. In the event Lessee shall have received from the lessor or secured
party of any airframe leased to Lessee or owned by Lessee or subject to a
conditional sale or other security agreement, a written agreement complying with
Section 15 B iv hereof (which agreement may be contained in the lease,
conditional sale agreement or security agreement relating to such airframe), and
such lease or conditional sale or other security agreement covering such
airframe
25
also covers an engine or engines owned by the lessor under such lease or subject
to a security interest in favor of the secured party under such conditional sale
or other security agreement, Lessor hereby agrees for the benefit of such lessor
or secured party that Lessor will not acquire or claim, as against such lessor
or secured party, any right, title or interest in any such engine as the result
of such engine being installed on the Airframe at any time while such engine is
subject to such lease or conditional sale or other security agreement and owned
by such lessor or subject to a security interest in favor of such secured party.
Lessor also hereby agrees for the benefit of the mortgagee under any mortgage
complying with clause (a) of Section 15 B iv hereof, relating to installation of
an Engine on airframe leased to Lessee, that Lessor will not acquire or claim,
as against such mortgagee, any right, title or interest in any engine subject to
the lien of such mortgage as the result of such engine being installed on the
Airframe at any time while such engine is subject to the lien of such mortgage.
E. Notwithstanding anything herein to the contrary, in the event of any
sublease hereunder, Lessee shall be obligated to return the Aircraft to Lessor
in the condition required hereunder as if the sublease had not occurred.
16. EVENTS OF DEFAULT
Each of the following events shall constitute an "Event of Default":
A. If default shall be made by Lessee in the making of any payment of
Base Rental, Variable Rental, Supplemental Rental or other charges when due and
payable under this Agreement and such default shall continue for a period of
five (5) Business Days;
B. If default shall be made by Lessee at any time in the procurement or
maintenance of any insurance coverage prescribed herein;
C. If default shall be made by Lessee in a material respect in the
observance or performance of any of the other obligations of Lessee contained in
this Agreement and such default shall continue for a period of fifteen (15) days
after notice from Lessor to Lessee specifying the default and requiring that the
same be remedied, provided that if such default cannot be cured within fifteen
(15) days that Lessee has been exercising due diligence to effect such cure;
then such cure must be effected within thirty (30) days;
D. If Lessee shall become insolvent or go into liquidation or cease
paying its debts as they mature or make an assignment for the benefit of
creditors, or file for protection from its creditors under any applicable law
relating to bankruptcy or insolvency, or a trustee or receiver or liquidator
shall be appointed for Lessee, for a substantial part of its property, or
bankruptcy, or liquidation, reorganization arrangements, insolvency or similar
proceedings shall be instituted by or against Lessee under the laws of any
jurisdiction, unless in the instance of any involuntary proceedings, the
petition or appointment is set aside, withdrawn or ceases within ten (10)
Business Days of its effective date;
26
E. If any representation or warranty made by Lessee in or pursuant to
this Agreement proves to be incorrect in any material respect;
F. If Lessee shall suspend, for a period in excess of thirty (30) days
for reasons other than war, insurrections, strikes, riots, fire, flood,
explosions, earthquakes, serious accidents, any act of government, acts of God
or the public enemy, failure of transportation, cancellation of schedules, or
labor troubles, all or substantially all of its operations or shall cease to
hold all permits, licenses and authorizations necessary for the conduct of its
business or the same shall be revoked or varied in a manner which materially
adversely affects the financial situation of Lessee;
G. If any order of any Court shall be made, or any process of Law shall
take effect, either in a preliminary manner or otherwise at the behest of any
creditor or obligor of Lessee which shall have the effect of impounding or
attaching the Aircraft or restraining its removal from any airport for any time
whatsoever, and said order or process shall not be set aside, withdrawn, vacated
or cease to be effective within ten (10) Business Days of its effective date;
H. Lessee shall default in the payment of any unsecured obligation for
the payment of borrowed money which has a principal amount of $1,000,000 or more
or any secured obligation for the payment of borrowed money, for the deferred
purchase price of property or for the payment of rent under any aircraft lease
or other agreement when the same becomes due if such non payment results in an
acceleration of such indebtedness;
I. If an Event of Default shall occur and be continuing under that
certain Lease Agreement between Fleet National Bank, a National Banking
Association, not in its individual capacity but solely as Trustee for the
benefit of Aircraft No. 1, L.L.C. and Lessee of even date herewith in respect of
aircraft with manufacturer's serial number 23051.
17. REMEDIES
Upon the occurrence of any Event of Default and at any time thereafter
so long as the same shall be continuing, Lessor may, at its option, declare by
written notice to Lessee this Agreement to be in default; and at any time
thereafter, so long as any such Event of Default shall not have been remedied,
Lessor may do one or more of the following with respect to all or any part of
the Aircraft and any or all of the Engines as Lessor in its sole discretion
shall elect, to the extent permitted by and subject to compliance with any
mandatory requirements of, applicable law then in effect.
A. Upon the written demand of Lessor and at Lessee's expense, cause
Lessee to return promptly, and Lessee shall return promptly, the Aircraft or any
Engine as Lessor may so demand, to Lessor or its order, in the manner and
condition required by, and otherwise in accordance with all the provisions of,
Sections 2, 6, Exhibit C, Exhibit E and other provisions of this Agreement as if
such Aircraft or Engine were being returned at the end of the Lease Term, or
Lessor, at its option, may enter upon the premises where all or any part of the
Aircraft or any Engine is located and take immediate possession of and remove
the same by summary
27
proceedings or otherwise (and, at Lessor's option, store the same at Lessee's
premises until disposal thereof by Lessor), all without trespass or liability
accruing to Lessor for or by reason of such entry or taking of possession or
removing whether for the restoration of damage to property caused by such action
or otherwise;
B. Whether or not Lessor shall have exercised, or shall thereafter at
any time exercise, any of its rights under paragraph (a) above with respect to
the Aircraft, Lessor by written notice to Lessee specifying a payment date not
earlier than five (5) days from the date of such notice, may demand that the
Lessee pay to Lessor, and Lessee shall pay Lessor, in addition to such other
remedies, as liquidated damages for loss of a bargain and not as a penalty, an
amount equal to any Base Rental, Variable Rental, Supplemental Rental and other
charges unpaid as of the date of such notice, plus an amount equal to the entire
remaining Base Rental for the duration of the unexpired period remaining of the
initial stated term of the Agreement, plus any extension exercised discounted to
present value at nine percent (9%) per annum, it being acknowledged and agreed
that actual damages under such circumstances would be difficult or impossible to
determine.
▇. ▇▇▇▇▇▇ may terminate this Agreement, and/or may exercise any other
right or remedy which may be available to it under applicable law or proceed by
appropriate court action to enforce the terms hereof or to recover damages for
breach hereof. In addition, Lessee shall be liable, for any and all amounts due
hereunder, including all costs and expenses reasonably incurred by reason of the
occurrence of any Event of Default and the exercise of Lessor's remedies with
respect thereto, including but not limited to reasonable attorneys fees and
costs and expenses incurred by Lessor in connection with the return of the
Aircraft or any Engine in accordance with the terms hereof, or in placing such
Aircraft or Engine in the condition and airworthiness required hereby.
18. EXCUSABLE DELAY
Lessor shall use reasonable efforts to deliver the Aircraft and to
perform its obligations in a timely manner; provided, however, Lessor shall not
be responsible nor deemed to be in default on account of delays in the
performance of this Agreement or for delays or failure in delivering the
Aircraft to Lessee due to causes beyond Lessor's control, including, but not
limited to, failure of TAP to timely deliver the Aircraft to Lessor in the
condition required under the TAP Lease, war, insurrections, strikes or labor
disputes, inability or failure of suppliers to deliver parts or materials,
riots, fires, floods, explosions, earthquakes, serious accidents, any act of
government, acts of God or the public enemy, failure of transportation,
cancellation of schedules, or labor troubles causing cessation, slowdown or
interruption of work, actions or inactions of Lessee; provided, however, Lessee
shall not be required to accept delivery of the Aircraft if the excusable delay
extends beyond May 1, 1998, except if such excusable delay was caused by Lessee.
28
19. DELAY IN RETURN OF AIRCRAFT
In the event Lessee is unable or fails to return the Aircraft to Lessor
upon the expiration of this Agreement, Lessor shall have the right to repossess
the Aircraft wherever it may be. In addition, all obligations of Lessee under
this Agreement shall continue until the Aircraft is redelivered or repossessed
by Lessor and the Aircraft is put into the condition required hereunder. Base
Rental and Variable Rental will accrue and be paid by Lessee from and after a
failure to return the Aircraft at the time and in the condition required
hereunder at 150% of the Base Rental and Variable Rental.
20. APPLICABLE LAW AND JURISDICTION
A. This Agreement is being delivered in the State of New York and shall
be deemed to be a contract made under the laws of the State of New York, U.S.A.,
and for all purposes shall be construed in accordance with the laws of said
State.
B. The parties agree that any state or federal court located in the
State of New York shall have jurisdiction to hear any suit, action or proceeding
arising out of or in connection with this Lease. Each party hereby acknowledges
and irrevocably consents and submits to the jurisdiction of any such court in
any such suit, action or proceeding. Service of process may be made against a
party either in person, wherever such party may be found, or by notice as
permitted herein to the address of the party set forth in this Lease.
C. Lessee covenants and agrees that any suit, action or proceeding
arising out of or relating to this Lease or the matters dealt with herein shall
only be instituted by it or its permitted successors or assigns, if at all, in a
state or federal court located in New York.
21. NOTICES
Except as otherwise specified in this Agreement, notices required or
permitted hereunder shall be deemed sufficient if delivered personally or sent
by certified mail, return receipt requested, facsimile, telegram, or telex, or
any other customary means of communication addressed as follows or to any other
address which either party may designate in writing to the other party hereto:
Lessor: Aircraft No. 2, L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager
Telex No.: ▇▇▇-▇▇▇-▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
29
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Senior Counsel
AAR Corp.
One AAR Place
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
CRANE 737-200 L.L.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile ▇▇▇-▇▇▇-▇▇▇▇
Lessee:
Aloha Airlines, Inc.
Senior Vice President Finance and Planning
▇.▇. ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: 808-833-3100
Notices sent by certified mail shall be deemed effective four (4) days after
mailing and notices sent by any other means shall be effective upon receipt,
and in the case of facsimile confirmed.
22. HEADINGS
The paragraph headings herein have been inserted solely for convenience
and in the event of any conflict between such headings and the provisions of
that paragraph, the provisions of the paragraph shall supersede and control.
23. CONFIDENTIALITY
A. Lessee expressly covenants and agrees that it will keep confidential
the terms of this Agreement and all information, material, documents and data
furnished by Lessor hereunder other than as may be in any filings with the FAA,
that no part of said items shall be voluntarily furnished or disclosed by Lessee
to any other person, firm or corporation (except any U.S. governmental agency
that may require submission thereof, as required by law, to comply with lender
requirements, to satisfy existing and potential investor due diligence and
requirements, and to Lessee's accountants and attorneys) without Lessor's prior
written consent, that Lessee shall not reproduce the same except for essential
copies for its own internal usage and that Lessee shall return all said items to
Lessor promptly after return of the Aircraft.
▇. ▇▇▇▇▇▇ expressly covenants and agrees that it will keep confidential
the terms of this Agreement and all information, material, documents and data
furnished by Lessee hereunder
30
other than as may be in any filings with the FAA, that no part of said items
shall be voluntarily furnished or disclosed by Lessor to any other person, firm
or corporation (except any U.S. governmental agency that may require submission
thereof, as required by law, to comply with lender requirements, to satisfy
existing and potential investor due diligence and requirements, and to Lessor's
accountants and attorneys) without Lessee's prior written consent, that Lessor
shall not reproduce the same except for essential copies for its own internal
usage and that Lessor shall return all said items to Lessee promptly after
return of the Aircraft.
24. REPRESENTATIONS, WARRANTIES AND COVENANTS
A. Lessee represents and warrants that:
(i) Lessee is a corporation organized and existing under the Laws of
Delaware and has the corporate power and authority to carry on its business as
presently conducted and to perform its obligations under this Agreement and is
the holder of all necessary licenses issued by all governmental authorities
having jurisdiction to authorize or permit Lessee to engage in air
transportation;
(ii) This Agreement has been duly authorized by all necessary
corporate action on the part of Lessee, and neither the execution and delivery
hereof nor the consummation of the transactions contemplated hereby nor
compliance by Lessee with any terms and provisions hereof will contravene any
law applicable to Lessee or result in any breach of, or constitute any default
under or result in the creation of any lien, charge or encumbrance upon any
property of Lessee under, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, bank loan or credit agreement, corporate
charter, by-law, or other agreement or instrument to which Lessee is a party or
by which Lessee or its properties or assets may be bound or affected;
(iii) The execution and delivery by Lessee of this Agreement, and
any of the transactions by Lessee contemplated hereby, have received, and Lessee
has complied with, every necessary consent, approval, order, or authorization
of, or registration with, or the giving or prior notice to, any government
authority having jurisdiction with respect to the execution and delivery of this
Agreement or the validity and enforceability hereof or the satisfaction of all
monetary and other obligations hereunder.
(iv) This Agreement has been duly entered into and delivered by
Lessee and constitutes the valid, legal and binding obligation of Lessee,
enforceable in accordance with its terms.
(v) It is not necessary under the laws of the United States and/or
Hawaii in order to ensure the validity, effectiveness and enforceability of this
Agreement or to protect the property rights of Lessor in the Aircraft that this
Agreement or any other instrument relating thereto be filed, registered or
recorded or that any other action be taken, except for recording in the FAA
Aircraft Registry in Oklahoma City, and a notice filing with the Secretary of
State of
31
Hawaii and that under the laws of the United States and Hawaii, the property
rights of Lessor in the Aircraft will have priority in all respects over the
claims of all creditors of Lessee;
(vi) There are no suits or legal proceedings pending or threatened
against Lessee which, if adversely determined, would have a material adverse
effect upon its financial condition or business or its ability to perform its
obligations hereunder, other than as heretofore disclosed in writing by Lessee
to Lessor.
B. Lessee hereby covenants with Lessor that from the Delivery Date and
during the Term hereof it will:
(i) duly pay and discharge all Taxes, assessments and governmental
charges upon it or against its properties prior to the date on which penalties
are attached thereto, unless and to the extent only that the same be contested
in good faith and by appropriate proceedings by Lessee. In particular, Lessee
shall pay all airport charges in respect of the Aircraft according as the same
may be incurred;
(ii) remain in and continue to operate substantially the same line
of business as presently engaged in, preserve its corporate existence, conduct
its business in an orderly efficient and customary manner, satisfy its debts and
obligations as they fall due and keep and maintain all of its properties in good
working order and condition;
(iii) maintain insurance in respect of its liabilities and
properties in accordance with good airline practice;
(iv) comply with all laws and regulations for the time being in
force in the State of Hawaii and in any country, to, from, in or over which the
Aircraft is flown;
(v) within sixty (60) days following the end of each quarter,
furnish to Lessor an unaudited balance sheet of Lessee prepared by it as of the
period ended, together with the related profit and loss statement for such
period;
(vi) within one hundred twenty (120) days after the close of each
fiscal year of Lessee, furnish Lessor an audited balance sheet, and profit and
loss statement of Lessee (and an unaudited balance sheet); and
(vii) at its own expense from time to time do and perform such other
and further acts and execute and deliver any and all other further instruments
as may be required by Law or reasonably requested by Lessor to establish,
maintain and protect the respective rights and remedies of Lessor and to carry
out and give effect to the intents and purposes of this Agreement and the
parties hereto provided, however, Lessee will be reimbursed for actual costs
associated with any transfer of Lessor's interest in the Aircraft.
C. To the extent permitted by law, Lessee hereby agrees, in accordance
with Section 1110 of Title 11 of the United States Code, or any superseding
statutes, as amended from time to
32
time, that the title of Lessor to the Aircraft, and any right of Lessor to take
possession of such Aircraft in compliance with the provisions of this Lease will
not be affected by the provisions of Section 362 or 363 of such Title 11, or
other analogous part of any superseding statutes, as amended from time to time.
D. The Lessor represents and warrants to the Lessee that:
(i) The Lessor is a limited liability company formed under the laws
of Illinois and has the power to own its assets and carry on its business as it
is now being conducted.
(ii) 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.
(iii) This Agreement constitutes the Lessor's legal, valid and
binding obligation, enforceable against Lessor in accordance with its terms.
(iv) The entry into and performance by the Lessor of, and the
transactions contemplated by, this Agreement do not and will not:
(a) conflict with any laws binding on the Lessor;
(b) conflict with the constitutional documents of the Lessor;
or
(c) conflict with any document which is binding upon the
Lessor or any of its assets.
(v) So far as concerns the obligations of the Lessor, all
authorizations, consents, registrations and notifications required under the
laws of the State of Illinois, 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.
(vi) On the Delivery Date, the Lessor shall have the right to lease
the Aircraft to the Lessee under this Agreement.
E. The representations and warranties in Sections A and D above will
survive the execution of this Agreement. The representations and warranties
contained in Sections A and D above will be deemed to be repeated by the Lessee
and Lessor on delivery and on each subsequent Rent Date as if made with
reference to the facts and circumstances then existing.
33
25. ASSIGNMENT AND COOPERATION WITH LESSOR'S LENDER
A. Subject to Lessee's rights pursuant to the Lease, Lessor may grant
security interests over the Aircraft and the benefit of this Lease to Lessor's
lender as security for Lessor's obligations to Lessor's lender in connection
with Lessor's financing of the Aircraft. Lessor shall also have the right, at
its sole cost and expense, to assign or sell any interest of Lessor in the
Aircraft or this Lease and/or the proceeds thereof, subject to the rights of
Lessee hereunder.
B. On request by Lessor or Lessor's lender, Lessee will sign and
execute all such documents as Lessor or Lessor's lender may reasonably require
to confirm Lessee's obligations under this Lease. Lessee undertakes to provide
all other reasonable assistance and cooperation to Lessor and Lessor's lender in
connection with the perfection and maintenance of such security interest,
including (without limitation) the effecting of all necessary filings and
registrations at Lessor's sole cost and expense.
C. Wherever the term "Lessor" is used in this Lease in relation to any
of the provisions relating to disclaimer, title and registration, operational
interest, indemnity and insurance, the term "Lessor" will be deemed to include
any Lessor's lender notified to Lessee by Lessor.
D. Any such sale or transfer will not expand Lessee's obligations
hereunder.
26. ENTIRE AGREEMENT
This Lease and the Exhibits and Appendices attached hereto, and made a
part hereof, embody the entire agreement and understanding of the parties and,
as of its effective date, terminate and supersede all prior or independent
agreements and understandings between the parties covering the same subject
matter. No amendment to this Lease shall be binding on either party unless
confirmed in writing and signed by the duly authorized officers or
representatives of both parties.
27. MISCELLANEOUS
A. This Lease may be executed in counterparts. Such counterpart
documents, when taken together, will constitute one and the same instrument. A
facsimile signature on any counterpart will be deemed an original for all
purposes.
B. Any reference to the payment of money will refer to U.S. Dollars.
C. So long as no Event of Default has occurred and is continuing
hereunder, Lessee shall have the peaceful and quiet enjoyment of the Aircraft
free from all claims or interference of Lessor or anyone claiming by, through or
under Lessor, except as otherwise provided herein.
D. If any legal action or other proceeding is brought in connection
with any provisions in this Lease, the prevailing party will be entitled to
recover reasonable attorneys' fees
34
and other costs incurred in such action or proceedings. The prevailing party
will also, to the extent permissible by Law, be entitled to receive pre- and
post- judgment Interest.
E. The rights of the parties hereunder are cumulative, not exclusive,
may be exercised as often as each party considers appropriate and are in
addition to its rights under general Law. The rights of one party against the
other party are not capable of being waived or amended except by an express
waiver or amendment in writing. Any failure to exercise or any delay in
exercising any of such rights will not operate as a waiver or amendment of that
or any other such right; any defective or partial exercise of any such rights
will not preclude any other or further exercise of that or any other such right;
and no act or course of conduct or negotiation on a party's part or on its
behalf will in any way preclude such party from exercising any such right or
constitute a suspension or any amendment of any such right.
F. Each party agrees from time to time to do and perform such other and
further acts and execute and deliver any and all such other instruments as may
be required by Law or reasonably requested by the other party to establish,
maintain or protect the rights and remedies of the requesting party or to carry
out and effect the intent and purpose of this Lease.
G. The Lease Agreement dated as of August 11, 1997 between Lessee and
Fleet National Bank, a national banking association, not in its individual
capacity, but solely as Trustee for the benefit of Aircraft No. 2, L.L.C. shall
be null and void upon execution hereof by the parties.
28. BROKERS/FINDERS
Lessor and Lessee each represent to the other that there are and will
be no third parties involved as brokers or finders with respect to this Lease
and each party indemnifies the other from liability for fees, commissions or
other intermediary's claims arising as a result of actions of the indemnifying
party.
29. SECURITY DEPOSIT; LETTER OF CREDIT
A. Security Deposit
(a) Prior to delivery of the Aircraft to Lessee, Lessee shall pay
Lessor a security deposit of $500,000 (the "Security Deposit") as follows:
$250,000 upon execution hereof and $125,000 on October 1, 1997, and $125,000
upon delivery of the Aircraft to Lessee. The initial $250,000 security deposit
can be accomplished by appropriately amending the Letter of Credit dated May 7,
1997 issued by First Hawaiian Bank with respect to the Aircraft. 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 (or, if a mortgage shall be in effect, the Lessor's
lender) may (but shall not be obligated to) apply all or any portion of the
Security Deposit in or towards satisfaction of any sums due
35
and payable to the Lessor under this Agreement or to compensate the Lessor or,
if applicable, the Lessor's lender 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 or the Lessor's lender, the Lessee shall
remain in default under this Agreement until the full amount owed by the Lessee,
including interest accrued thereon pursuant to Exhibit H, Paragraph H, shall
have been paid to the Lessor. If the Lessor or, if applicable, the Lessor's
lender so uses or applies all or any portion of the Security Deposit, the Lessee
shall immediately, on demand of the Lessor or Lessor's lender, replenish the
Security Deposit in an amount equal to the amount so used or applied within five
(5) Business Days after Lessor's or Lessor's lender's demand therefor.
(b) Provided Lessee is not then in default hereunder, the first
$250,000 of the Security Deposit shall be reduced by $62,500 on each anniversary
of the Delivery Date.
(c) If Lessor fails to tender delivery of the Aircraft by May 1,
1998, other than by reason of default of Lessee or delay caused by Lessee, then
Lessor will return the Security Deposit to Lessee.
(ii) Lessor or, if applicable, Lessor's lender may commingle
the Security Despot with its general funds, and any interest earned on the
Security Deposit will be for Lessor's or Lender's account.
(iii) The Security Deposit shall be returned to the Lessee
within five (5) Business Days of (1) redelivery of the Aircraft to the Lessor in
the condition required by Section 2 and Exhibit C to this Agreement, (2) receipt
by the Lessor of the Agreed Value following a Total Loss and all other amounts
due under Section 11 C or at such later time as the Lessor is satisfied that the
Lessee has irrevocably paid to the Lessor all amounts which are at the 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 Letters of Credit in the amounts of the cash Security Deposit.
In the event that the Lessee elects to provide the Letters of Credit, the
following provisions shall apply:
(i) Lessee shall cause the Letters of Credit to be renewed or
replaced by the issuing bank not later than ten (10) Business Days before the
expiration of such Letter of Credit, and shall cause the Letters of Credit to
remain in effect, as renewed, until ninety (90) days after the scheduled
Expiration Date.
(ii) If an Event of Default occurs and for as long as it continues,
the Lessor or, so long as a mortgage shall remain in effect, the Lessor's lender
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 or lender for any sums
which it may, in its discretion, advance or expend as a result of any such Event
of
36
Default. Notwithstanding any such use or application by the Lessor or the
lender, the Lessee shall remain in default under this Agreement until the full
amount owed by the Lessee, including interest accrued thereon pursuant to
Exhibit H, Section H, shall have been paid to the Lessor and the Lessor's
lender. If the Lessor or, if applicable, the Lessor's lender so uses or applies
all or any portion of the amount available under the Letters of Credit, the
Lessee shall immediately, on demand of the Lessor or the lender, procure the
issue of a new Letter of Credit acceptable to the Lessor and the lender for 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
this Section 29.
(iii) The Letters of Credit shall be returned to the Lessee
within five (5) Business Days of:
(a) redelivery of the Aircraft to the Lessor in the condition
required by Section 2 and Exhibit C to this Agreement;
(b) receipt by the lessor of the Agreed Value following a Total Loss
and all other amounts due under Section 11C; 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.
(c) Lessor's failure to deliver the Aircraft by May 1, 1998 other
than by reason of default of Lessee or delay caused by Lessee.
30. NO PURCHASE OPTION; NO HUSH KIT FINANCING
Lessee shall have no option to purchase the Aircraft. Lessor shall have
no obligations with respect to HUSH KITS (those parts that are required to be
affixed to the Engines and Airframe in order that the Aircraft complies with all
requirements of US FAR Part 36, Stage III and ICAO Annex 16, Chapter 3),
including but not limited to financing thereof.
31. AUTHORIZATION; LESSEE'S CONDITIONS PRECEDENT
A. Upon execution hereof, Lessor will deliver to Lessee:
(a) 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) a certificate of a duly authorized officer of the Lessor;
37
i. setting out a specimen of each signature referred to in
Section (a) above; and
ii. certifying that the copy of the resolutions referred to in
Section (a) above is correct, complete and in full force and effect;
B. 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:
That the representations and warranties of the Lessor under Section 24
and elsewhere in the Lease Agreement are correct and would be correct if
repeated on Delivery; and
i. The Aircraft is in the condition required pursuant to
Section 1C and Section 2A;
ii. The Aircraft is U.S. registered;
iii. The Aircraft is substantially in the same condition as
when inspected by Lessee in May, 1997, normal wear and tear excepted;
iv. The Aircraft shall have been delivered prior to May 1,
1998; subject to Article 18, and
▇. ▇▇▇▇▇▇ shall have executed the Lease Supplement in the form
of
Exhibit I.
C. The conditions specified in Section 31 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.
32. AUTHORIZATION; LESSOR'S CONDITIONS PRECEDENT
A. Upon execution hereof, Lessee will deliver to Lessor:
(a) a copy of resolutions 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 deliver the Aircraft on its behalf;
(b) a certificate of a duly authorized officer of the Lessee;
i. setting out a specimen of each signature referred to in
Section a above; and
38
ii. certifying that the copy of the resolutions referred to
in Section a above is correct, complete and in full force and effect;
B. The Lessor's obligation to deliver the Aircraft to the Lessee under
this Agreement is subject to the satisfaction by the Lessee of the following
conditions precedent:
That the representations and warranties of the Lessee under Section 24
and elsewhere in the Lease Agreement are correct and would be correct if
repeated on Delivery. Lessee shall have executed the Lease Supplement in the
form of Exhibit I.
D. The conditions specified in Section 32 are for the sole benefit of
the Lessor 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 lease the Aircraft to the Lessee, the Lessee will
ensure that those conditions are fulfilled within one month after the
Delivery Date.
IN WITNESS WHEREOF, the par-ties hereto have executed this Aircraft
Lease Agreement by their duly authorized officers the day and year first
above written.
▇▇▇▇▇▇▇▇ ▇▇. ▇, ▇.▇.▇., ▇▇▇▇▇ Airlines, Inc.,
Lessor Lessee
AAR Corp., Manager
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By:
-------------------------------- --------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name:
-------------------------------- --------------------------
Vice President
Title: Chief Financial Officer Title:
-------------------------------- --------------------------
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
39
ii. certifying that the copy of the resolutions referred to
in Section a above is correct, complete and in full force and effect;
B. The Lessor's obligation to deliver the Aircraft to the Lessee under
this Agreement is subject to the satisfaction by the Lessee of the following
conditions precedent:
That the representations and warranties of the Lessee under Section 24
and elsewhere in the Lease Agreement are correct and would be correct if
repeated on Delivery. Lessee shall have executed the Lease Supplement in the
form of Exhibit I.
D. The conditions specified in Section 32 are for the sole benefit of
the Lessor 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 lease the Aircraft to the Lessee, the Lessee will
ensure that those conditions are fulfilled within one month after the
Delivery Date.
IN WITNESS WHEREOF, the par-ties hereto have executed this Aircraft
Lease Agreement by their duly authorized officers the day and year first
above written.
▇▇▇▇▇▇▇▇ ▇▇. ▇, ▇.▇.▇., ▇▇▇▇▇ Airlines, Inc.,
Lessor Lessee
AAR Corp., Manager
By: By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------- --------------------------
Name: Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------- --------------------------
Sr. Vice President
Title: Title: Finance & Planning and CFO
-------------------------------- --------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Vice President
Title: Planning & Development
--------------------------
39
EXHIBIT A
DESCRIPTION OF AIRCRAFT
Manufacturer Model Serial No. US Registration
------------ ----- ---------- ---------------
Boeing 737-282A 23045 N824AL
Total Time Since New: 38152.6 hours
Total Cycles Since New: 23199
Time Since Last D Check: 24.6 hours
Cycles Since Last D Check: 8
Time Since Last C Check: 24.6 hours
Cycles Since Last C Check: 8
ENGINES
▇▇▇▇▇ & Whitney JT8D-9A SN 665851
▇▇▇▇▇ & ▇▇▇▇▇▇▇ JT8D-9A SN 655014
Lessor shall have the right to substitute another Engine for one of the
listed Engines provided that such substitute engine meets the build
specifications set forth in the letter from ▇▇▇▇▇ ▇▇▇▇ to ▇▇▇ ▇▇▇▇ dated June
27, 1997.
AIRCRAFT COMPONENTS ON THE AIRCRAFT ARE
LISTED ON THE EQUIPMENT LIST ATTACHED TO
THE LETTER DATED MARCH 18, 1998.
40
EXHIBIT B
RECORDS
All logs, manuals and data, and inspection, modification and overhaul
records required to be maintained with respect to the Aircraft under
applicable rules and regulations of the Federal Aviation Administration of
the United States to the extent required for registration of the Aircraft in
the United States, and the Republic of Portugal and the agencies and
instrumentalities thereof, and if any such logs, manuals, data or records are
not in English, English translations thereof.
41
EXHIBIT C
REDELIVERY CONDITIONS
1. ENGINE CONDITION AT REDELIVERY
Upon return of the Aircraft to Lessor under this Lease, each Engine (or
replacement engine, as the case may be) shall have remaining as many
hours or cycles on the Engine's most limiting disk (with no single
Engine having fewer than 3,000 hours or cycles (whichever is more
limiting)) until its next Scheduled Engine Shop Visit as when the
Aircraft was delivered to Lessee. In the event an Engine upon such
return (or replacement Engine) shall have less hours or cycles
remaining on its most limiting disk than on delivery, Lessee shall pay
Lessor for the difference at the Adjusted L.L.P. rate at redelivery
(i.e. the payment shall equal the Adjusted LLP rate at redelivery times
the excess of the hours/cycles at Delivery over the hours/cycles at
redelivery); provided, however, in the event one Engine (or replacement
Engine) upon such return shall have more hours or cycles on its most
limiting disk than on Delivery, such excess times the Adjusted LLP Rate
at Redelivery shall be applied as a credit against amounts owed by
Lessee pursuant to the preceding phrase; provided further, that the
foregoing credit shall be applicable only if each Engine (or
replacement engine) has at least 3,000 hours/cycles remaining as set
forth in the first sentence above. The foregoing calculation shall be
made as to the Engine condition at delivery prior to any build up of
the Engine condition by Lessee. In addition, upon return of the
Aircraft to Lessor, Lessee will pay Lessor with respect to each Engine,
an amount equal to the Adjusted Engine Shop Rate at redelivery times
the excess, if any, of the number of flight hours elapsed on each such
Engine since its last Engine Shop Visit at Redelivery over the number
of flight hours elapsed on such Engine since its last Engine Shop Visit
at Delivery. In the event an Engine (or replacement Engine) upon such
Redelivery shall have fewer flight hours elapsed since its last Engine
Shop Visit than at Delivery, the excess amount multiplied by the
Adjusted Engine Shop Rate at Redelivery shall be applied as a credit
against the amount owed by Lessee for the other Engine, pursuant to the
preceding phrase. The foregoing credit is applicable only if each
Engine (or replacement engine) is returned with at least 3,000
hours/cycles remaining until its next Scheduled Engine Shop Visit.
Lessor shall have no obligation for betterment of the Engines upon
redelivery. The foregoing calculation shall be made with reference to
the Engine condition at delivery prior to any build up of the Engine
condition by Lessee.
If Lessee is unable to return an Engine at the expiration or earlier
termination of this Lease, because of damage, overhaul or repair,
Lessee shall replace such Engine prior to such expiration or earlier
termination by duly conveying or causing to be conveyed to Lessor as a
replacement for such Engine, good and marketable title to another
engine acceptable to Lessor, which Engine shall be free
42
EXHIBIT E
REDELIVERY RECORDS
Upon redelivery, Lessee will deliver to Lessor all of the records, manuals,
logs, etc., delivered to Lessor at the commencement of the Lease plus all
records, manuals, logs, etc., generated by Lessee during the term of the Lease.
47
EXHIBIT F
[Form of Letter of Credit to be furnished]
Intentionally deleted for FAA filing purposes
48
EXHIBIT G
LIST OF PERMITTED SUBLESSEES
Aer Lingus
Aerolineas Argentinas
Aeropostale
Air Canada
Air France
Air-Inter
Air Malta
Air New Zealand
Air Nippon
Air Portugal
Alitalia
All Nippon Airways
Ansett
Austrian Airlines
Aviateca
Bahamas Air
Braathens
British Airways
British Midland Airways
Canadian Airlines International
Cathay Pacific
China Airlines
Condor
COPA Panama
Iberia
Japan Airlines
Japan Air System
Japan Asia Airways
Japan Transocean Air
Korean Air
Lan Chile
Lufthansa
Malaysian Airlines System
Martinair Holland
Northwest Territorial
Qantas
Royal Dutch Airlines
▇▇▇▇ Air
Sabena
Scandinavian Airlines System
Singapore Airlines
49
South African Airways
SwissAir
TACA International
Thai Airways International
Alaska Airlines
Continental Airlines
Delta Airlines
Southwest Airlines
United Air Lines
USAir
50
EXHIBIT H
FINANCIAL TERMS
[Four pages of confidential information have been omitted and filed
separately with the Commission]
51
EXHIBIT I
LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. ___, dated ___________________, 19___, between
Aircraft No. 2, L.L.C., a limited liability company incorporated under the
laws of Illinois ("Lessor"), and Aloha Airlines, Inc., a Delaware corporation
("Lessee").
Lessor and Lessee have previously entered into that certain Aircraft
Lease Agreement dated as of August 11, 1997, (herein called the "Lease" and
the defined terms therein being hereinafter used with the same meaning). The
Lease provides for the execution and delivery from time to time of a Lease
Supplement substantially in the form hereof for the purpose of leasing the
aircraft described below under the Lease as and when delivered by Lessor to
Lessee in accordance with the terms thereof.
The Lease relates to the Aircraft, Parts and Engines as more precisely
described below. A counterpart of the Lease is attached hereto and this Lease
Supplement and the Lease shall form one document.
In consideration of the premises and other good and sufficient
consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under the Lease and
Lessee hereby accepts and leases from Lessor under the Lease, that certain
used Boeing 737-282 Advanced commercial jet Aircraft, Airframe and the two
(2) ▇▇▇▇▇ & Whitney Engines (each of which Engines has 750 or more rated
takeoff horsepower or the equivalent of such horsepower) described in
Schedule 1 herewith ("Aircraft").
2. The Delivery Date of the Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof.
3. The term for the Aircraft shall commence on the Delivery Date and
shall end on the Expiration Date, which shall be subject to extension as
contemplated by Section 1 D of the Lease.
4. The amount of Rent for the Aircraft is set forth in the Lease, and
is payable as provided in the Lease. The Last Basic Rent Payment Date shall
be subject to revision as contemplated by Section I D and Exhibit H of the
Lease. The Supplemental Rental is set forth on Schedule 2 hereto.
5. Lessee hereby confirms to Lessor that (i) the Aircraft and each
Engine installed thereon or belonging thereto have been duly marked in
accordance with the terms of Section 14 of the Lease, (ii) Lessee has
accepted the Aircraft for all purposes hereof and of the Lease, and
52
(iii) except as otherwise expressly agreed in writing by Lessor and Lessee,
Lessee has inspected the Aircraft and the Aircraft satisfies the conditions
set forth in the Lease.
6. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
7. This Lease Supplement may be executed in any number of
counterparts, each of such counterparts shall for all purposes be deemed to
be an original; and all such counterparts shall together constitute but one
and the same Lease Supplement.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
No.______ to Aircraft Lease Agreement to be duly executed as of the day and
year first above written.
Aircraft No. 2, L.L.C., Lessor
AAR Corp., Manager
By: ___________________________________
Name: _________________________________
Title: ________________________________
Aloha Airlines, Inc., Lessee
By: ___________________________________
Name: _________________________________
Title: ________________________________
By: ___________________________________
Name: _________________________________
Title: ________________________________
53
SCHEDULE 1
TO
LEASE SUPPLEMENT NO. 1
One Used
Boeing 737-282A
Advanced Airframe
FAA Registration No. Manufacturer's Serial No. Total Time* Total Cycles*
-------------------- ------------------------- ----------- -------------
N824AL 23045
Installed ▇▇▇▇▇ & ▇▇▇▇▇▇▇
Engines
Model No. Serial No. Total Time* Total Cycles*
--------- ---------- ----------- -------------
JT8D-9A
JT8D-9A
Each of the above-described Aircraft Engines has 750 or more rated takeoff
horsepower or its equivalent.
* The total time and total cycles referred to above are as of ______________
time, __, 1998. Such times and cycles are the actual hours and cycles at the
time of this Lease Supplement.
54
SCHEDULE 2
TO
LEASE SUPPLEMENT NO. 1
[One page of confidential information has been omitted and filed
separately with the Commission]
55
EXHIBIT J
ADDITIONAL ▇▇▇▇ OF WORK
[One page of confidential information has been omitted and filed
separately with the Commission]
LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. 1, dated March 20, 1998, between Aircraft No. 2,
L.L.C., a limited liability company incorporated under the laws of Illinois
("Lessor"), and Aloha Airlines, Inc., a Delaware corporation ("Lessee").
Lessor and Lessee have previously entered into that certain Aircraft
Lease Agreement dated as of August 11, 1997, (herein called the "Lease" and the
defined terms therein being hereinafter used with the same meaning). The Lease
provides for the execution and delivery from time to time of a Lease Supplement
substantially in the form hereof for the purpose of leasing the aircraft
described below under the Lease as and when delivered by Lessor to Lessee in
accordance with the terms thereof.
The Lease relates to the Aircraft, Parts and Engines as more precisely
described below. A counterpart of the Lease is attached hereto and this Lease
Supplement and the Lease shall form one document.
In consideration of the premises and other good and sufficient
consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under the Lease and
Lessee hereby accepts and leases from Lessor under the Lease, that certain used
Boeing 737-282 Advanced commercial jet Aircraft, Airframe and the two (2) ▇▇▇▇▇
& ▇▇▇▇▇▇▇ Engines (each of which Engines has 750 or more rated takeoff
horsepower or the equivalent of such horsepower) described in Schedule 1
herewith ("Aircraft").
2. The Delivery Date of the Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof.
3. The term for the Aircraft shall commence on the Delivery Date and
shall end on the Expiration Date, which shall be March 31, 2006. subject to
extension as contemplated by Section 1 D of the Lease.
4. The amount of Rent for the Aircraft is set forth in the Lease,
and is payable as provided in the Lease. The Last Basic Rent Payment Date shall
be subject to revision as contemplated by Section 1 D and Exhibit H of the
Lease. The Supplemental Rental is set forth on Schedule 2 hereto.
5. Lessee hereby confirms to Lessor that (i) the Aircraft and each
Engine installed thereon or belonging thereto have been duly marked in
accordance with the terms of Section 14 of the Lease, (ii) Lessee has accepted
the Aircraft for all purposes hereof and of the Lease, and (iii) except as
otherwise expressly agreed in writing by Lessor and Lessee, Lessee has inspected
the Aircraft and the Aircraft satisfies the conditions set forth in the Lease.
6. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
7. This Lease Supplement may be executed in any number of
counterparts, each of such counterparts shall for all purposes be deemed to be
an original; and all such counterparts shall together constitute but one and the
same Lease Supplement.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
No. 1 to Aircraft Lease Agreement to be duly executed as of the day and year
first above written.
Aircraft No. 2, L.L.C., Lessor
AAR Corp., Manager
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Vice President
Title: Chief Financial Officer
--------------------------------
Aloha Airlines, Inc., Lessee
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
6. All of the terms and provisions of the Lease are hereby
incorporated by terms reference in this Lease Supplement to the same extent as
if fully set forth herein.
7. This Lease Supplement may be executed in any number of
counterparts, each of such counterparts shall for all purposes be deemed to be
an original; and all such counterparts shall together constitute but one and the
same Lease Supplement.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement No. ____ to Aircraft Lease Agreement to be duly executed as of the
day and year first above written.
Aircraft No. 2, L.L.C., Lessor
AAR Corp., Manager
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Aloha Airlines, Inc., Lessee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Sr. Vice President Finance &
Title: Planning and CFO
--------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Vice President Planning &
Title: Development
--------------------------------
SCHEDULE 1
TO
LEASE SUPPLEMENT NO. 1
One Used
Boeing 737-282A Advanced
Airframe
FAA REGISTRATION NO. MANUFACTURER'S SERIAL TOTAL TIME* TOTAL CYCLES*
NO.
N824AL 23045 38152.6 hours 23199
Installed ▇▇▇▇▇ & Whitney
Engines
MODEL NO. SERIAL NO. TOTAL TIME* TOTAL CYCLES*
JT8D-9A 665851 56495.4 hours 39585
JT8D-9A 655014 61607.4 hours 44700
Each of the above-described Aircraft Engines has 750 or more rated takeoff
horsepower or its equivalent.
*The total time and total cycles referred to above are as of March 19, 1998.
Such times and cycles are the actual hours and cycles at the time of this Lease
Supplement.
ASSIGNMENT OF AIRCRAFT LEASE
(Aircraft 23045)
INSTRUMENT OF ASSIGNMENT ("Assignment") dated as of March 20, 1998,
between Aircraft No. 2, L.L.C., an Illinois limited liability company
("Assignor"), and ▇▇▇▇▇▇▇ BANK, N.A., a national banking association
("Assignee").
RECITALS:
A. The Assignor holds legal and record title to a Boeing 737-282
aircraft bearing manufacturer's serial number 23045 and FAA Registration Number
N824AL (the "Airframe") and its two ▇▇▇▇▇ & Whitney JT8D-9A jet engines bearing
manufacturer's serial numbers 665851 and 655014 (collectively, the "Engines";
the Airframe and the Engines, together with all avionics, appliances, radio and
radar devices, accessories, and equipment installed on the Airframe, being
referred to herein as the "Aircraft").
B. The Assignor has leased the Aircraft to Aloha Airlines, Inc.
("Lessee"), pursuant to an Aircraft Lease Agreement dated as of August 11, 1997
(the "Lease").
C. The Assignee has agreed to advance to the Assignor $7,099,888
($U.S.) as a term loan (the "Loan") pursuant to a Term Loan Agreement dated as
of May 30, 1997, between the Assignor and the Assignee (such Term Loan Agreement
as the same may be amended or modified from time to time being hereinafter
referred to as the "Loan Agreement").
D. As a condition of its making the Term Loan and in consideration
thereof and as security for the repayment thereof, the Assignee has required,
among other things, that the Assignor enter into this Assignment.
NOW, THEREFORE, in consideration of the foregoing recitals and for
other good and valuable consideration, the parties hereto hereby agree as
follows:
1. Capitalized terms used but not defined in this Assignment shall
have the respective meanings set forth in the Loan Agreement. In the event of a
conflict between the terms of this Assignment and the Loan Agreement, the terms
of the Loan Agreement or this Assignment which provide the Assignee with the
greatest rights and remedies shall be controlling.
2. In order to secure the due and punctual performance by Assignor
of each and every obligation of Assignor under, and compliance by Assignor with
each and every provision of, the Loan Agreement and the Term Note and the other
Loan Documents, Assignor hereby irrevocably assigns, transfers and sets over to
Assignee, all of Assignor's estate, right, title, interest, claim and demand in,
to and under the Lease and all payments due or to become due thereunder and
damages and other moneys from time to time payable
to or receivable by Assignor thereunder (said sums being herein called the
"Moneys").
3. Notwithstanding the provisions of Section 2 hereof, unless and
until an Event of Default shall have occurred, and thereafter provided that
Assignor has remedied all Events of Default, Assignor shall be entitled to
exercise all of the Assignor's rights under the Lease, except (a) the right, if
any, to assign or grant a security interest in any such right, including the
right to receive Moneys, to any Person other than Assignee, (b) to the extent
that such exercise would violate any provision of the Lease, and (c) as
otherwise provided herein. Upon the occurrence of an Event of Default and for as
long as the same shall be continuing, all rights and interest of the Assignor
in, to and under the Lease and the proceeds thereof, including, without
limitation, all rights to receive Moneys thereunder, shall be exercisable solely
by and shall inure solely and exclusively to the benefit of Assignee.
Accordingly, upon such occurrence of an Event of Default for as long as the same
shall be continuing in addition to any right or remedy Assignee may have under
the Loan Agreement, the Aircraft Security Agreement and the other Loan
Documents, Assignee shall have the all rights, but shall not be obligated, to
enforce the Lease as if Assignee were a party thereto.
4. Any Moneys which would have been required to be paid to Assignor
by Lessee but for the existence of an Event of Default and which have been paid
to Assignee shall be held by Assignee and may be applied by Assignee to cure any
Event of Default or applied in reduction of the obligations. Any Moneys
remaining in the possession of Assignee after the payment in full of all
obligations shall be promptly paid over to Assignor without interest.
5. The obligations of Assignor owing to Lessee under the Lease shall
continue to be obligations of Assignor, and Assignee shall have no obligations
or liability under the Lease by reason of, or arising out of, this Assignment,
and shall not be obligated to make any inquiry as to the sufficiency of any
payment received by it or to present or file any claim or to take any action to
collect or enforce any claim for any payment assigned hereunder. Notwithstanding
the foregoing sentence, in the event that an Event of Default (as defined in the
Lease) shall have occurred, Assignee, in its sole discretion, shall have the
right, but not the obligation, to undertake to assume and perform the
obligations of Assignor under the Lease and to have the Lessee deem and treat
Assignee as possessing all the rights granted Assignor under the Lease for all
purposes thereunder. Any performance by Assignee shall not constitute a waiver
or release of any obligation or any Event of Default (under the Loan Agreement)
which may arise out of Assignor's non-performance of its obligations under the
Lease nor an election or waiver by Assignee of any remedy or right available to
Assignee under the Loan Agreement or the other Loan Documents.
-2-
6. This Assignment shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
7. All notices, consents and other communications permitted or
required by this Assignment to be given or sent shall be in writing and, to be
effective hereunder, shall be hand delivered or sent by certified or registered
first class mail, return receipt requested, and addressed to the party to whom
directed at such party's address first above written or to such other address as
such party shall specify in a written notice to the other party hereto.
8. This Assignment shall be governed by, and construed and enforced
in accordance with, the laws of the State of Florida in effect from time to
time.
IN WITNESS WHEREOF, the parties hereto have executed this agreement on
the day and year first above written.
Aircraft No. 2, LLC, an Illinois
limited liability company
By: AAR Corp., a Delaware corpora-
tion as manager
By: \s\ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Assistant Secretary
▇▇▇▇▇▇▇ BANK, N.A., a
national banking association
By: -----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Vice President
(Acknowledgments appear on following page)
-3-
6. This Assignment shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
7. All notices, consents and other communications permitted or
required by this Assignment to be given or sent shall be in writing and, to be
effective hereunder, shall be hand delivered or sent by certified or registered
first class mail, return receipt requested, and addressed to the party to whom
directed at such party's address first above written or to such other address as
such party shall specify in a written notice to the other party hereto.
8. This Assignment shall be governed by, and construed and enforced
in accordance with, the laws of the State of Florida in effect from time to
time.
IN WITNESS WHEREOF, the parties hereto have executed this agreement on
the day and year first above written.
Aircraft No. 2, LLC, an Illinois
limited liability company
By: AAR Corp., a Delaware corpora-
tion, as manager
By: -----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
▇▇▇▇▇▇▇ BANK, N.A., a
national banking association
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Vice President
(Acknowledgments appear on following page)
-3-
STATE OF ILLINOIS )
) SS:
COUNTY OF DuPage )
The foregoing instrument was acknowledged before me this 17th day of March,
1998 by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as Assistant Secretary of AAR Corp., a Delaware
corporation, as manager of Aircraft No. 2, LLC, an Illinois limited liability
company, on behalf of the corporation and the limited liability company. He is
personally known to, me or has produced a driver's license as identification.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Print or Stamp Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------
Notary Public, State of: Illinois
---------------
Commission no.:
My Commission Expires: 09/06/00
----------------------------------
STATE OF FLORIDA ) OFFICIAL SEAL
) SS: ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇
COUNTRY OF DADE ) NOTARY PUBLIC, STATE OF ILLINOIS
MY COMMISSION EXPIRES: 09/06/00
----------------------------------
The foregoing instrument was acknowledged before me this ____ day of
March, 1998 by ▇▇▇▇▇ ▇▇▇▇▇▇▇, as Vice President of ▇▇▇▇▇▇▇ Bank, N.A., a
national banking association, on behalf of the association. He is personally
known to me or has produced a driver's license as identification.
----------------------------------------
Print or Stamp Name:
-------------------
Notary Public, State of:
---------------
Commission no.:
My Commission Expires:
-4-
STATE OF ILLINOIS )
) SS:
COUNTY OF __________ )
The foregoing instrument was acknowledged before me this ____ day of
__________, 1998 by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, as Vice President of AAR Corp., a
Delaware corporation, as manager of Aircraft No. 2, LLC, an Illinois limited
liability company, on behalf of the corporation and the limited liability
company. He is personally known to me or has produced a driver's license as
identification.
----------------------------------------
Print or Stamp Name:
-------------------
Notary Public, State of:
---------------
Commission no.:
My Commission Expires:
STATE OF FLORIDA )
) SS:
COUNTY OF DADE )
The foregoing instrument was acknowledged before me this 16 day of March,
1998 by ▇▇▇▇▇ ▇▇▇▇▇▇▇, as Vice President of ▇▇▇▇▇▇▇ Bank, N.A., a national
banking association, on behalf of the association. He is personally known to me
or has produced a driver's license as identification.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Print or Stamp Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Notary Public, State of: Florida
---------------
Commission no.: 6/6/2000
My Commission Expires:
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
MY COMMISSION # CC 559908
EXPIRES: June 6, 2000
Bonded Thru Notary Public Underwriters
--------------------------------------
-4-
6. This Assignment shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
7. All notices, consents and other communications permitted or
required by this Assignment to be given or sent shall be in writing and, to be
effective hereunder, shall be hand delivered or sent by certified or registered
first class mail, return receipt requested, and addressed to the party to whom
directed at such party's address first above written or to such other address as
such party shall specify in a written notice to the other party hereto.
8. This Assignment shall be governed by, and construed and enforced
in accordance with, the laws of the State of Florida in effect from time to
time.
IN WITNESS WHEREOF, the parties hereto have executed this agreement on
the day and year first above written.
Aircraft. No. 2, LLC, an Illinois
limited liability company
By: AAR Corp., a Delaware corpora-
tion as manager
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Assistant Secretary
▇▇▇▇▇▇▇ BANK, N.A., a
national banking association
By:
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Vice President
(Acknowledgments appear on following page)
-3-
6. This Assignment shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
7. All notices, consents and other communications permitted or
required by this Assignment to be given or sent shall be in writing and, to be
effective hereunder, shall be hand delivered or sent by certified or registered
first class mail, return receipt requested, and addressed to the party to whom
directed at such party's address first above written or to such other address as
such party shall specify in a written notice to the other party hereto.
8. This Assignment shall be governed by, and construed and enforced
in accordance with, the laws of the State of Florida in effect from time to
time.
IN WITNESS WHEREOF, the parties hereto have executed this agreement on
the day and year first above written.
Aircraft No. 2, LLC, an Illinois
limited liability company
By: AAR Corp., a Delaware corpora-
tion, as manager
By:
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
▇▇▇▇▇▇▇ BANK, N.A., a
national banking association
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Vice President
(Acknowledgments appear on following page)
-3-
STATE OF ILLINOIS )
) SS:
COUNTY of DuPage )
The foregoing instrument was acknowledged before me this 17th day of
March, 1998 by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as Assistant Secretary of AAR Corp., a Delaware
corporation, as manager of Aircraft No. 2, LLC, an Illinois limited liability
company, on behalf of the corporation and the limited liability company. He is
personally known to me or has produced a driver's license as identification.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Print or Stamp Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------
Notary Public, State of: Illinois
---------------
Commission no.:
My Commission Expires: 09/06/00
----------------------------------
STATE OF FLORIDA ) OFFICIAL SEAL
) SS: ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇
COUNTRY OF DADE ) NOTARY PUBLIC, STATE OF ILLINOIS
MY COMMISSION EXPIRES: 09/06/00
----------------------------------
The foregoing instrument was acknowledged before me this ____ day of March,
1998 by ▇▇▇▇▇ ▇▇▇▇▇▇▇, as Vice President of ▇▇▇▇▇▇▇ Bank, N.A., a national
banking association, on behalf of the association. He is personally known to me
or has produced a driver's license as identification.
----------------------------------------
Print or Stamp Name:
-------------------
Notary Public, State of:
---------------
Commission no.:
My Commission Expires:
-4-
STATE OF ILLINOIS )
) SS:
COUNTY OF __________ )
The foregoing instrument was acknowledged before me this ____ day of
__________, 1998 by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, as Vice President of AAR Corp., a
Delaware corporation, as manager of Aircraft No. 2, LLC, an Illinois limited
liability company, on behalf of the corporation and the limited liability
company. He is personally known to me or has produced a driver's license as
identification.
----------------------------------------
Print or Stamp Name:
-------------------
Notary Public, State of:
---------------
Commission no.:
My Commission Expires:
STATE OF FLORIDA )
) SS:
COUNTY OF DADE )
The foregoing instrument was acknowledged before me this 16 day of March,
1998 by ▇▇▇▇▇ ▇▇▇▇▇▇▇, as Vice President of ▇▇▇▇▇▇▇ Bank, N.A., a national
banking association, on behalf of the association. He is personally known to me
or has produced a driver's license as identification.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Print or Stamp Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Notary Public, State of: Florida
---------------
Commission no.: 6/6/2000
My Commission Expires:
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
MY COMMISSION # CC 559908
EXPIRES: June 6, 2000
Bonded Thru Notary Public Underwriters
--------------------------------------
-4-
AIRCRAFT LEASE AGREEMENT
BETWEEN
AIRCRAFT NO. 2, L.L.C.
AND
ALOHA AIRLINES, INC.
Counterpart No. _____ of _____ serially numbered manually executed
counterparts. To the extent, if any that this Lease constitutes
chattel paper under the UCC, no security interest in this Lease may
be created through the transfer and possession of any counterpart
other than Counterpart No. 1
TABLE OF CONTENTS
1. LEASE AND TERM; NET LEASE
2. DELIVERY AND RETURN OF AIRCRAFT
3. CHARGES
4. LIMITED WARRANTY; DISCLAIMER
5. SET-OFF; ABATEMENT
6. OPERATION, MAINTENANCE, REGISTRATION, and RECORDS
7. MODIFICATION OF THE AIRCRAFT
8. INSPECTION AND RECORDS
9. TAXES
10. INDEMNITY
11. LOSS OF OR DAMAGE TO AIRCRAFT; AGREED VALUE
12. INSURANCE
13. COMPLIANCE WITH LAWS
14. TITLE TO AIRCRAFT
15. ASSIGNMENT OR SUBLEASE; POSSESSION AND USE
16. EVENTS OF DEFAULT
17. REMEDIES
18. EXCUSABLE DELAY
19. DELAY IN RETURN OF AIRCRAFT
20. APPLICABLE LAW AND JURISDICTION
21. NOTICES
22. HEADINGS
23. CONFIDENTIALITY
24. REPRESENTATIONS, WARRANTIES AND COVENANTS
25. ASSIGNMENT AND COOPERATION WITH LESSOR'S LENDER
26. ENTIRE AGREEMENT
27. MISCELLANEOUS
28. BROKERS/FINDERS
29. SECURITY DEPOSIT
30. NO PURCHASE OPTION; NO HUSH KIT FINANCING
31. AUTHORIZATION; LESSEE'S CONDITIONS PRECEDENT
32. AUTHORIZATION; LESSOR'S CONDITIONS PRECEDENT
EXHIBIT A DESCRIPTION OF AIRCRAFT
EXHIBIT B RECORDS
EXHIBIT C REDELIVERY CONDITIONS
EXHIBIT D DELIVERY RECEIPT
EXHIBIT E REDELIVERY RECORDS
EXHIBIT F FORM OF LETTER OF CREDIT
EXHIBIT G PERMITTED SUBLESSEES
EXHIBIT H FINANCIAL TERMS
EXHIBIT I FORM OF LEASE SUPPLEMENT
EXHIBIT J ADDITIONAL ▇▇▇▇ OF WORK
IA. Summary of Transaction
The following is a summary of the lease transaction between Lessee and
Lessor. It is set forth for the convenience of the parties only and will
not be deemed in any way to amend, detract from or simplify the other
provisions of this Lease.
A. Description of Aircraft
One Boeing 737-282A, SN 23045, U.S. Reg N824AL
B. Scheduled Delivery Date and Location
On or Before March 15, 1998; over International Waters near
Christchurch Base, New Zealand
C. Basic Lease Tenn
96 Months from the Basic Lease Term Commencement Date
D. Security Deposit
As set forth in Exhibit H
E. Rent during the Basic Lease Term
See Exhibit H
F. Country of Aircraft Registration
United States
G. Initial Agreed Value of Aircraft
U.S. $11,000,000
▇. ▇▇▇▇▇▇'▇ Bank Account
▇▇▇▇▇▇▇ Bank
Miami Lakes, FL
Acct# 1596591379
ABA# ▇▇▇▇▇▇▇▇▇
1
AIRCRAFT LEASE AGREEMENT
THIS AGREEMENT, made and entered into as of the 11th day
of August, 1997, by and between AIRCRAFT NO. 2, L.L.C.,
(hereinafter referred to as "Lessor") and ALOHA AIRLINES,
INC., a Delaware corporation (hereinafter referred to as
"Lessee" ).
WITNESSETH:
WHEREAS, Lessor is the owner of the aircraft described in Exhibit A. The
aircraft, together with the engines, parts and equipment installed thereon,
including any replacements or substitutions therefor and (where the context
permits) the Records furnished herewith and required to be maintained hereunder,
are hereinafter collectively referred to as the "Aircraft"; and
WHEREAS, Lessee desires to hire and take from Lessor for operation and
Lessor is willing to lease to Lessee the Aircraft under the terms and conditions
hereinafter set forth;
NOW, THEREFORE, for and in consideration of the premises and of the mutual
covenants and agreements herein contained, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. LEASE AND TERM; NET LEASE
A. Subject to the provisions of this Agreement, Lessor agrees to and does
hereby lease to Lessee and Lessee agrees to and does hereby hire and take from
Lessor the Aircraft for a term commencing on the Delivery Date and ending
ninety-six (96) months after the Basic Lease Term Commencement Date (the
"Expiration Date"). The Term shall consist of (i) the Interim Term (which means
the period commencing on the Delivery Date of the Aircraft and ending on the
date immediately prior to the Basic Lease Term Commencement Date), (ii) the
Basic Lease Term (the ninety-six (96) month period referenced above) , and (iii)
if actually entered into, any Renewal Term, as hereinafter defined. The Basic
Lease Term Commencement Date means the first day of the month following the
month in which the Delivery Date occurs. The Delivery Date means the date on
which Lessor delivers the Aircraft to Lessee and the Lease Supplement is
executed by Lessor and Lessee ("Delivery"). Lessor will furnish Lessee with 72
hours notice of intended delivery. Lessor and Lessee anticipate that the
Delivery Date will be on or before March 15, 1998 provided, however that Lessor
will have no responsibility or liability for any delay in delivering the
Aircraft or failure to deliver the Aircraft for reasons other than willful
default of Lessor, including but not limited to, the failure of the current
lessee, Transportes Aeros Portugueses, S.A. ("TAP"), to redeliver the Aircraft
to Lessor at the time and in the condition required by Lessor's lease with TAP.
The delivery to and acceptance of the Aircraft by Lessee will be confirmed by
execution of a lease supplement in the form of Exhibit I hereto. The Aircraft
shall be used by Lessee for the carriage of passengers, mail and freight in its
operations as an air carrier certified by the Federal Aviation Administration
("FAA") and for no other purposes whatsoever except for flight crew training;
provided however, any training or check
2
flights performed with the Aircraft shall not exceed the average training/check
flights performed in other aircraft in Lessee's fleet. In no event shall the
Aircraft be operated in any area excluded from coverage by any insurance policy
required to be in effect with respect to the Aircraft under Section 12 hereof.
B. At Delivery the Aircraft will be equipped with two (2) ▇▇▇▇▇ and ▇▇▇▇▇▇▇
model JT8D-9A engines each of which has 750 or more rated take off horsepower,
or the equivalent thereof (individually, an "Engine" and collectively the
"Engines"), and with the major components as described in Exhibit A. Lessor will
perform at its expense all necessary conversions from metric to US measurements
for manuals, supplements and any other documents, in order for the Aircraft to
be operated. Lessor will retain all parts removed from the Aircraft as a result
of such conversion.
▇. ▇▇▇▇▇▇ shall deliver and Lessee shall accept the Aircraft on the
Delivery Date in the following condition:
a. The Aircraft will have a U.S. Certificate of Airworthiness, a fresh
TAP "C" Check (Lessee shall be entitled to observe and will be notified by
Lessor of the performance of the C Check), TCAS and windshear installed, Hexcel
Interiors 737-200 PAX Quikbin Interior Kit, and having all Airworthiness
Directives ("ADs") requiring compliance by the FAA complied with.
b. The Aircraft will be painted in Lessee's livery. Lessee shall supply
the paint and the Pounce Pattern.
c. The Aircraft will have at least 3,000 hours remaining on the
Airframe's structural inspection.
d. Intentionally Omitted.
e. The APU, landing gear and time controlled components shall be in a
condition as delivered by TAP to Lessor.
f. The Lessor will perform the work set forth in Exhibit J on the
Aircraft prior to delivery to Lessee (the "Additional ▇▇▇▇ of Work"). Lessee
will reimburse Lessor for the Additional ▇▇▇▇ of Work by means of Supplemental
Rental.
g. The Aircraft otherwise shall be delivered to Lessee in an "AS IS,
WHERE IS" condition over International Waters near Air New Zealand's maintenance
facility located in Christchurch Base, New Zealand (or another location as
agreed by the parties, if required to reduce tax liability).
h. All SI inspection items required to be performed through 22,400
flight hours will be performed (compliance without sampling) prior to delivery
and no individual SI items will fall due within the next 4000 flight hours.
3
i. All Engineering Orders that have been applied to the Aircraft and
maintenance records required for issuance of the U.S. Certificate of
Airworthiness and U.S. Registration will have been translated into English.
These will include AD's, major repairs and major alterations.
j. The Aircraft will be delivered without seats or galleys.
k. The Aircraft will have no maintenance deferrals, all non-routine
maintenance items discovered during the TAP C check will have been performed,
(upon completion of such C check, the Aircraft will have no required maintenance
items in a deferred status, including but not limited to, any structural
repairs, corrosion, skin replacement requirements, or crack propagation).
l. All AD's will either be terminated or cleared for inspection for a
minimum of eighteen (18) months from the delivery date except for those
inspections required more frequently than every eighteen months in which case
that AD will be cleared for inspection for the applicable maximum period between
inspections.
D. Provided Lessee is not in default hereunder, Lessee may extend the term
of the lease for a one (1) year period ("Renewal Term") following expiration of
the Basic Lease Term stated in Section 1.A. hereof. Lessee shall notify Lessor
of its desire to extend said term not less than one hundred eighty (180) days
prior to expiration of the Basic Lease Term. Base Rental and Variable Rental, as
hereinafter defined, during the Renewal Term will be at the greater of the then
Fair Market Rental Value as hereinafter defined or the Base Rental rates. Fair
Market Rental Value means the amount agreed by Lessor and Lessee as the price at
which an aircraft of the type, age and condition of the Aircraft could be leased
in an orderly transaction under prevailing market conditions between a willing
Lessee and a willing Lessor on the date of such determination. If Lessor and
Lessee are unable to agree on such amount then the Lessor and Lessee shall each
select an independent appraiser skilled in evaluating aircraft, who shall
jointly make the determination of such amount. If Lessor's and Lessee's
appraisers are unable to agree on the Fair Market Rental Value of the Aircraft,
then such appraisers shall select a third appraiser who shall make the
determination. The determination of the independent appraiser(s) shall be
binding and conclusive on Lessor and Lessee. In all cases, Lessor and Lessee
shall bear the cost of the appraiser selected by them and shall share equally in
the cost of retaining the third independent appraiser, if required, to make such
determination.
E. The Lease is net to Lessor. Lessee will pay all Base Rental, Variable
Rental, Supplemental Rental, costs, charges, fees and expenses in connection
with the delivery of Hexcel Interiors 737-200 PAX Quikbin Interior Kit, use,
possession and operation of the Aircraft, including maintenance, insurance,
state and local taxes (except for taxes with respect to which Lessee is not
obligated to indemnify Lessor under Section 9), and risk of loss or other
casualty. Such obligations of Lessee will be absolute and unconditional under
any and all circumstances and regardless of other events, including any of the
following:
4
(a) Any right of set-off, counterclaim, recoupment, defense or other
right (including any right of reimbursement) which Lessee may have against
Lessor, or any other person for any reason whatsoever, including any claim
Lessee may have for the foregoing.
(b) Unavailability or interruption in use of the Aircraft for any
reason, including a requisition thereof or any prohibition or interference with
or other restriction against Lessee's use, operation or possession of the
Aircraft (whether by Law, as hereinafter defined, or otherwise); any defect in
airworthiness, merchantability, fitness for any purpose, condition, design,
specification or operation of any kind or nature of the Aircraft; the
ineligibility of the Aircraft for any particular use or trade or for
registration or documentation under the Laws of any jurisdiction; or Total Loss
of the Aircraft; however, Lessee's obligation to pay Base Rental in the event of
Total Loss of the Aircraft shall terminate upon Lessor's receipt of the Agreed
Value of the Aircraft in accordance with Article 11 hereof.
(c) Insolvency, bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution, liquidation, receivership, administration or similar
proceedings by or against Lessor, Lessee or any other person.
(d) Invalidity or unenforceability or lack of due authorization of or
other defect in this Lease.
(e) Failure or delay on the part of any party to perform its obligations
under this Lease.
(f) Other cause which but for this provision would or might have the
effect of terminating or in any other way affecting any obligation of Lessee
hereunder.
F. Nothing in the foregoing Section 1E is intended as a waiver of any
rights of Lessee to bring a separate action for default by Lessor of any of its
obligations hereunder.
2. DELIVERY AND RETURN OF AIRCRAFT
A. The Aircraft, together with all pertinent log books, flight manuals
and other documents as described in Exhibit B, attached hereto and made a part
hereof (the "Records"), shall be delivered by Lessor to Lessee on the Delivery
Date of this lease over International Waters near Christchurch Base, New Zealand
or at such other location as is determined pursuant to Section l.C.g.
(hereinafter referred to as the "Delivery Point").
(a) Upon request by Lessee, Lessor will provide Lessee with a
demonstration flight of at least one hour, but less than two hours, duration,
prior to delivery of the Aircraft. If a demonstration flight is required
prior to delivery, it will be performed by and under the control of Lessor,
with Lessee's flight crew and/or other authorized personnel (not to exceed 3)
on board as observers if desired by Lessee. Lessor's captain will be the
pilot in command and will have the authority to cancel or terminate any
flight at his discretion short of one hour's duration without
5
incurring any liability for Lessor. If any such flight is canceled or terminated
short of one hour's duration, it will be rescheduled at a mutually agreeable
time.
(b) Lessor will bear the costs of the demonstration flight including but
not limited to costs of crew, special insurance for such flight, fuel and take
off and landing rights.
(c) The demonstration flight will be for the sole purpose of
demonstrating to the Lessee the satisfactory operation of the Aircraft and its
equipment and systems. The demonstration flight will be conducted in accordance
with mutually acceptable procedures. Lessor will at its expense correct
Discrepancies (conditions exceeding manufacturer's specifications) revealed
during the demonstration flight.
(d) The Engines shall undergo a video borescope inspection and power
assurance run at or immediately prior to time of the demonstration flight
performed at Lessor's expense with Lessee as an observer. Any Discrepancies
found not to be in compliance with the manufacturer's maintenance manual shall
be corrected at Lessor's expense.
B. Upon expiration or termination of this Lease, Lessee will redeliver the
Aircraft at a mutually agreeable location in the continental United States (the
"Redelivery Location"). Subject to Section 6, upon redelivery of the Aircraft,
the Aircraft shall be in an airworthy condition in accordance with FAA
standards, without any maintenance deferrals, with a valid FAA certificate of
airworthiness in effect with respect thereto, in conformance with Federal
Aviation Regulations ("FAR") Part 121, and otherwise with the same equipment and
in the same condition and configuration as when delivered to Lessee, except for
reasonable wear and tear due to ordinary use. Notwithstanding anything herein to
the contrary, upon return the Aircraft will not be in compliance with FAR Part
36 and ICAO 16 Chapter 3. In addition, the Aircraft upon completion of the
redelivery acceptance inspection (i) will be free and clear of all Liens, as
hereinafter defined, which result from Lessee's actions or inactions, (ii) will
be fresh from a full "C" check performed by Lessee, under Lessee's FAA approved
maintenance and structural programs including CPCP and all required non-routine
maintenance items discovered during such "C" check, without any deferrals will
have been performed, (upon completion of the "C" check, the Aircraft shall have
no required maintenance items in a deferred status, including but not limited to
any structural repairs, corrosion, skin replacement requirements, or crack
propagation discovered prior to or during the "C" check in accordance with
Lessee's Maintenance Program, and FAA Requirements), (iii) will be painted in
the livery designated by Lessor, and (iv) will meet the conditions listed in
Exhibit C. Upon Redelivery, all AD's will either be terminated or cleared for
inspection for a minimum of eighteen (18) months from the redelivery date except
for those inspections required more frequently than every eighteen (18) months,
in which case that AD will be cleared for inspection for the applicable maximum
period between inspections. If the Aircraft is not returned in the condition
required under this Agreement upon expiration or termination of this Lease,
unless lost, destroyed or so damaged as to constitute a constructive total loss
for insurance purposes, the provisions of this Agreement shall continue in full
force and effect with respect to the rights of Lessor and the obligations of
Lessee, including, without limitation, Lessee's obligation to pay rental at 150%
of the monthly rate and other
6
charges set forth in Section 19 and to maintain insurance as set forth herein,
without prejudice to any other rights or remedies of Lessor.
C. At least fourteen (14) days prior to redelivery of the Aircraft, Lessee,
at its expense, will make the Aircraft available to Lessor for inspection and at
least twenty-one (21) days prior to such redelivery, Lessee will make the
Records available to Lessor for inspection ("Final Inspection") to permit Lessor
to verify that the condition of the Aircraft and Records complies with the terms
hereof. The period allowed for the Final Inspection shall be of such duration as
to permit the conduct by Lessor of the following:
(a) Inspection of Records;
(b) Inspection of the Aircraft, Engines (including a full video engine
borescope inspection) and Parts;
(c) A test flight of at least one hour but not more than two hours (at
Lessor's option, the first hour of the redelivery flight will constitute the
test flight) duration. The test flight will be performed by and under the
control of Lessee, with up to three of Lessor's authorized personnel on board as
observers. Lessee will bear the cost of the test flight including but not
limited to costs of crew, insurance, fuel, takeoff and landing rights. Lessee
will at its expense correct Discrepancies revealed during the test flight.
(d) The Engines shall undergo a video borescope inspection and power
assurance run at or before time of the redelivery test flight performed at
Lessee's expense with Lessor as an observer. Any Discrepancies found not to be
in compliance with the manufacturer's maintenance manual shall be corrected at
Lessee's expense.
If the condition of the Aircraft upon such Final Inspection does not
conform to the terms hereof, Lessee at its own expense will bring the Aircraft
into compliance. To the extent the time for such rectification extends beyond
the expiration date of the Lease, the term hereof shall be deemed automatically
extended, except that Lessee will pay monthly rental at 150% of the Base Rental
and 150% of the Variable Rental and the provisions hereof shall remain in force
until such rectification has been accomplished, unless Lessor terminates the
Lease in writing at its sole option.
D. Each transfer of possession of the Aircraft between the parties shall be
accompanied by the delivery to the transferring party of a receipt in the form
of Exhibit D attached hereto, executed by an authorized representative of the
receiving party.
E. Redelivery of the Aircraft under this Agreement will occur upon physical
redelivery of the Aircraft to Lessor at the Redelivery Location upon execution
and delivery by Lessor to Lessee of an aircraft redelivery receipt in the form
of Exhibit ▇. ▇▇▇▇▇▇ shall sign and deliver such receipt to Lessee upon tender
of delivery of the Aircraft to Lessor at the Redelivery Location in compliance
with all of the terms and conditions hereof.
7
F. Lessee will ensure that at return of the Aircraft any and all airport,
navigation and other charges, including but not limited to Eurocontrol charges,
which give rise or may if unpaid give rise to any lien, claim, charge or
encumbrance, right of detention, right of sale or other security interest in
relation to the Aircraft, any Engine or any Part, whether incurred in respect of
the Aircraft or any other aircraft operated by Lessee, have been paid and
discharged in full (whether or not due) and will at Lessor's request produce
evidence thereof satisfactory to Lessor.
3. CHARGES
See Exhibit H.
4. LIMITED WARRANTY; DISCLAIMER
A. Lessor warrants that it will have good title to the Aircraft, free and
clear of all liens and encumbrances other than the lien of Lessor's Lender, at
the time of delivery to Lessee.
B. THE AIRCRAFT IS LEASED TO AND ACCEPTED BY LESSEE IN "AS IS" CONDITION
AND WITH ALL FAULTS. LESSOR MAKES NO WARRANTIES WHATSOEVER WITH RESPECT TO THE
AIRCRAFT, EXPRESS OR IMPLIED, EXCEPT THE WARRANTY AS TO TITLE APPEARING IN
SECTION 4A ABOVE.
C. THE WARRANTIES SET FORTH IN THIS SECTION 4 AND THE OBLIGATIONS AND
LIABILITIES OF LESSOR THEREUNDER, ARE EXPRESSLY IN LIEU OF AND LESSEE HEREBY
WAIVES AND RELEASES LESSOR FROM ANY AND ALL OTHER WARRANTIES, AGREEMENTS,
GUARANTEES, CONDITIONS, DUTIES, OBLIGATIONS, REMEDIES OR LIABILITIES, EXPRESS OR
IMPLIED, ARISING BY LAW OR OTHERWISE, INCLUDING WITHOUT LIMITATION ANY WARRANTY
OF MERCHANTABILITY AND FITNESS FOR INTENDED USE OR LOSS OF USE OR STRICT
LIABILITY IN TORT, WITH RESPECT TO ANY EQUIPMENT LEASED HEREUNDER OR LESSOR'S
PERFORMANCE HEREUNDER. NO AGREEMENT OR UNDERSTANDING VARYING, ALTERING OR
EXTENDING LESSOR'S LIABILITY WILL BE BINDING ON LESSOR UNLESS IN WRITING AND
SIGNED BY LESSEE'S AND LESSOR'S DULY AUTHORIZED OFFICER OR REPRESENTATIVE.
▇. ▇▇▇▇▇▇ will assign to Lessee any assignable warranties of overhaul
agencies performing any predelivery work for Lessor on the Aircraft, and/or
Engines. In the event that Lessor contracts for performance of work on the
Aircraft or Engines prior to delivery, Lessor will use good faith efforts to
obtain industry standard warranties for that work and to assign such warranties
to Lessee.
5. SET-OFF; ABATEMENT
All payments provided for herein shall be paid without set-off, defense,
counterclaim or deduction of any nature whatsoever arising from this or any
other transaction or relationship, direct or indirect, which may exist between
the parties, except for taxes imposed on Lessee as a
8
result of this Lease with respect to which Lessee is not obligated to indemnify
Lessor under Section 9. There shall be no abatement of Base Rental, Variable
Rental, Supplemental Rental, or other charges payable hereunder for any period
that the Aircraft shall be out of use or unserviceable for any reason
whatsoever, including by way of illustration but not by way of limitation, while
undergoing maintenance, suspension of certification or grounding of the Aircraft
resulting from fire, casualty, or administrative action or revocation or
limitation of government approval, license or permit. If Lessee is prohibited by
Law from making payment in full to Lessor, Lessee will gross up the payment
amount such that the net payment received by Lessor after any deduction or
withholding equals the amounts called for under this Lease. "Law" means any (i)
statute, decree, constitution, regulation, order or any directive of any
government entity, (ii) treaty, pact, compact or other agreement to which any
government entity is a signatory or party and (iii) judicial or administrative
interpretation or application. Nothing in this Section 5 is intended as a waiver
of any rights of Lessee to bring a separate action for default by Lessor of any
of its obligations hereunder.
6. OPERATION, MAINTENANCE, REGISTRATION, and RECORDS
A. Lessee shall conduct all flight operations of the Aircraft only with
properly qualified and properly certified flight crews and in accordance with
(i) the manufacturers recommended operating procedures and manuals and
instructions in effect from time to time, (ii) applicable rules, regulations and
requirements of the government of the United States of America, including
specifically, the FAA, and (iii) the applicable rules, regulations and
requirements of any other jurisdiction in which the Aircraft may be operated.
B. During the Term, Lessee, at its sole cost and expense, will service,
repair, overhaul and maintain the Aircraft in accordance with applicable
requirements of all U.S. governmental agencies including the FAA. In addition,
Lessee will (i) keep the Aircraft in as good operating condition as when
delivered to Lessee, reasonable wear and tear from ordinary use excepted, (ii)
keep the Aircraft in such condition as may be necessary to enable the
airworthiness certification for the Aircraft to be maintained in good standing
at all times under the laws of the United States, and (iii) maintain the
Aircraft in at least the same manner as Lessee maintains, services, repairs or
overhauls similar aircraft operated by Lessee without in any way discriminating
against the Aircraft, whether by reason of its leased status or otherwise;
provided however, that nothing in the foregoing shall be deemed to expand
Lessee's obligations or return of the Aircraft beyond the return provisions
expressly set forth herein. The Aircraft shall be maintained in accordance with
Lessee's FAA approved maintenance program. Such maintenance will include without
limitation all scheduled and unscheduled overhaul and maintenance, including
line maintenance, and replacement of components, parts, and Engines as may be
required. In addition, Lessee will replace or repair any loss or damage to the
Aircraft, regardless of cause. Lessee will fully comply, at its sole cost and
expense, with all instructions and Airworthiness Directives of the FAA falling
due during the Term ("AD") and will comply at its sole cost and expense with all
Alert Service Bulletins (service bulletins issued by the manufacturer requiring
compliance) falling due during the Term, all in accordance with the terms
thereof in the same manner as Lessee complies with such AD's and Alert Service
Bulletins on similar aircraft operated by
9
Lessee without in any way discriminating against the Aircraft, whether by reason
of its leased status or otherwise.
C. Lessee, at its own cost and expense, will promptly replace or cause to
be replaced all Parts which may from time to time become unserviceable, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use for any reason whatsoever. All replacement Parts shall be
owned by Lessee free and clear of all Liens, except replacement Parts
temporarily installed on an emergency basis (Lessee will notify Lessor of any
such emergency replacement involving a Lien or Liens in excess of Ten Thousand
Dollars ($10,000.00)), and shall be in as good operating condition as, and shall
have a value and utility at least equal to, and be in a modification status and
part number equal or greater than, the Parts replaced assuming such replaced
Parts were in the condition and repair required to be maintained by the terms
hereof. All Parts at any time removed from the Aircraft or any Engine shall
remain the property of the Lessor, no matter where located, until such time as
such Parts shall be replaced by Parts which meet the requirements for
replacement Parts specified above. Immediately upon any replacement Part
becoming incorporated or installed in or attached to the Aircraft or any Engine,
without further act, except replacement Parts temporarily installed on an
emergency basis, (i) such replacement Part shall become the property of Lessor
and shall become subject to this Lease and be deemed a Part for all purposes
hereof to the same extent as the Parts originally incorporated or installed in
or attached to the Aircraft or such Engine, and (ii) the replaced Part shall no
longer be the property of Lessor and shall no longer be deemed a Part hereunder
and provided Lessee is not in default, title to such removed Part shall transfer
to Lessee free and clear of Liens, except for Liens created by or through
Lessee. "Parts" means all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature other than
complete Engine or Engines, which are from time to time incorporated or
installed in or attached to the Aircraft or any Engine. Lessee, at its own
expense, may from time to time make such alterations and modifications in and
additions to the Aircraft or any Engine as Lessee may deem desirable in the
proper conduct of its business, including removal of parts which Lessee deems to
be obsolete or no longer suitable or appropriate for use on the Aircraft or such
Engine ("Obsolete Parts"); provided that no such alteration, modification,
removal or addition impairs the condition or airworthiness of the Aircraft or
such Engine, or diminishes the value, utility or remaining useful life of the
Aircraft or such Engine below the value, utility or remaining useful life
thereof immediately prior to such alteration, modification, removal or addition
assuming the Aircraft or such Engine was then in the condition required to be
maintained by the terms of this Lease. All Parts incorporated or installed in
or attached or added to the Aircraft or an Engine as the result of such or
addition (except those parts which Lessee has leased from others and which may
be removed by Lessee pursuant to the next sentence) (the "Additional Parts")
shall, without further act, become the property of Lessor. Notwithstanding the
foregoing sentence, Lessee may, at any time during the Term, so long as no Event
of Default shall have occurred and be continuing, remove or suffer to be removed
any Additional Part, provided that such Additional Part (i) is in addition to,
and not in replacement of or substitution for, any Part originally incorporated
or installed in or attached to such Aircraft or any Engine at the time of
delivery thereof hereunder or any Part in replacement of or substitution for any
such Part, (ii) is not required to be incorporated or installed in or attached
or added to the Aircraft or any Engine pursuant to the terms of Section 6 hereof
and (iii) can be removed from
10
the Aircraft or such Engine without impairing airworthiness or diminishing the
value, utility or remaining useful life of the Aircraft or such Engine which the
Aircraft or such Engine would have had at such time had such alteration,
modification or addition not occurred. Upon the removal thereof as provided
above, such Additional Part shall no longer be deemed the property of Lessor or
part of the Aircraft or Engine from which it was removed. Any Additional Part
not removed as above provided prior to the return of the Aircraft or Engine to
Lessor hereunder shall remain the property of Lessor. Notwithstanding the above,
Lessee shall be permitted to install leased galleys and seats (the "Special
Equipment") on the Aircraft. Lessor agrees that it will claim no interest in the
Special Equipment.
▇. ▇▇▇▇▇▇ will cause the Aircraft to be registered in the name of Lessor
under regulations of the United States throughout the Term. Lessee will assist
Lessor in maintaining such registration during the Term. Lessee shall at its own
expense and responsibility cause this Agreement or appropriate financing
statements, so far as permitted by applicable law or regulation, to be kept
filed and recorded at all times during the Term, in such office or offices for
the registration of aircraft in the United States and in such other offices as
may be necessary, or as Lessor may reasonably request, to protect and preserve
Lessor's rights hereunder, and shall on request furnish to Lessor an opinion of
counsel or other evidence satisfactory to Lessor of such filing and recording.
E. (i) Lessee will maintain complete and accurate records, logs and other
materials required to be maintained in respect of the Aircraft by the FAA and
will provide them to Lessor on reasonable request. In addition, the Records will
include, but not be limited to, records of accomplishment of AD's, service
bulletins, and any modifications. In addition, all overhaul/maintenance Records
for the airframe, engines, APU and components required by Lessor will be
maintained and supplied by Lessee. All such Records shall be the property of
Lessor and will be deemed Records at the time generated. Lessee will report
hours and cycles of operation, and location of operation, to Lessor upon
request. If the Lessee is required pursuant to the terms hereof to pay Variable
Rent at the time a D Check is being performed on the Aircraft, Lessee will
obtain Lessor's prior written approval, which approval will not be unreasonably
withheld, of the "D" Check Vendor if Lessor has notified Lessee of such
requirement.
(ii) Upon redelivery of the Aircraft to Lessor, Lessee will return all
Records delivered to Lessee by Lessor as well as all Records generated by
Lessee. See Exhibit E; provided, however, Lessee shall not be responsible for
records and documentation with respect to the Aircraft (as the Aircraft was
delivered to Lessee) prior to the commencement of this Lease unless such records
were delivered to Lessee by Lessor. Lessee's obligation is to redeliver
originals of all such Records.
(iii) With respect to any Part installed by the Lessee during the Lease
and not removed prior to the return of the Aircraft, the Records returned to
Lessor will include:
(a) Part number, description, and serial number (if Part is
serialized); and
11
(b) Historical records, including but not limited to (i)
serviceability status of the Part at installation, (ii) for a time-controlled
Part, total time and cycles, time and cycles since overhaul as may be
applicable, and total time and cycles of the Aircraft or engine at the time of
Part installation, (iii) for a life-limited Part, documentation tracing usage of
the Part since new and all appropriate on-off logs, and (iv) past history,
modification status and overhaul records for components.
7. MODIFICATION OF THE AIRCRAFT
A. Except as provided in Section 6C and modifications relating to seats,
and galleys, Lessee shall not make any optional modifications to the Aircraft,
including but not limited to additions, alterations or improvements without
Lessor's prior written consent.
B. Upon termination of this Lease Agreement, Lessee shall return the
Aircraft to Lessor in its original configuration as delivered to Lessee, or as
otherwise agreed in writing between Lessor and Lessee.
8. INSPECTION AND RECORDS
A. While the Aircraft is leased to Lessee, Lessor shall have the right to
inspect the Aircraft and the required maintenance records at any reasonable time
and on reasonable notice (except in the case of an Event of Default where no
notice is required) so as not to delay Lessee's flights or unreasonably
interfere with Lessee's or any permitted Sublessee's operations, including
periods during which the Aircraft is undergoing maintenance. Subject to the
preceding sentence, such inspection shall not restrict Lessor from opening any
panels, bays, doors, etc., which are normally opened during such maintenance.
Upon request, Lessee will advise Lessor of the maintenance schedule of the
Aircraft for the following year and Lessor shall be entitled to have a
representative present at the location of any "C" check or "D" check at all
times during which the work is being performed.
B. Lessee agrees to furnish Lessor information in such form as Lessor may
reasonably request regarding Lessee's use and operation of the Aircraft during
the term of this Lease as may be necessary to permit Lessor to maintain its
records in accordance with the requirements of all applicable United States
governmental agencies.
9. TAXES
A. All payments to be made by Lessee under the Lease shall be paid without
deduction for, or on account of, any present or future taxes, levies, imposts,
value added type charges or taxes, customs, duties, charges, currency
surcharges, fees, assessments, deductions or withholdings of any nature
(collectively, together with interest and penalties thereon, called "Taxes")
imposed, levied, collected, withheld or assessed by any country or any political
subdivision or taxing authority thereof or therein, or by any group or
organization of which such country at the time of payment may be a member,
unless Lessee is compelled by law to make
12
payment after deducting any of such Taxes, in which event Lessee shall pay to
Lessor such additional amounts as may be necessary to ensure that Lessor
receives an amount in U.S. Dollars equal to the full amount which it would have
received had payment not been made subject to any such taxes. Lessee shall pay
or cause to be paid, and shall indemnify and hold harmless Lessor from and
against, any and all Taxes imposed, levied, collected, withheld or assessed
against Lessee or Lessor by any country or political subdivision or taxing
authority thereof or therein, if and to the extent that such Taxes are payable
as a result of this Lease Agreement, the work performed as set forth in Exhibit
J, the delivery and installation of Hexcel Interiors 737-200 PAX Quikbin
Interior Kits, or the possession, use, operation or repair of the Aircraft.
Notwithstanding the provisions of the above paragraph, Lessee's obligations
under this Section 9 in respect of Taxes shall not include:
(i) Taxes on, based on, or measured by, net income of Lessor, or United
States federal value added or consumption type charges or taxes imposed on
Lessor, imposed by the United States of America or any United States federal,
state or local political subdivision or taxing authority;
(ii) Taxes imposed in a taxing jurisdiction (other than by the United
States federal government or by the jurisdiction in which Lessor is incorporated
in or maintains its principal place of business) for a tax period during which
neither the Aircraft nor any part thereof has been located or operated in that
taxing jurisdiction.
(iii) Any Taxes imposed as a result of a sale, transfer of title,
mortgaging, pledging, financing, voluntary transfer of other voluntary
disposition by Lessor of the Aircraft or part thereof or interest therein, or
any interest in the Rent or part thereof or any interest in the Lease or part
thereof, unless such sale, transfer, mortgage, pledge or disposition occurs by
reason of the exercise of Lessor's remedies under this Lease upon an Event of
Default, provided however, that Lessor shall comply with any reasonable request
as Lessee shall make concerning the appropriate jurisdiction in which such sale,
transfer or disposition shall be made (with Lessee bearing any costs associated
therewith) unless Lessor determines (and advises Lessee) that such compliance
with Lessee's request would generate an adverse consequence to Lessor.
(iv) Any penalties or interest caused solely by the negligence or
willful misconduct of Lessor in connection with its obligations under this
Section 9.
(v) Any Taxes caused solely by a failure by Lessor to furnish in a
timely manner notice or information which Lessor is required to furnish to
Lessee by the terms of this Section;
(vi) Taxes relating to the Aircraft or any part thereof, or interest
therein, for any taxable period or portion thereof, relating to events occurring
prior to commencement of the Term of this Lease with the exception of work
performed as set forth in Exhibit J and delivery and installation of Hexcel
Interiors 737-200 PAX Quikbin Interior Kit or after the expiration of the Term
of this Lease and the redelivery of the Aircraft in accordance with this Lease;
13
(vii) Taxes based on or measured by the value or principal amount of any
loan or promissory note (or security therefore) entered into by Lessor or anyone
claiming an interest in the Aircraft or any portion thereof through Lessor.
B. In the event any report or return is required to be made with respect to
any obligation of the Lessee, under or arising out of this Section 9 (including
but not limited to personal property tax returns), the Lessee shall (a) to the
extent required or permitted by law, make and file in its own name such return,
statement or report, and (b) in the case of any other such return, statement or
report required to be made in the name of Lessor advise Lessor of such fact and
prepare such return, statement or report for filing by Lessor or, where such
return, statement or report shall be required to reflect items in addition to
any obligation of the Lessee under or arising out of this Section 9, provide
Lessor with information sufficient to permit such return, statement or report to
be properly made with respect to any obligation of the Lessee under or arising
out of this Section 9. Lessee shall indemnify and hold Lessor harmless from and
against any liabilities, obligations, losses, damages, penalties, interest,
claims, actions, suits and costs arising out of any late or inadequate payment
of any such Taxes, or any failure to file, or insufficiency or inaccuracy in any
such return, statement, report or information, except to the extent that the
same is attributable to Lessor's failure to timely and properly file returns
which have been timely prepared by Lessee and delivered to Lessor. 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 such Taxes referred to in this Section
9, Lessor shall promptly notify Lessee of such required report or return. Lessor
agrees to respond to any reasonable request of Lessee for information within the
control of Lessor with respect to the filing of any such report or return, but
Lessee agrees to pay any reasonable costs, fees or other charges of independent
counsel or independent accountants incurred by Lessor in connection with such
response or request.
C. If claim is made against Lessor for any Taxes with respect to which
Lessee has an obligation under this Section 9, Lessor shall promptly notify the
Lessee. If reasonably requested by the Lessee in writing and provided no Event
of Default shall have occurred and is continuing, Lessor, at the sole expense of
the Lessee, shall in good faith and diligently contest (and not settle without
Lessee's written consent) or shall permit the Lessee, if desired by the Lessee,
to contest in the name of the Lessee the validity, applicability or amount of
such Taxes. Lessee may contest, or require that Lessor contest, by (a) resisting
payment thereof if practicable, (b) not paying the same except under protest
with funds advanced by Lessee on an interest-free basis, if protest is necessary
and proper, and (c) if payments be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings; provided,
however, that, in each such instance, the Lessor shall not be required to
undertake any contest unless:
(i) Lessee shall have provided Lessor with an opinion of legal counsel
reasonably acceptable to Lessor to the effect that a reasonable basis exists to
contest such claim (provided, however, that no such opinion shall be necessary
in order to contest such claim in meetings with auditors, revenue agents, or in
other informal meetings with staff members of the applicable tax authority) and,
prior to the commencement of any appeal of an adverse judicial decision, with an
opinion of such tax counsel to the effect that a reasonable basis exists to
appeal
14
such adverse judicial decision (which opinions shall be obtained at
Lessee's sole cost and expense);
(ii) Such proceedings do not involve any material risk or danger of the
sale, forfeiture or loss of the Aircraft or any part thereof or interest therein
or the imposition of criminal penalties or sanctions against Lessor or the
creation of any Lien other than a Lien for taxes not yet due or being contested
in good faith by appropriate proceedings, and for payment of which such reserves
if any, as are required to be provided under generally accepted accounting
principals have been made unless Lessee has provided to Lessor a bond or other
security reasonably satisfactory to Lessor (provided that in the case of
criminal penalties or sanctions such bond or other security shall be
satisfactory to Lessor in its sole discretion) to protect against such risk or
danger;
(iii) in the event that the subject matter of the contest is of a
continuing nature and has previously been decided adversely pursuant to the
contest provisions of this Section 9 by the highest court to which an appeal
could be taken (other than the U.S. Supreme Court), there has been a change in
the law (including, without limitation, amendments to statutes or regulations,
administrative rulings and court decisions) after such claim shall have been so
previously decided and Lessor shall have received an opinion of independent tax
counsel selected by the Lessee and reasonably acceptable to Lessor, which
opinion shall be obtained at the Lessee's sole expense, to the effect that, as a
result of such change, it is more likely than not that the position which Lessor
or the Lessee, as the case may be, had asserted in such previous contest would
prevail;
(iv) No Event of Default shall have occurred and be continuing;
(v) Prior to the commencement of any contest undertaken by the Lessee or
any contest undertaken by Lessor with respect to which Lessor is required to
follow the direction of the Lessee, the Lessee shall have delivered to Lessor a
written acknowledgment of its obligation to indemnify fully Lessor to the extent
that the contest is not successful;
(vi) If such contest is to be initiated by the payment of, and the
claiming of a refund for, such Taxes, Lessee shall have advanced to Lessor
sufficient funds (on an interest-free basis) to make such payments, provided,
however, that Lessee shall indemnify Lessor for any adverse tax consequences
resulting from such advance.
Lessee shall not be deemed to be in default under any of the above
indemnification provisions of this Section 9 so long as Lessee shall diligently
prosecute a contest in conformity with the requirements of this Section 9C, or
in the case where the Lessor shall be prosecuting such contest pursuant to this
Section 9C, Lessee has fulfilled all of its obligations under this Section 9C
with respect to such contest. Notwithstanding the foregoing, if a claim is made
against Lessor which, if successful, would result in the imposition of Taxes
under circumstances which would require the Lessee to indemnify Lessor, Lessor
shall be released from its responsibility to contest such claim, or part
thereof, if it agrees in writing with Lessee not to seek indemnification from
Lessee in respect of the claim, or such part thereof to be contested. In the
15
event Lessor fails diligently to contest, or refuses to permit the Lessee to
contest, a claim or part thereof which Lessor has the obligation to contest or
to permit Lessee to contest under this Section 9, then Lessee shall not be
obligated to indemnify Lessor for such claim or such part thereof and Lessor
shall refund to Lessee any amounts paid or advanced by Lessee in connection with
such Taxes that were the subject of such claim (plus interest from the date
payment is due at the rate established for refunds by the taxing authority
imposing such taxes).
D. If Lessor shall obtain a refund of all or any part of such tax, fee or
other charge paid by Lessee, Lessor shall pay the Lessee the amount of such
refund less the amount of any Taxes payable by Lessor in respect of the receipt
of such refund; provided that such amount shall not be payable (x) before such
time as the Lessee shall have made all payments or indemnities then due to
Lessor under the Lease, or (y) while any Event of Default is outstanding and
continues unremedied. If in addition to such refund, Lessor shall receive an
amount representing attorneys fees, interest or other amount with respect to
such refund, the Lessee shall be paid that proportion of such amounts which is
fairly attributable to Taxes paid by the Lessee prior to the receipt of such
refund.
10. INDEMNITY
A. LESSEE HEREBY RELEASES AND AGREES TO INDEMNIFY, DEFEND AND SAVE HARMLESS
LESSOR, AND ITS DIRECTORS, OFFICERS, AGENTS, MEMBERS AND EMPLOYEES (COLLECTIVELY
THE "INDEMNITEES"), FROM ANY AND ALL LIABILITIES, DAMAGES, LOSSES, EXPENSES,
DEMANDS, CLAIMS, SUITS OR JUDGMENTS, INCLUDING ALL REASONABLE ATTORNEYS' FEES,
COSTS AND EXPENSES IN CONNECTION THEREWITH OR INCIDENT THERETO, FOR THE DEATH OF
OR INJURIES TO ANY PERSONS WHOMSOEVER (EXCLUDING EMPLOYEES OF THE INDEMNITEES IN
THEIR CAPACITY AS EMPLOYEES), AND FOR THE LOSS OF, DAMAGE TO OR DESTRUCTION OF
OR DELAY IN DELIVERY OF ANY PROPERTY WHATSOEVER, INCLUDING PROPERTY OF THE
PARTIES HERETO OR THAT OF THEIR DIRECTORS, OFFICERS, AGENTS, MEMBERS AND
EMPLOYEES, INCLUDING BUT NOT LIMITED TO THE AIRCRAFT, IN ANY MANNER ARISING OUT
OF POSSESSION, USE, MAINTENANCE, REPAIR OR OPERATION OF THE AIRCRAFT DURING THE
TERM HEREOF, (REGARDLESS OF NEGLIGENCE ON THE PART OF ANY INDEMNITEE, WHETHER
ACTIVE, PASSIVE OR OTHERWISE), PROVIDED, HOWEVER, THAT LESSEE'S INDEMNITY
OBLIGATION HEREUNDER SHALL NOT BE APPLICABLE TO ANY DEATH, INJURY, LOSS, DAMAGE
OR DESTRUCTION TO THE EXTENT CAUSED BY (1) THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF AN INDEMNITEE OR (2) BY ANY INDEPENDENT ACT OF NEGLIGENCE ON THE
PART OF ANY INDEMNITEE NOT RELATED TO THE PERFORMANCE OF THIS AGREEMENT.
Lessee shall be entitled, at its sole cost and expense, acting through
counsel reasonably acceptable to the respective Indemnitee, (i) in any judicial
or administrative proceeding that involves solely a claim for which payment or
indemnity is sought under this Section 10, to assume responsibility for and
control thereof, (ii) in any judicial or administrative proceeding
16
involving a claim for which payment or indemnity is sought under this Section
10, and other claims related to the transactions contemplated by this Lease, to
assume responsibility for the control of such claim for which payment or
indemnity is sought under this Section 10, to the extent that the same may be
and is severed from such other claim, and (iii) in any other case, to be
consulted by such Indemnitee with respect to judicial proceedings subject to the
control of such Indemnitee. Notwithstanding any of the foregoing to the
contrary, Lessee shall not be entitled to assume responsibility for and control
of any such judicial or administrative proceedings (1) while an Event of Default
shall have occurred and be continuing, or (2) if such proceedings will involve
the sale, forfeiture or loss of, or the creation of any Lien on the Aircraft. An
Indemnitee may participate at its own expense and with its own counsel in any
judicial proceeding controlled by Lessee pursuant to the preceding provisions of
this Section 10.
An Indemnitee shall supply Lessee with such information reasonably
requested by Lessee as is necessary or advisable for Lessee to control or
participate in any proceeding to the extent permitted by this Section 10. Lessee
shall not enter into a settlement or other compromise with respect to any claim
without the prior written consent of any Indemnitees affected thereby, which
consent shall not be unreasonably withheld or delayed provided that Lessee is
solely responsible for any recoveries or awards pursuant to such settlement or
other compromise.
B. Lessee shall be liable for and shall indemnify and save harmless Lessor
from any amounts payable by Lessor to any third party as a result of any breach
by Lessee of the terms and conditions of use of the Aircraft set forth in this
Agreement, together with any costs and expenses incurred by Lessor in connection
therewith.
C. The indemnities contained in this Section 10 will continue in full force
and effect notwithstanding the expiration or other termination of this Agreement
or the letting of the Aircraft hereunder.
11. LOSS OF OR DAMAGE TO AIRCRAFT; AGREED VALUE
A. Except to the extent that any loss or damage is caused by the willful
misconduct of Lessor, Lessee shall be liable to Lessor for, and shall indemnify
and save Lessor harmless from, any loss of or damage to the Aircraft (including
Engines, Parts, assemblies and components) occurring while leased to Lessee
hereunder or while in the possession, custody or control of Lessee and arising
from any cause whatsoever.
B. Total Loss with respect to the Aircraft, or any Engine means any of the
following with respect to such property: (i) the loss of such property or of the
use thereof due to the destruction of or damage to such property which renders
repair uneconomic or which renders such property permanently unfit for the uses
permitted in Section 1A above for any reason whatsoever; (ii) any damage to such
property which results in an insurance settlement with respect to such property
on the basis of a total loss, or a constructive total loss; (iii) the theft or
disappearance of such property, or the confiscation, condemnation, or seizure
of, or requisition of title to, or loss of such property by any governmental
authority which shall have resulted in the loss of title or possession of such
property by Lessee for a period in excess of sixty (60) days.
17
▇. ▇▇▇▇▇▇ and Lessee hereby agree and fix the Agreed Value of the Aircraft
(together with all assorted equipment installed therein) to be $11,000,000. The
Agreed Value will decrease by 5% on each annual anniversary of the Delivery
Date. In the event the Aircraft shall become a Total Loss, Lessee shall
immediately notify Lessor thereof and Lessee shall within sixty (60) days of
such loss pay to Lessor in cash the Agreed Value of the Aircraft less any hull
insurance proceeds paid to Lessor in accordance with Section 12.B. below, and
Lessee shall further continue to pay Lessor the Base Rental for each day between
the day the Aircraft is lost or damaged as provided above and the day Lessor
receives the full Agreed Value for the Aircraft.
D. Upon the Total Loss of an Engine not then installed in the Aircraft, or
a Total Loss of an Engine installed in the Aircraft not involving a Total Loss
of the Aircraft, Lessee shall give Lessor prompt written notice thereof and
Lessee shall replace such Engine within a reasonable time period but not to
exceed thirty (30) days of such Total Loss by duly conveying or causing to be
conveyed to Lessor as a replacement for such Engine, good and marketable title
to another engine reasonably acceptable to Lessor, which engine shall be free
and clear of all liens and encumbrances, shall have a value and utility at least
equal to and be in as good operating condition, as the Engine which sustained
the Total Loss, assuming such Engine was in the condition required to be
maintained hereunder. Such replacement engine, after reasonable approval and
acceptance by Lessor, shall be deemed an "Engine" as defined herein. Provided
Lessee is not in default hereunder, Lessor will then convey to Lessee title,
free and clear of all Liens, except for Liens created by or through Lessee, to
the Engine that sustained the Total Loss. Lessee's obligation to pay the Base
Rental, Variable Rental, Supplemental Rental, and other charges shall continue
in full force and effect, but Lessee shall be entitled to be reimbursed by
Lessor by the amount of insurance proceeds, if any, received by Lessor on
account of the insurance required to be carried by Lessee with respect to such
replaced Engine.
12. INSURANCE
Lessee will, at its own expense, procure and maintain in full force and
effect during the term of this Agreement (covering the Aircraft and the Engines
anywhere in the world where Lessee operates), a policy or policies of insurance,
with a responsible insurance company or companies active in the airline
industry, of the types and in the minimum amounts set forth below:
A. (i) Comprehensive Airline Insurance in an amount which will produce
single limit per occurrence coverage of at least Three Hundred Million Dollars
($300,000,000), provided that if Lessee carries a higher liability limit fleet
wide, then Lessee will furnish such higher limits hereunder.
(ii) Lessee shall cause the aforesaid insurance policies to be duly and
properly endorsed by Lessee's insurance underwriters:
(a) To name Lessor and its directors, officers, agents, members
and employees as additional insureds thereunder;
18
(b) To provide said insurance shall be primary insurance and any
other insurance policy or policies of Lessor shall be excess insurance;
(c) To cover the contractual liability assumed by Lessee under
this Agreement including, but not limited to, any liabilities and indemnities
assumed by Lessee under any supplements to this Lease hereafter executed by
Lessor and Lessee, however, such coverage is only to the extent of coverage
afforded under the policies;
(d) The policies will contain cross liability and severability of
interest clauses.
B. (i) Aircraft Hull Insurance -- All-Risk, in the amount designated in
Section 11.C., as the Agreed Value of the Aircraft.
(ii) Lessee shall cause said Aircraft hull insurance policy to be duly
and properly endorsed by Lessee's insurance underwriters:
(a) To provide that all physical damage losses with respect to
the Aircraft will be adjusted with Lessee (subject to the approval of Lessor).
In the event of a Total Loss of the Aircraft, Lessor is named as sole loss payee
for all insurance proceeds up to the Agreed Value. With respect to damage or
loss not constituting a Total Loss of the Aircraft, the Lessor is named as sole
loss payee in respect of all insurance proceeds where such insurance proceeds
exceed US $500,000.00. Said proceeds will be applied by Lessor toward payment of
repairs of damage claimed unless Lessor waives this provision and permits
payment of insurance proceeds directly to Lessee or the facility effecting
repairs. 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 Lessor that a Default or an Event of
Default on the part of Lessee has occurred and is continuing, all payments up to
the Agreed Value will be made to Lessor. In all cases, any insurance proceeds,
as a result of policies carried by Lessee, in excess of the Agreed Value will be
payable solely to Lessee.
(b) To waive any and all rights to subrogation that insurers may
or could have against Lessor and its directors, officers, agents and employees
by virtue of such insurance policy, regardless of any negligence (whether
active, passive or otherwise) on the part of Lessor its directors, officers,
agents or employees in connection with the leasing of the Aircraft hereunder or
in the performance of this Lease, but such waiver of rights of subrogation shall
only be to the same extent Lessee has waived its rights of recovery against or
agreed to indemnify Lessor, its directors, officers, agents and employees
elsewhere in this Lease.
(iii) All Risk Property Insurance (including in-transit coverage
on any Engine covering any damage which may occur while in Lessee's care,
custody or control but not then attached to an aircraft) on a replacement value
basis during all periods from their delivery to Lessee by Lessor until their
redelivery to Lessor by Lessee.
19
C. Lessee shall cause the aforesaid insurance policies to be duly and
properly endorsed by Lessee's insurance underwriters to provide that Lessor be
given not less than thirty (30) days prior written notice in the event that
either Lessee or Lessee's insurance underwriters desire to amend, materially
change the policies in a manner adverse to Lessor, cancel or terminate said
policy or policies or any part or parts thereof, except war risk coverages, in
which case notice of cancellation shall not be less then seven (7) days or such
lesser period as may be customary in the industry from time to time.
D. Lessee shall, with respect to any losses payable in connection with the
Aircraft, Engines or any of its Parts, cause its insurers promptly to adjust the
same with Lessee, subject to Lessor's approval and shall be payable directly to
Lessor; provided, however: (i) final decision with respect to any adjusted claim
shall be made solely by Lessor, and (ii) the insurance proceeds of any adjusted
claim will be applied by Lessor toward payment of repairs of damage claimed.
E. Lessee shall furnish Lessor with acceptable certificates of insurance
evidencing the coverage and endorsements as required herein. Such certificates
shall be delivered to Lessor not less than five days prior to the delivery of
the Aircraft. Renewal certificates shall be provided to Lessor not less than 10
days prior to any policy expiration.
F. All policies shall contain a "Breach of Warranty" clause in behalf of
Lessor.
G. All insurance coverages listed in Section 12B above will include war
risk, hijack, terrorism and confiscation coverage in the amounts listed therein.
H. Lessee will not operate the Aircraft or any Engine in an area or on any
route excluded from coverage by any insurance required under this Section 12.
I. Lessor and Lessee shall each be permitted to carry insurance with
coverage limits which are in addition to/excess over what is required by
Sections 12A, 12B and 12G, provided such insurance does not adversely affect
and/or prejudice the insurance required by those sections.
13. COMPLIANCE WITH LAWS
Lessee agrees that the Aircraft leased hereunder shall not be used in any
manner which shall violate any law or regulation of any government or
governmental agency having jurisdiction and that any fine, penalty, or
forfeiture resulting from any such violation shall be the sole responsibility of
Lessee and Lessee agrees to indemnify and save Lessor harmless from all
liability therefor. Lessee agrees that it shall procure and maintain at its own
expense all certificates, permits and licenses, as may be required, and shall
give all notices required in connection with such possession, operation or use.
Lessee shall furnish Lessor with such documentary evidence of the procurement of
such certificates, permits and licenses as may be requested by Lessor. Lessee
agrees that while the Aircraft is leased hereunder, the Aircraft shall be
retained by Lessee in its possession, custody and control, unless otherwise
provided herein.
20
14. TITLE TO AIRCRAFT
A. Except as otherwise expressly provided herein, title to the Aircraft,
including Engines, accessories and other equipment of every nature which are
physically attached to or in operation on the Aircraft and title to any other
engines and personal property furnished or supplied by Lessor to Lessee
hereunder shall be and remain in Lessor's name at all times. Lessee shall have
no right, title or interest in the Aircraft except as provided in this Lease.
Lessee shall not directly or indirectly create, incur, assume or suffer to exist
any Lien (any mortgage, pledge, lien, charge, encumbrance, lease, exercise of
rights, security interest or claim) on or with respect to the Aircraft or any
Engine, title thereto or any interest therein, except (i) the respective rights
of Lessor and Lessee as herein provided; (ii) Lessor's Liens (Liens arising as a
result of (a) claims against Lessor not related to the transactions contemplated
by this Lease; (b) acts of Lessor, not contemplated and expressly permitted
under this Lease; or (b) taxes imposed against Lessor which are not indemnified
against by Lessee pursuant to Article 9) with respect to the Aircraft or any
Engine; (iii) Liens for Taxes either not yet due or being contested in
accordance with Section 9 hereof and so long as adequate reserves are maintained
with respect to such Liens; and (iv) inchoate materialmen's, mechanics',
workmen's, repairmen's, employees' or other like Liens arising in the ordinary
course of business, which either are not delinquent or are begin contested in
good faith by Lessee, so long as the Aircraft or such Engine is not in danger of
being lost, sold, confiscated, forfeited or seized as a result of any such Lien
provided, however, that Lessee has established cash reserves in an amount
necessary to discharge any such Lien. Lessee shall promptly, at its own expense,
take such action as may be necessary to duly discharge any Lien (except for
the Liens referred to in clauses (i) and (ii) of this Section 14) if the same
shall arise at any time with respect to the Aircraft or any Engine. Lessee shall
promptly pay and discharge when due, or make adequate provision (by way of
security or otherwise) for, or procure that the same are paid and discharged,
all debts, claims, liabilities or obligations whatsoever created by it or any
other Person, or arising as a result of any matter concerning it or any other
Person, which may give rise to any Lien on the Aircraft or any Engine,
including, without limitation, any landing fee, air navigation or similar
charges. Lessee agrees to indemnify and save Lessor harmless from and against
all damages suffered by Lessor including costs and expenses incident thereto, as
the result of Lessee's failure to perform the undertaking herein in this
paragraph provided for.
B. Lessee shall attach a permanent placard, to be furnished by Lessor, to
the forward side of the cockpit and cabin door adjacent to the Certificate of
Aircraft Registration in the interior of the Aircraft indicating that the
Aircraft is being operated by Lessee in accordance with a Lease Agreement
between Lessee and Lessor and Lessee shall not remove same nor permit it to be
removed and shall immediately replace such placard if it should become lost,
illegible, damaged or destroyed. The placard shall state:
"Aircraft Serial No. 23045 is owned by Aircraft No. 2, L.L.C.
("Lessor") subject to a mortgage in favor of ▇▇▇▇▇▇▇ Bank, N.A.
It is being operated by Aloha Airlines, Inc., pursuant to a Lease
Agreement between Lessor and Aloha Airlines, Inc., as Lessee.
21
Owner's Address: ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇"
C. Lessee shall also cause a placard, to be furnished by Lessor, to be
attached to each Engine at all times during the Lease Term and until redelivery
to Lessor pursuant to the Lease, as follows:
"This Engine is owned by Aircraft No. 2, L.L.C, ▇▇▇▇ ▇.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, subject to a
mortgage in favor of ▇▇▇▇▇▇▇ Bank, N.A."
15. ASSIGNMENT OR SUBLEASE; POSSESSION AND USE
A. Lessee shall neither assign this Agreement in whole or in part nor
sublease the Aircraft or transfer the custody or possession thereof to any third
party, except with the prior written consent of Lessor; provided, however,
Lessee may sublease the Aircraft to a commercial air carrier from the list
attached as Exhibit G or such other commercial air carrier as is approved in
writing by Lessor, such approval not to be unreasonably withheld (a "Permitted
Sublessee"); provided further, that at any time during the Term Lessor may, by
notice to Lessee, notify Lessee that any entity on said Exhibit G no longer
constitutes a Permitted Sublessee (which determination shall be made on a
reasonable basis by the Lessor) whereupon such entity shall no longer constitute
a Permitted Sublessee, provided that Lessor may not remove an entity from such
list during a lease to such Permitted Sublessee.
The following conditions must be met in connection with any such sublease:
(i) the sublease agreement is assigned to Lessor as security on or
before its effective date pursuant to documentation in form and content
reasonably acceptable to Lessor;
(ii) all rent payable by the sublessee under such sublease agreement
shall be payable directly by the sublessee to Lessor, provided that so long as
no Event of Default has occurred and is continuing hereunder, Lessor shall pay
to Lessee out of each payment received from sublessee, the excess of the
sublease rental over the amounts due hereunder.
Further, with respect to any such sublease:
(a) the term of such sublease (including without limitation, any option
of the sublessee to renew or extend the sublease) shall not extend beyond the
Term;
(b) the rights of the sublessee shall be subject and subordinate to all
the terms of this Lease, including without limitation the right of repossession
pursuant to Section 17 and to avoid such sublessee's right to possession upon
such repossession;
(c) the Lessee shall remain primarily liable hereunder for the
performance of all the terms of this Lease to the same extent as if any such
sublease had not occurred;
22
(d) any sublease permitted by Section 15.A. shall provide that (i) the
Aircraft, Airframe or Engine may not be operated or used other than as provided
in Sections 6 and 15 hereof, (ii) Lessor may avoid or terminate such sublease
following an Event of Default hereunder, and (iii) to the extent not
accomplished by an assignment of sublease, upon an Event of Default such
sublease shall automatically be deemed assigned to Lessor until such time as the
event of default has been cured;
(e) no sublease of the Aircraft or any Engine shall in any way destroy
or diminish any of Lessor's rights hereunder and such rights shall continue as
if such sublease or transfer has not occurred;
(f) with respect to any sublease permitted by Section 15.A., at least
ten (10) Business Days prior to such sublease becoming effective Lessee shall
famish a copy of such sublease to Lessor for Lessor's review to determine that
the sublease is in compliance with the provisions hereof. Lessee shall reimburse
Lessor for Lessor's out-of-pocket costs and legal fees in connection with its
review of such document;
(g) any sublease permitted by Section 15.A. shall expressly provide (x)
that such sublessee will not transfer possession or control of the Aircraft,
Airframe or Engine to anyone other than Lessee or Lessor, except to the extent
permitted pursuant to Section 15B of this Lease, and (y) that all rights of the
sublessee are subject and subordinate to all the terms of this Lease including,
without limitation, in each instance, Lessor's rights to repossession pursuant
to Section 17 and Lessor's rights to avoid such sublessee's right to possession
upon such repossession;
(h) such sublease shall include appropriate provisions (whether by
requiring such obligations to be performed by the sublessee, Lessee, or both)
for the operation, maintenance and insurance of the Aircraft and the Engines
subleased thereby which are comparable to, or more restrictive than, the
provisions of this Lease; provided the foregoing conditions are met, sublessee
will be permitted to operate the Aircraft under the maintenance program of the
sublessee and in accordance with applicable laws governing sublessee's
operations and, provided, that Lessor and Lessor's lender have received an
opinion of counsel satisfactory to Lessor and Lessor's lender with respect to
title and perfection of security interests, sublessee will be permitted to
operate the Aircraft on the registry and with a certificate of airworthiness
where the sublessee is located; and
(i) any such sublease shall expressly prohibit any assignment or further
sublease of the Aircraft, the Airframe or any Engine and any of the rights under
such sublease.
B. Lessee shall not transfer possession of the Aircraft to any person
provided that, so long as no Event of Default or event which could constitute an
Event of Default (as defined herein), but for the lapse of time or the giving of
notice or both, shall have occurred and be continuing, Lessee may, without the
prior written consent of Lessor:
23
(i) subject any Engine to, in each case, agreements (customary in the
airline industry and entered into in the ordinary course of its business) with
an FAA certified licensed engine overhaul agency, provided that: (a) no such
agreement or arrangement results in or requires the transfer of title to such
Engine; or (b) if Lessor's title to such Engine shall be divested under any such
agreement or arrangement, such divestiture shall be deemed to be a Total Loss
with respect to such Engine and Lessee shall comply with Section 11 hereof in
respect thereof;
(ii) deliver possession of the Aircraft, the Airframe (Airframe shall
mean (i) the aircraft described on Exhibit A, but not including any Engine
installed thereon, and (ii) any and all Parts so long as the same shall- be
incorporated or installed on or attached to the Airframe, or so long as title
thereto shall remain vested in Lessor in accordance with the terms of Section 6,
after removal from the Airframe) or any Engine or any Part to the manufacturer
thereof for testing or other similar purposes or to any organization for
service, repair, maintenance, testing or overhaul work on such Aircraft,
Airframe or Engine or any Part thereof or for alterations or modifications in or
additions to such Aircraft, Airframe or Engine to the extent required or
permitted by the terms of Sections 6 and 7 hereof;
(iii) install an Engine on an airframe (other than the Airframe) owned
by Lessee during the term hereof free and clear of all Liens except: (a) those
Liens of the type permitted under Section 14 hereof and those which apply only
to the engines (other than Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment (other than Parts)
installed on such airframe (but not to the airframe as an entirety; and (b) the
rights of United States participants under normal interchange agreements which
are customary in the airline industry and do not contemplate, permit, result in
or require the transfer of title to the Airframe, Engines or Parts installed
thereon;
(iv) install an Engine on an airframe leased to Lessee or owned by
Lessee subject to a conditional sale or other security agreement, provided that:
(a) such airframe is free and clear of all Liens except the right of the parties
to the lease or conditional sale or other security agreement covering such
airframe and except Liens of the type permitted by Section 14 hereof which
insofar as they relate to such Engine are subordinate to the rights of the
Lessor hereunder, and the Lien of any mortgage which either by its terms does
not apply to the Engine or which effectively provides that each Engine leased to
Lessee hereby shall not become subject to the Lien thereof or to any rights of
any party thereunder other than Lessee (with respect to Lessee's rights
expressly granted hereunder), notwithstanding the installation of such Engine on
any airframe subject to the Lien of such mortgage, unless and until Lessee shall
become the owner of such Engine and Lessor shall have no further interest
therein, all pursuant to the express terms of this Lease; and (b) there shall be
in effect a written agreement of the lessor or secured party of such airframe
(which may be the lease or conditional sale or other security agreement covering
such airframe) substantially similar in effect to the agreement of Lessor in
Section D below whereby such lessor or secured party effectively and expressly
agrees that neither it nor its successors or assigns will acquire or claim any
right, title or interest in any Engine or any Part thereof by reason of such
Engine being installed on such airframe at any time while such Engine is subject
to this Lease or owned by Lessor, and a copy of such agreement shall be provided
to
24
Lessor upon written request of Lessor. In the event Lessee installs on the
Airframe an engine that is leased by Lessee from a lessor, or is owned by Lessee
subject to a conditional sale agreement or other security agreement held by a
secured party, Lessor hereby agrees for the benefit of such lessor or secured
party that Lessor will not acquire or claim, as against such lessor or secured
party, any right, title or interest in any such engine as the result of such
engine being installed on the Airframe at any time while such engine is subject
to such lease or conditional sale or other security agreement and owned by such
lessor or subject to a security interest in favor of such secured party;
(v) subject (i) any Engine or Part to normal interchange agreements or
other similar agreement customary in the airline industry and entered into by
Lessee in the ordinary course of its business and (ii) any Engine or Part to
short-term pooling or borrowing, reciprocal leasing or other arrangement
customarily entered into by major U.S. air carriers and entered into by Lessee
in the ordinary course of its business; provided that no transfer of the
registration of the Aircraft shall be effected in connection therewith and
Lessor's title to and interest in the Aircraft, such Engine or Part shall not be
divested or impaired and that if Lessor's title or interest shall be divested or
impaired, such event shall be deemed to be a Total Loss with respect thereto;
and further provided that the foregoing shall be subject to approval by Lessor
of the air carriers who participate with Lessee in such interchange, pooling or
other similar agreements; and
(vi) transfer possession of the Aircraft, Airframe or any Engine to the
United States Government pursuant to a contract not extending beyond the Term of
this Lease or to the Civil Reserve Air Fleet Program or any similar or
substitute programs so long as Lessee shall promptly notify Lessor upon
transferring possession of the Aircraft, Airframe or any Engine pursuant to such
program or contract.
C. With respect to any transfer pursuant to Section 15 A or 15 B:
(i) the rights of any transferee that received possession by reason of a
transfer permitted by Section 15B shall be subject and subordinate to all the
terms of this Lease, including but not limited to, Lessor's rights to
repossession pursuant to Section 17 and to terminate and avoid such transfer
upon such repossession and to require such transferee forthwith to deliver the
item which is subject to such transfer upon repossession;
(ii) Lessee shall remain primarily liable hereunder for the performance
of all of the terms of this Lease to the same extent as if such transfer had not
occurred; and
(iii) no relinquishment of possession pursuant to the terms of Section
15B shall in any way discharge or diminish any of Lessee's obligations to Lessor
hereunder.
D. In the event Lessee shall have received from the lessor or secured party
of any airframe leased to Lessee or owned by Lessee or subject to a conditional
sale or other security agreement, a written agreement complying with Section 15
B iv hereof (which agreement may be contained in the lease, conditional sale
agreement or security agreement relating to such airframe), and such lease or
conditional sale or other security agreement covering such airframe
25
also covers an engine or engines owned by the lessor under such lease or subject
to a security interest in favor of the secured party under such conditional sale
or other security agreement, Lessor hereby agrees for the benefit of such lessor
or secured party that Lessor will not acquire or claim, as against such lessor
or secured party, any right, title or interest in any such engine as the result
of such engine being installed on the Airframe at any time while such engine is
subject to such lease or conditional sale or other security agreement and owned
by such lessor or subject to a security interest in favor of such secured party.
Lessor also hereby agrees for the benefit of the mortgagee under any mortgage
complying with clause (a) of Section 15 B iv hereof, relating to installation of
an Engine on airframe leased to Lessee, that Lessor will not acquire or claim,
as against such mortgagee, any right, title or interest in any engine subject to
the lien of such mortgage as the result of such engine being installed on the
Airframe at any time while such engine is subject to the lien of such mortgage.
E. Notwithstanding anything herein to the contrary, in the event of any
sublease hereunder, Lessee shall be obligated to return the Aircraft to Lessor
in the condition required hereunder as if the sublease had not occurred.
16. EVENTS OF DEFAULT
Each of the following events shall constitute an "Event of Default":
A. If default shall be made by Lessee in the making of any payment of Base
Rental, Variable Rental, Supplemental Rental or other charges when due and
payable under this Agreement and such default shall continue for a period of
five (5) Business Days;
B. If default shall be made by Lessee at any time in the procurement or
maintenance of any insurance coverage prescribed herein;
C. If default shall be made by Lessee in a material respect in the
observance or performance of any of the other obligations of Lessee contained in
this Agreement and such default shall continue for a period of fifteen (15) days
after notice from Lessor to Lessee specifying the default and requiring that the
same be remedied, provided that if such default cannot be cured within fifteen
(15) days that Lessee has been exercising due diligence to effect such cure;
then such cure must be effected within thirty (30) days;
D. If Lessee shall become insolvent or go into liquidation or cease paying
its debts as they mature or make an assignment for the benefit of creditors, or
file for protection from its creditors under any applicable law relating to
bankruptcy or insolvency, or a trustee or receiver or liquidator shall be
appointed for Lessee, for a substantial part of its property, or bankruptcy, or
liquidation, reorganization arrangements, insolvency or similar proceedings
shall be instituted by or against Lessee under the laws of any jurisdiction,
unless in the instance of any involuntary proceedings, the petition or
appointment is set aside, withdrawn or ceases within ten (10) Business Days of
its effective date;
26
E. If any representation or warranty made by Lessee in or pursuant to this
Agreement proves to be incorrect in any material respect;
F. If Lessee shall suspend, for a period in excess of thirty (30) days for
reasons other than war, insurrections, strikes, riots, fire, flood, explosions,
earthquakes, serious accidents, any act of government, acts of God or the public
enemy, failure of transportation, cancellation of schedules, or labor troubles,
all or substantially all of its operations or shall cease to hold all permits,
licenses and authorizations necessary for the conduct of its business or the
same shall be revoked or varied in a manner which materially adversely affects
the financial situation of Lessee;
G. If any order of any Court shall be made, or any process of Law shall
take effect, either in a preliminary manner or otherwise at the behest of any
creditor or obligor of Lessee which shall have the effect of impounding or
attaching the Aircraft or restraining its removal from any airport for any time
whatsoever, and said order or process shall not be set aside, withdrawn, vacated
or cease to be effective within ten (10) Business Days of its effective date.
H. Lessee shall default in the payment of any unsecured obligation for the
payment of borrowed money which has a principal amount of $1,000,000 or more or
any secured obligation for the payment of borrowed money, for the deferred
purchase price of property or for the payment of rent under any aircraft lease
or other agreement when the same becomes due if such non payment results in an
acceleration of such indebtedness;
I. If an Event of Default shall occur and be continuing under that certain
Lease Agreement between Fleet National Bank, a National Banking Association, not
in its individual capacity but solely as Trustee for the benefit of Aircraft No.
1, L.L.C. and Lessee of even date herewith in respect of aircraft with
manufacturer's serial number 23051.
17. REMEDIES
Upon the occurrence of any Event of Default and at any time thereafter so
long as the same shall be continuing, Lessor may, at its option, declare by
written notice to Lessee this Agreement to be in default; and at any time
thereafter, so long as any such Event of Default shall not have been remedied,
Lessor may do one or more of the following with respect to all or any part of
the Aircraft and any or all of the Engines as Lessor in its sole discretion
shall elect, to the extent permitted by and subject to compliance with any
mandatory requirements of, applicable law then in effect.
A. Upon the written demand of Lessor and at Lessee's expense, cause Lessee
to return promptly, and Lessee shall return promptly, the Aircraft or any Engine
as Lessor may so demand, to Lessor or its order, in the manner and condition
required by, and otherwise in accordance with all the provisions of, Sections 2,
6, Exhibit C, Exhibit E and other provisions of this Agreement as if such
Aircraft or Engine were being returned at the end of the Lease Term, or Lessor,
at its option, may enter upon the premises where all or any part of the Aircraft
or any Engine is located and take immediate possession of and remove the same by
summary
27
proceedings or otherwise (and, at Lessor's option, store the same at Lessee's
premises until disposal thereof by Lessor), all without trespass or liability
accruing to Lessor for or by reason of such entry or taking of possession or
removing whether for the restoration of damage to property caused by such action
or otherwise;
B. Whether or not Lessor shall have exercised, or shall thereafter at any
time exercise, any of its rights under paragraph (a) above with respect to the
Aircraft, Lessor by written notice to Lessee specifying a payment date not
earlier than five (5) days from the date of such notice, may demand that the
Lessee pay to Lessor, and Lessee shall pay Lessor, in addition to such other
remedies, as liquidated damages for loss of a bargain and not as a penalty, an
amount equal to any Base Rental, Variable Rental, Supplemental Rental and other
charges unpaid as of the date of such notice, plus an amount equal to the entire
remaining Base Rental for the duration of the unexpired period remaining of the
initial stated term of the Agreement, plus any extension exercised discounted to
present value at nine percent (9%) per annum, it being acknowledged and agreed
that actual damages under such circumstances would be difficult or impossible to
determine.
▇. ▇▇▇▇▇▇ may terminate this Agreement, and/or may exercise any other right
or remedy which may be available to it under applicable law or proceed by
appropriate court action to enforce the terms hereof or to recover damages for
breach hereof. In addition, Lessee shall be liable, for any and all amounts due
hereunder, including all costs and expenses reasonably incurred by reason of the
occurrence of any Event of Default and the exercise of Lessor's remedies with
respect thereto, including but not limited to reasonable attorneys fees and
costs and expenses incurred by Lessor in connection with the return of the
Aircraft or any Engine in accordance with the terms hereof, or in placing such
Aircraft or Engine in the condition and airworthiness required hereby.
18. EXCUSABLE DELAY
Lessor shall use reasonable efforts to deliver the Aircraft and to perform
its obligations in a timely manner; provided, however, Lessor shall not be
responsible nor deemed to be in default on account of delays in the performance
of this Agreement or for delays or failure in delivering the Aircraft to Lessee
due to causes beyond Lessor's control, including, but not limited to, failure of
TAP to timely deliver the Aircraft to Lessor in the condition required under the
TAP Lease, war, insurrections, strikes or labor disputes, inability or failure
of suppliers to deliver parts or materials, riots, fires, floods, explosions,
earthquakes, serious accidents, any act of government, acts of God or the
public enemy, failure of transportation, cancellation of schedules, or labor
troubles causing cessation, slowdown or interruption of work, actions or
inactions of Lessee; provided, however, Lessee shall not be required to accept
delivery of the Aircraft if the excusable delay extends beyond May 1, 1998,
except if such excusable delay was caused by Lessee.
28
19. DELAY IN RETURN OF AIRCRAFT
In the event Lessee is unable or fails to return the Aircraft to Lessor
upon the expiration of this Agreement, Lessor shall have the right to repossess
the Aircraft wherever it may be. In addition, all obligations of Lessee under
this Agreement shall continue until the Aircraft is redelivered or repossessed
by Lessor and the Aircraft is put into the condition required hereunder. Base
Rental and Variable Rental will accrue and be paid by Lessee from and after a
failure to return the Aircraft at the time and in the condition required
hereunder at 150% of the Base Rental and Variable Rental.
20. APPLICABLE LAW AND JURISDICTION
A. This Agreement is being delivered in the State of New York and shall be
deemed to be a contract made under the laws of the State of New York, U.S.A.,
and for all purposes shall be construed in accordance with the laws of said
State.
B. The parties agree that any state or federal court located in the State
of New York shall have jurisdiction to hear any suit, action or proceeding
arising out of or in connection with this Lease. Each party hereby acknowledges
and irrevocably consents and submits to the jurisdiction of any such court in
any such suit, action or proceeding. Service of process may be made against a
party either in person, wherever such party may be found, or by notice as
permitted herein to the address of the party set forth in this Lease.
C. Lessee covenants and agrees that any suit, action or proceeding arising
out of or relating to this Lease or the matters dealt with herein shall only be
instituted by it or its permitted successors or assigns, if at all, in a state
or federal court located in New York.
21. NOTICES
Except as otherwise specified in this Agreement, notices required or
permitted hereunder shall be deemed sufficient if delivered personally or sent
by certified mail, return receipt requested, facsimile, telegram, or telex, or
any other customary means of communication addressed as follows or to any other
address which either party may designate in writing to the other party hereto:
Lessor: Aircraft No. 2, L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager
Telex No.: ▇▇▇-▇▇▇-▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
29
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Senior Counsel
AAR Corp.
One AAR Place
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
CRANE 737-200 L.L.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile ▇▇▇-▇▇▇-▇▇▇▇
Lessee:
Aloha Airlines, Inc.
Senior Vice President Finance and Planning
▇.▇. ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: 808-833-3100
Notices sent by certified mail shall be deemed effective four (4) days
after mailing and notices sent by any other means shall be effective upon
receipt, and in the case of facsimile confirmed.
22. HEADINGS
The paragraph headings herein have been inserted solely for convenience and
in the event of any conflict between such headings and the provisions of that
paragraph, the provisions of the paragraph shall supersede and control.
23. CONFIDENTIALITY
A. Lessee expressly covenants and agrees that it will keep confidential the
terms of this Agreement and all information, material, documents and data
furnished by Lessor hereunder other than as may be in any filings with the FAA,
that no part of said items shall be voluntarily furnished or disclosed by Lessee
to any other person, firm or corporation (except any U.S. governmental agency
that may require submission thereof, as required by law, to comply with lender
requirements, to satisfy existing and potential investor due diligence and
requirements, and to Lessee's accountants and attorneys) without Lessor's prior
written consent, that Lessee shall not reproduce the same except for essential
copies for its own internal usage and that Lessee shall return all said items to
Lessor promptly after return of the Aircraft.
▇. ▇▇▇▇▇▇ expressly covenants and agrees that it will keep confidential the
terms of this Agreement and all information, material, documents and data
furnished by Lessee hereunder
30
other than as may be in any filings with the FAA, that no part of said items
shall be voluntarily furnished or disclosed by Lessor to any other person, firm
or corporation (except any U.S. governmental agency that may require submission
thereof, as required by law, to comply with lender requirements, to satisfy
existing and potential investor due diligence and requirements, and to Lessor's
accountants and attorneys) without Lessee's prior written consent, that Lessor
shall not reproduce the same except for essential copies for its own internal
usage and that Lessor shall return all said items to Lessee promptly after
return of the Aircraft.
24. REPRESENTATIONS, WARRANTIES AND COVENANTS
A. Lessee represents and warrants that:
(i) Lessee is a corporation organized and existing under the Laws of
Delaware and has the corporate power and authority to carry on its business as
presently conducted and to perform its obligations under this Agreement and is
the holder of all necessary licenses issued by all governmental authorities
having jurisdiction to authorize or permit Lessee to engage in air
transportation;
(ii) This Agreement has been duly authorized by all necessary corporate
action on the part of Lessee, and neither the execution and delivery hereof nor
the consummation of the transactions contemplated hereby nor compliance by
Lessee with any terms and provisions hereof will contravene any law applicable
to Lessee or result in any breach of, or constitute any default under or result
in the creation of any lien, charge or encumbrance upon any property of Lessee
under, any indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, bank loan or credit agreement, corporate charter, by-law, or
other agreement or instrument to which Lessee is a party or by which Lessee or
its properties or assets may be bound or affected;
(iii) The execution and delivery by Lessee of this Agreement, and any of
the transactions by Lessee contemplated hereby, have received, and Lessee has
complied with, every necessary consent, approval, order, or authorization of, or
registration with, or the giving or prior notice to, any government authority
having jurisdiction with respect to the execution and delivery of this Agreement
or the validity and enforceability hereof or the satisfaction of all monetary
and other obligations hereunder.
(iv) This Agreement has been duly entered into and delivered by Lessee
and constitutes the valid, legal and binding obligation of Lessee, enforceable
in accordance with its terms.
(v) It is not necessary under the laws of the United States and/or
Hawaii in order to ensure the validity, effectiveness and enforceability of this
Agreement or to protect the property rights of Lessor in the Aircraft that this
Agreement or any other instrument relating thereto be filed, registered or
recorded or that any other action be taken, except for recording in the FAA
Aircraft Registry in Oklahoma City, and a notice filing with the Secretary of
State of
31
Hawaii and that under the laws of the United States and Hawaii, the property
rights of Lessor in the Aircraft will have priority in all respects over the
claims of all creditors of Lessee;
(vi) There are no suits or legal proceedings pending or threatened
against Lessee which, if adversely determined, would have a material adverse
effect upon its financial condition or business or its ability to perform its
obligations hereunder, other than as heretofore disclosed in writing by Lessee
to Lessor.
B. Lessee hereby covenants with Lessor that from the Delivery Date and
during the Term hereof it will:
(i) duly pay and discharge all Taxes, assessments and governmental
charges upon it or against its properties prior to the date on which penalties
are attached thereto, unless and to the extent only that the same be contested
in good faith and by appropriate proceedings by Lessee. In particular, Lessee
shall pay all airport charges in respect of the Aircraft according as the same
may be incurred;
(ii) remain in and continue to operate substantially the same line of
business as presently engaged in, preserve its corporate existence, conduct its
business in an orderly efficient and customary manner, satisfy its debts and
obligations as they fall due and keep and maintain all of its properties in good
working order and condition;
(iii) maintain insurance in respect of its liabilities and properties in
accordance with good airline practice;
(iv) comply with all laws and regulations for the time being in force in
the State of Hawaii and in any country, to, from, in or over which the Aircraft
is flown;
(v) within sixty (60) days following the end of each quarter, furnish to
Lessor an unaudited balance sheet of Lessee prepared by it as of the period
ended, together with the related profit and loss statement for such period;
(vi) within one hundred twenty (120) days after the close of each fiscal
year of Lessee, furnish Lessor an audited balance sheet, and profit and loss
statement of Lessee (and an unaudited balance sheet); and
(vii) at its own expense from time to time do and perform such other and
further acts and execute and deliver any and all other further instruments as
may be required by Law or reasonably requested by Lessor to establish, maintain
and protect the respective rights and remedies of Lessor and to carry out and
give effect to the intents and purposes of this Agreement and the parties hereto
provided, however, Lessee will be reimbursed for actual costs associated with
any transfer of Lessor's interest in the Aircraft.
C. To the extent permitted by law, Lessee hereby agrees, in accordance with
Section 1110 of Title 11 of the United States Code, or any superseding
statutes, as amended from time to
32
time, that the title of Lessor to the Aircraft, and any right of Lessor to take
possession of such Aircraft in compliance with the provisions of this Lease will
not be affected by the provisions of Section 362 or 363 of such Title 11, or
other analogous part of any superseding statutes, as amended from time to time.
D. The Lessor represents and warrants to the Lessee that:
(i) The Lessor is a limited liability company formed under the laws of
Illinois and has the power to own its assets and carry on its business as it is
now being conducted.
(ii) 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.
(iii) This Agreement constitutes the Lessor's legal, valid and binding
obligation, enforceable against Lessor in accordance with its terms.
(iv) The entry into and performance by the Lessor of, and the
transactions contemplated by, this Agreement do not and will not:
(a) conflict with any laws binding on the Lessor;
(b) conflict with the constitutional documents of the Lessor; or
(c) conflict with any document which is binding upon the Lessor or
any of its assets.
(v) So far as concerns the obligations of the Lessor, all
authorizations, consents, registrations and notifications required under the
laws of the State of Illinois, 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.
(vi) On the Delivery Date, the Lessor shall have the right to lease the
Aircraft to the Lessee under this Agreement.
E. The representations and warranties in Sections A and D above will
survive the execution of this Agreement. The representations and warranties
contained in Sections A and D above will be deemed to be repeated by the Lessee
and Lessor on delivery and on each subsequent Rent Date as if made with
reference to the facts and circumstances then existing.
33
25. ASSIGNMENT AND COOPERATION WITH LESSOR'S LENDER
A. Subject to Lessee's rights pursuant to the Lease, Lessor may grant
security interests over the Aircraft and the benefit of this Lease to Lessor's
lender as security for Lessor's obligations to Lessor's lender in connection
with Lessor's financing of the Aircraft. Lessor shall also have the right, at
its sole cost and expense, to assign or sell any interest of Lessor in the
Aircraft or this Lease and/or the proceeds thereof, subject to the rights of
Lessee hereunder.
B. On request by Lessor or Lessor's lender, Lessee will sign and execute
all such documents as Lessor or Lessor's lender may reasonably require to
confirm Lessee's obligations under this Lease. Lessee undertakes to provide all
other reasonable assistance and cooperation to Lessor and Lessor's lender in
connection with the perfection and maintenance of such security interest,
including (without limitation) the effecting of all necessary filings and
registrations at Lessor's sole cost and expense.
C. Wherever the term "Lessor" is used in this Lease in relation to any of
the provisions relating to disclaimer, title and registration, operational
interest, indemnity and insurance, the term "Lessor" will be deemed to include
any Lessor's lender notified to Lessee by Lessor.
D. Any such sale or transfer will not expand Lessee's obligations
hereunder.
26. ENTIRE AGREEMENT
This Lease and the Exhibits and Appendices attached hereto, and made a part
hereof, embody the entire agreement and understanding of the parties and, as of
its effective date, terminate and supersede all prior or independent agreements
and understandings between the parties covering the same subject matter. No
amendment to this Lease shall be binding on either party unless confirmed in
writing and signed by the duly authorized officers or representatives of both
parties.
27. MISCELLANEOUS
A. This Lease may be executed in counterparts. Such counterpart documents,
when taken together, will constitute one and the same instrument. A facsimile
signature on any counterpart will be deemed an original for all purposes.
B. Any reference to the payment of money will refer to U.S. Dollars.
C. So long as no Event of Default has occurred and is continuing hereunder,
Lessee shall have the peaceful and quiet enjoyment of the Aircraft free from all
claims or interference of Lessor or anyone claiming by, through or under Lessor,
except as otherwise provided herein.
D. If any legal action or other proceeding is brought in connection with
any provisions in this Lease, the prevailing party will be entitled to recover
reasonable attorneys' fees
34
and other costs incurred in such action or proceedings. The prevailing party
will also, to the extent permissible by Law, be entitled to receive pre- and
post-judgment Interest.
E. The rights of the parties hereunder are cumulative, not exclusive, may
be exercised as often as each party considers appropriate and are in addition to
its rights under general Law. The rights of one party against the other party
are not capable of being waived or amended except by an express waiver or
amendment in writing. Any failure to exercise or any delay in exercising any of
such rights will not operate as a waiver or amendment of that or any other such
right; any defective or partial exercise of any such rights will not preclude
any other or further exercise of that or any other such right; and no act or
course of conduct or negotiation on a party's part or on its behalf will in any
way preclude such party from exercising any such right or constitute a
suspension or any amendment of any such right.
F. Each party agrees from time to time to do and perform such other and
further acts and execute and deliver any and all such other instruments as may
be required by Law or reasonably requested by the other party to establish,
maintain or protect the rights and remedies of the requesting party or to carry
out and effect the intent and purpose of this Lease.
G. The Lease Agreement dated as of August 11, 1997 between Lessee and Fleet
National Bank, a national banking association, not in its individual capacity,
but solely as Trustee for the benefit of Aircraft No. 2, L.L.C. shall be null
and void upon execution hereof by the parties.
28. BROKERS/FINDERS
Lessor and Lessee each represent to the other that there are and will be no
third parties involved as brokers or finders with respect to this Lease and each
party indemnifies the other from liability for fees, commissions or other
intermediary's claims arising as a result of actions of the indemnifying party.
29. SECURITY DEPOSIT; LETTER OF CREDIT
A. Security Deposit
(a) Prior to delivery of the Aircraft to Lessee, Lessee shall pay Lessor
a security deposit of $500,000 (the "Security Deposit") as follows: $250,000
upon execution hereof and $125,000 on October 1, 1997, and $125,000 upon
delivery of the Aircraft to Lessee. The initial $250,000 security deposit can be
accomplished by appropriately amending the Letter of Credit dated May 7, 1997
issued by First Hawaiian Bank with respect to the Aircraft. 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 (or, if a mortgage shall be in effect, the Lessor's lender) may (but
shall not be obligated to) apply all or any portion of the Security Deposit in
or towards satisfaction of any sums due
35
and payable to the Lessor under this Agreement or to compensate the Lessor or,
if applicable, the Lessor's lender 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 or the Lessor's lender, the Lessee shall
remain in default under this Agreement until the fall amount owed by the Lessee,
including interest accrued thereon pursuant to Exhibit H, Paragraph H, shall
have been paid to the Lessor. If the Lessor or, if applicable, the Lessor's
lender so uses or applies all or any portion of the Security Deposit, the Lessee
shall immediately, on demand of the Lessor or Lessor's lender] replenish the
Security Deposit in an amount equal to the amount so used or applied within five
(5) Business Days after Lessor's or Lessor's lender's demand therefor.
(b) Provided Lessee is not then in default hereunder, the first $250,000
of the Security Deposit shall be reduced by $62,500 on each anniversary of the
Delivery Date.
(c) If Lessor fails to tender delivery of the Aircraft by May 1, 1998,
other than by reason of default of Lessee or delay caused by Lessee, then Lessor
will return the Security Deposit to Lessee.
(ii) Lessor or, if applicable, Lessor's lender may commingle the
Security Deposit with its general funds, and any interest earned on the Security
Deposit will be for Lessor's or Lender's account.
(iii) The Security Deposit shall be returned to the Lessee within
five (5) Business Days of (1) redelivery of the Aircraft to the Lessor in the
condition required by Section 2 and Exhibit C to this Agreement, (2) receipt by
the Lessor of the Agreed Value following a Total Loss and all other amounts due
under Section 11 C or at such later time as the Lessor is satisfied that the
Lessee has irrevocably paid to the Lessor all amounts which are at the 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 Letters of Credit in the amounts of the cash Security Deposit. In
the event that the Lessee elects to provide the Letters of Credit, the following
provisions shall apply:
(i) Lessee shall cause the Letters of Credit to be renewed or replaced
by the issuing bank not later than ten (10) Business Days before the expiration
of such Letter of Credit, and shall cause the Letters of Credit to remain in
effect, as renewed, until ninety (90) days after the scheduled Expiration Date.
(ii) If an Event of Default occurs and for as long as it continues, the
Lessor or, so long as a mortgage shall remain in effect, the Lessor's lender 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 or lender for any sums which it
may, in its discretion, advance or expend as a result of any such Event of
36
Default. Notwithstanding any such use or application by the Lessor or the
lender, the Lessee shall remain in default under this Agreement until the full
amount owed by the Lessee, including interest accrued thereon pursuant to
Exhibit H, Section H, shall have been paid to the Lessor and the Lessor's
lender. If the Lessor or, if applicable, the Lessor's lender so uses or applies
all or any portion of the amount available under the Letters of Credit, the
Lessee shall immediately, on demand of the Lessor or the lender, procure the
issue of a new Letter of Credit acceptable to the Lessor and the lender for 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
this Section 29.
(iii) The Letters of Credit shall be returned to the Lessee within five
(5) Business Days of
(a) redelivery of the Aircraft to the Lessor in the condition
required by Section 2 and Exhibit C to this Agreement;
(b) receipt by the lessor of the Agreed Value following a Total
Loss and all other amounts due under Section 11C; 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.
(c) Lessor's failure to deliver the Aircraft by May 1, 1998 other
than by reason of default of Lessee or delay caused by Lessee.
30. NO PURCHASE OPTION; NO HUSH KIT FINANCING
Lessee shall have no option to purchase the Aircraft. Lessor shall have no
obligations with respect to HUSH KITS (those parts that are required to be
affixed to the Engines and Airframe in order that the Aircraft complies with all
requirements of US FAR Part 36, Stage III and ICAO Annex 16, Chapter 3),
including but not limited to financing thereof.
31. AUTHORIZATION; LESSEE'S CONDITIONS PRECEDENT
A. Upon execution hereof, Lessor will deliver to Lessee:
(a) 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) a certificate of a duly authorized officer of the Lessor;
37
i. setting out a specimen of each signature referred to in Section
(a) above; and
ii. certifying that the copy of the resolutions referred to in
Section (a) above is correct, complete and in full force and effect;
B. 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:
That the representations and warranties of the Lessor under Section 24
and elsewhere in the Lease Agreement are correct and would be correct if
repeated on Delivery; and
i. The Aircraft is in the condition required pursuant to Section
IC and Section 2A;
ii. The Aircraft is U.S. registered;
iii. The Aircraft is substantially in the same condition as when
inspected by Lessee in May, 1997, normal wear and tear excepted;
iv. The Aircraft shall have been delivered prior to May 1, 1998;
subject to Article 18, and
▇. ▇▇▇▇▇▇ shall have executed the Lease Supplement in the form of
Exhibit I.
C. The conditions specified in Section 31 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.
32. AUTHORIZATION; LESSOR'S CONDITIONS PRECEDENT
A. Upon execution hereof, Lessee will deliver to Lessor:
(a) a copy of resolutions 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 deliver the Aircraft on its behalf;
(b) a certificate of a duly authorized officer of the Lessee;
i. setting out a specimen of each signature referred to in Section
a above; and
38
ii. certifying that the copy of the resolutions referred to in
Section a above is correct, complete and in full force and effect;
B. The Lessor's obligation to deliver the Aircraft to the Lessee under
this Agreement is subject to the satisfaction by the Lessee of the following
conditions precedent:
That the representations and warranties of the Lessee under Section 24
and elsewhere in the Lease Agreement are correct and would be Correct if
repeated on Delivery. Lessee shall have executed the Lease Supplement in the
form of Exhibit I.
D. The conditions specified in Section 32 are for the sole benefit of the
Lessor and may be waived or deferred in whole of 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 lease the Aircraft to the Lessee, the Lessee will, ensure that those
conditions are fulfilled within one month after the Delivery Date.
IN WITNESS WHEREOF, the parties hereto have executed this Aircraft Lease
Agreement by their duly authorized officers the day and year first above
written.
▇▇▇▇▇▇▇▇ ▇▇. ▇, ▇.▇.▇., ▇▇▇▇▇ Airlines, Inc.,
Lessor Lessee
AAR Corp., Manager
By: By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------- --------------------------
Name: Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------- --------------------------
Sr. Vice President
Title: Title: Finance & Planning and CFO
-------------------------------- --------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Vice President
Title: Planning & Development
--------------------------
39
EXHIBIT A
DESCRIPTION OF AIRCRAFT
MANUFACTURER MODEL SERIAL NO. US REGISTRATION
Boeing 737-282A 23045 N824AL
Total Time Since New: 38152.6 hrs
---------------
Total Cycles Since New: 23199
---------------
Since Last D Check: 24.6 hrs
---------------
Cycles Since Last D Check: 8
---------------
Time Since Last C Check: 24.6 hrs
---------------
Cycles Since Last C Check: 8
---------------
ENGINES
▇▇▇▇▇ & Whitney JT8D-9A SN 665851
▇▇▇▇▇ & ▇▇▇▇▇▇▇ JT8D-9A SN 655014
Lessor shall have the right to substitute another Engine for one
of the listed Engines provided that such substitute engine
meets the build specifications set forth in the letter
from ▇▇▇▇▇ ▇▇▇▇ to ▇▇▇ ▇▇▇▇ dated June 27,1997.
AIRCRAFT COMPONENTS ON THE AIRCRAFT ARE
LISTED ON THE ATTACHED EQUIPMENT LIST
DATED:____________
(To Be Furnished At Delivery)
40
EXHIBIT B
RECORDS
All logs, manuals and data, and inspection, modification and overhaul
records required to be maintained with respect to the Aircraft under applicable
rules and regulations of the Federal Aviation Administration of the United
States to the extent required for registration of the Aircraft in the United
States, and the Republic of Portugal and the agencies and instrumentalities
thereof, and if any such logs, manuals, data or records are not in English,
English translations thereof.
41
EXHIBIT C
REDELIVERY CONDITIONS
1. ENGINE CONDITION AT REDELIVERY
Upon return of the Aircraft to Lessor under this Lease, each Engine (or
replacement engine, as the case may be) shall have remaining as many
hours or cycles on the Engine's most limiting disk (with no single
Engine having fewer than 3,000 hours or cycles (whichever is more
limiting)) until its next Scheduled Engine Shop Visit as when the
Aircraft was delivered to Lessee. In the event all Engine upon such
return (or replacement Engine) shall have less hours or cycles remaining
on its most limiting disk than on delivery, Lessee shall pay Lessor for
the difference at the Adjusted L.L.P. rate at redelivery (i.e. the
payment shall equal the Adjusted LLP rate at redelivery times the excess
of the hours/cycles at Delivery over the hours/cycles at redelivery);
provided, however, in the event one Engine (or replacement Engine) upon
such return shall have more hours or cycles on its most limiting disk
than on Delivery, such excess times the Adjusted LLP Rate at Redelivery
shall be applied as a credit against amounts owed by Lessee pursuant to
the preceding phrase; provided further, that the foregoing credit shall
be applicable only if each Engine (or replacement engine) has at least
3,000 hours/cycles remaining as set forth in the first sentence above.
The foregoing calculation shall be made as to the Engine condition at
delivery prior to any build up of the Engine condition by Lessee. In
addition, upon return of the Aircraft to Lessor, Lessee will pay Lessor
with respect to each Engine, an amount equal to the Adjusted Engine Shop
Rate at redelivery times the excess, if any, of the number of flight
hours elapsed on each such Engine since its last Engine Shop Visit at
Redelivery over the number of Right hours elapsed on such Engine since
its last Engine Shop Visit at Delivery. In the event an Engine (or
replacement Engine) upon such Redelivery shall have fewer flight hours
elapsed since its last Engine Shop Visit than at Delivery, the excess
amount multiplied by the Adjusted Engine Shop Rate at Redelivery shall
be applied as a credit against the amount owed by Lessee for the other
Engine, pursuant to the preceding phrase. The foregoing credit is
applicable only if each Engine (or replacement engine) is returned with
at least 3,000 hours/cycles remaining until its next Scheduled Engine
Shop Visit. Lessor shall have no obligation for betterment of the
Engines upon redelivery. The foregoing calculation shall be made with
reference to the Engine condition at delivery prior to any build up of
the Engine condition by Lessee.
If Lessee is unable to return an Engine at the expiration or earlier
termination of this Lease, because of damage, overhaul or repair, Lessee
shall replace such Engine prior to such expiration or earlier
termination by duly conveying or causing to be conveyed to Lessor as a
replacement for such Engine, good and marketable title to another engine
acceptable to Lessor, which Engine shall be free
42
and clear of all liens and encumbrances, shall have a value and utility
at least equal to and be in as good operating condition as the Engine
replaced, assuming such Engine was in the condition required to be
maintained hereunder. Lessee shall have no right to substitute an engine
for an Engine upon return of the aircraft except for damage thereto.
Provided, however, Lessee may substitute an engine for an Engine if the
Engine at redelivery has twenty percent (20%) or more hours/cycles
remaining until its next Scheduled Engine Shop Visit at redelivery than
on delivery. The substitute engine will be free and clear of all liens
and encumbrances, shall have a value and utility at least equal to and
be in as good operating condition as the Engine replaced, assuming such
Engine was in the condition required hereunder. All financial
adjustments will be made with respect to the substitute engine.
2. AIRCRAFT CONDITION AT REDELIVERY
The number of hours remaining until the next scheduled TAP heavy "C" check
(C-7) at delivery is the "Beginning Hours". The number of hours remaining
until the next scheduled Aloha check that is the equivalent of the TAP heavy
C check at redelivery is the "Ending Hours". At Redelivery, the Aircraft
shall have been maintained in accordance with Section 6 of the Lease with
the same care and consideration for the technical condition of the Aircraft
as if it were to have been kept in continued regular service by Lessee. At
redelivery, Lessee will pay Lessor an amount equal to the excess of the
Beginning Hours over the Ending Hours times the Adjusted Airframe Rate. The
foregoing calculation shall be made as to the Beginning Hours prior to any
predelivery work performed by or at Lessee's expense and any Exhibit J
maintenance performed. The foregoing calculation is premised on the Lessee
continuing its current maintenance program with "Block" checks at current
intervals. If Lessee changes its maintenance program such that the intervals
for major maintenance ("D" checks) changes or is modified then Lessor and
Lessee will negotiate appropriate changes to the foregoing financial
adjustment and/or the return condition of the Aircraft, it being the intent
of the parties that the Aircraft be redelivered to Lessor in the same status
as when delivered to Lessee, or if not so redelivered, that the financial
adjustment is intended to compensate Lessor so that it can place the
Aircraft in such condition. Under no circumstances will the Lessor be
obligated to the Lessee for betterment of Aircraft condition.
- All cabin emergency equipment in serviceable condition (i.e.
megaphones, fire extinguishers, portable oxygen cylinders, etc.)
- All outstanding AD's and mandatory orders affecting such model of
aircraft issued by manufacturer which require compliance during the
term of the lease shall have been accomplished
- All Time Controlled Parts will have at least the same hours/cycles, or
calendar time (whichever is the more limiting factor) remaining to
operate until the Time
43
Controlled Parts' next scheduled overhaul in accordance with the
Lessee's Maintenance Program and manufacturer's recommendations as at
Delivery.
- If the Lessor's inspection prior to return of the Aircraft uncovers a
Time Controlled Part which has less hours, cycles or calendar time
remaining (whichever is the more limiting factor) Lessee shall make
payments in accordance with the terms of this Exhibit. The Lessee shall
make a payment to the Lessor by the amount in which the value assigned
to each Time Controlled Part which has less hours/cycles/calendar time
remaining at redelivery exceeds the value assigned to such Time
Controlled Parts as at Delivery. The value assigned to each Time
Controlled Part for the purposes of the payment referred to herein
shall be the product obtained by multiplying (i) the Part Overhaul
Price per hour, day or cycle (whichever is the more limiting factor)
calculated as set forth in this Exhibit, times (ii) the difference
between (a) the number of hours, calendar time or cycle (whichever is
the more limiting factor) consumed since the last Overhaul at
Redelivery and (b) the number of hours, calendar time or cycles
(whichever is the more limiting factor) since the last overhaul at
Delivery. The only Time Controlled Parts which shall be taken into
consideration for the purposes of the calculation of the payment
referred to herein are those Time Controlled Parts which have a
manufacturer's new list price of USD $1000 or more. Time Controlled
Part means any Part (other than an Engine, landing gear, APU or
airframe) which has a useful life measured in accordance with the
applicable Manufacturer's guidelines and recommendations, the FARs or
the Lessee's Maintenance Program by hours, cycles or calendar time
(whichever is the more limiting factor). The foregoing calculation
shall be made with reference to the hours/cycles/calendar time status
at delivery prior to any predelivery work performed by or at Lessee's
expense and any Exhibit J maintenance performed.
- Calculation of Part Overhaul Price.
(i) The Part Overhaul Price per hour, cycles or calendar time (whichever is
the more limiting factor) will be the quotient obtained by dividing (x) the
expected cost of the next Overhaul by (y) the full allotment of hours, cycles or
calendar time (whichever is the more limiting factor) between Overhauls as
approved by the Lessee's Maintenance Program.
(ii) If the Lessee and the Lessor are unable to agree on the expected cost
of the next Time Controlled Part Overhaul, such costs will be established by
taking the average of the price quotes submitted by two (2) reputable
FAA-approved overhaul facilities, one selected by the Lessor and the other by
the Lessee.
(iii) The foregoing calculation shall be made with reference to the
hours/cycles/calendar time status at delivery prior to any predelivery work
performed by or at Lessee's expense and Exhibit J maintenance performed.
3. LANDING GEAR AND APU
44
The landing gear and APU will be returned in the same status with respect to
overhaul as at delivery, provided that the delivery shall refer to the
hours/cycles/calendar time status at delivery prior to any predelivery work
performed by or at Lessee's expense and any Exhibit J maintenance performed.
45
EXHIBIT D
DELIVERY RECEIPT
Receipt is hereby acknowledged on behalf of ____________ of the delivery
to it by ____________ at ___ o'clock, This ___ day of _______________, at
____________, the following described Aircraft together, with the parts and
equipment attached thereto and included therewith, in accordance with the
terms of the Lease Agreement between Aircraft No. 2, L.L.C. and Aloha
Airlines, Inc., dated ________________, 1998,
(a) One (1) _______________ Aircraft
FAA Registration No. N824AL
----------------
Manufacturer's Serial No. 23045
----------------
(b) Fuel in Tanks ______________
(c) Additional Equipment listed on Exhibits _____, and _____ attached hereto [must be
generated and attached]
(d) Total Time Since New. 38152.6
----------------
Total Cycles Since New: 23199
----------------
Time Since Last D Check: 24.6 hrs
----------------
Cycles Since Last D Check: 8
----------------
Time Since Last C Check: 24.6 hrs
----------------
Cycles Since Last C Check: 8
----------------
(e) Engine Status:
ENGINE NO. 1 Serial Number: 665851
---------------
Total Time Since New: 56,495.4
----------------
Total Cycles Since New: 39,585
----------------
Time Since Last Overhaul: 0
----------------
Cycles Since Last Overhaul: 0
----------------
Time Since Last Shop Visit: 0
----------------
Cycles Since Last Shop Visit: 0
----------------
ENGINE NO: 2: Serial Number: 655914
---------------
Total Time Since New: 61,607.4
----------------
Total Cycles Since New: 44,700
----------------
Time Since Last Overhaul: 0
----------------
Cycles Since Last Overhaul: 0
----------------
Time Since Last Shop Visit: 0
----------------
Cycles Since Last Shop Visit: 0
----------------
By:
-------------------------------------
Date:
-------------------------------------
46
EXHIBIT D
DELIVERY RECEIPT
Receipt is hereby acknowledged on behalf of ____________ of the delivery
to it by ____________ at ___ o'clock, this ___ day of ________________, at
____________, the following described Aircraft together, with the parts and
equipment attached thereto and included therewith, in accordance with the
terms of the Lease Agreement between Aircraft No. 2, L.L.C. and Aloha
Airlines, Inc., dated ____________________, 1998,
(a) One (1) _______________ Aircraft
FAA Registration No.
----------------
Manufacturer's Serial No.
----------------
(b) Fuel in Tanks ______________
(c) Additional Equipment listed on Exhibits _____, and _____ attached hereto [must be
generated and attached]
(d) Total Time Since New:
----------------
Total Cycles Since New:
----------------
Time Since Last D Check:
----------------
Cycles Since Last D Check:
----------------
Time Since Last C Check:
----------------
Cycles Since Last C Check:
----------------
(e) Engine Status:
ENGINE NO. 1 Serial Number:
---------------
Total Time Since New:
----------------
Total Cycles Since New:
----------------
Time Since Last Overhaul:
----------------
Cycles Since Last Overhaul:
----------------
Time Since Last Shop Visit:
----------------
Cycles Since Last Shop Visit:
----------------
ENGINE NO: 2: Serial Number:
---------------
Total Time Since New:
----------------
Total Cycles Since New:
----------------
Time Since Last Overhaul:
----------------
Cycles Since Last Overhaul:
----------------
Time Since Last Shop Visit:
----------------
Cycles Since Last Shop Visit:
----------------
By:
-------------------------------------
Date:
-------------------------------------
46
EXHIBIT E
REDELIVERY RECORDS
Upon redelivery, Lessee will deliver to Lessor all of the records, manuals,
logs, etc., delivered to Lessor at the commencement of the Lease plus all
records, manuals, logs, etc., generated by Lessee during the term of the Lease.
47
EXHIBIT F
[Form of Letter of Credit to be furnished]
48
EXHIBIT G
LIST OF PERMITTED SUBLESSEES
Aer Lingus
Aerolineas Argentinas
Aeropostale
Air Canada
Air France
Air-Inter
Air Malta
Air New Zealand
Air Nippon
Air Portugal
Alitalia
All Nippon Airways
Ansett
Austrian Airlines
Aviateca
Bahamas Air
Braathens
British Airways
British Midland Airways
Canadian Airlines International
Cathay Pacific
China Airlines
Condor
COPA Panama
Iberia
Japan Airlines
Japan Air System
Japan Asia Airways
Japan Transocean Air
Korean Air
Lan Chile
Lufthansa
Malaysian Airlines System
Martinair Holland
Northwest Territorial
Qantas
Royal Dutch Airlines
▇▇▇▇ Air
Sabena
Scandinavian Airlines System
Singapore Airlines
49
South African Airways
SwissAir
TACA International
Thai Airways International
Alaska Airlines
Continental Airlines
Delta Airlines
Southwest Airlines
United Air Lines
USAir
50
EXHIBIT I
LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. ___, dated ____________, 19___, between Aircraft
No. 2, L.L.C., a limited liability company incorporated under the laws of
Illinois ("Lessor"), and Aloha Airlines, Inc., a Delaware corporation
("Lessee").
Lessor and Lessee have previously entered into that certain Aircraft
Lease Agreement dated as of August 11, 1997, (herein called the "Lease" and the
defined terms therein being hereinafter used with the same meaning). The Lease
provides for the execution and delivery from time to time of a Lease Supplement
substantially in the form hereof for the purpose of leasing the aircraft
described below under the Lease as and when delivered by Lessor to Lessee in
accordance with the terms thereof.
The Lease relates to the Aircraft, Parts and Engines as more precisely
described below. A counterpart of the Lease is attached hereto and this Lease
Supplement and the Lease shall form one document.
In consideration of the premises and other good and sufficient
consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under the Lease and
Lessee hereby accepts and leases from Lessor under the Lease, that certain used
Boeing 737-282 Advanced commercial jet Aircraft, Airframe and the two (2) ▇▇▇▇▇
& Whitney Engines (each of which Engines has 750 or more rated takeoff
horsepower or the equivalent of such horsepower) described in Schedule 1
herewith ("Aircraft").
2. The Delivery Date of the Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof.
3. The term for the Aircraft shall commence on the Delivery Date and
shall end on the Expiration Date, which shall be, subject to extension as
contemplated by Section 1 D of the Lease.
4. The amount of Rent for the Aircraft is set forth in the Lease, and is
payable as provided in the Lease. The Last Basic Rent Payment Date shall be
subject to revision as contemplated by Section 1 D and Exhibit H of the Lease.
The Supplemental Rental is set forth on Schedule 2 hereto.
5. Lessee hereby confirms to Lessor that (i) the Aircraft and each
Engine installed thereon or belonging thereto have been duly marked in
accordance with the terms of Section 14 of the Lease, (ii) Lessee has accepted
the Aircraft for all purposes hereof and of the Lease, and
56
(iii) except as otherwise expressly agreed in writing by Lessor and Lessee,
Lessee has inspected the Aircraft and the Aircraft satisfies the conditions set
forth in the Lease.
6. All of the terms and provisions of the Lease are hereby incorporated
by reference in this Lease Supplement to the same extent as if fully set forth
herein.
7. This Lease Supplement may be executed in any number of counterparts,
each of such counterparts shall for all purposes be deemed to be an original;
and all such counterparts shall together constitute but one and the same Lease
Supplement.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
No. ___ to Aircraft Lease Agreement to be duly executed as of the day and year
first above written.
Aircraft No. 2, L.L.C., Lessor.
AAR Corp., Manager
By:
-------------------------------------
Name:
----------------------------------
Title:
----------------------------------
Aloha Airlines, Inc., Lessee
By:
-------------------------------------
Name:
----------------------------------
Title:
----------------------------------
By:
-------------------------------------
Name:
----------------------------------
Title:
----------------------------------
57
SCHEDULE 1
TO
LEASE SUPPLEMENT NO. 1
One Used
Boeing 737-282A Advanced
Airframe
FAA Registration No. Manufacturer's Serial No. Total Time* Total Cycles*
-------------------- ------------------------- ----------- -------------
N824AL 23045
Installed ▇▇▇▇▇ & ▇▇▇▇▇▇▇
Engines
Model No. Serial No. Total Time* Total Cycles*
-------------------- ---------- ----------- -------------
JT8D-9A
JT8D-9A
Each of the above-described Aircraft Engines has 750 or more rated takeoff
horsepower or its equivalent.
*The total time and total cycles referred to above are as of _________ time,
_________, 1998. Such times and cycles are the actual hours and cycles at the
time of this Lease Supplement.
58
LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. 1, dated MARCH 20, 1998, between Aircraft No. 2,
L.L.C., a limited liability company incorporated under the laws of Illinois
("Lessor"), and Aloha Airlines, Inc., a Delaware corporation ("Lessee").
Lessor and Lessee have previously entered into that certain Aircraft
Lease Agreement dated as of August 11, 1997, (herein called the "Lease" and
the defined terms therein being hereinafter used with the same meaning). The
Lease provides for the execution and delivery from time to time of a Lease
Supplement substantially in the form hereof for the purpose of leasing the
aircraft described below under the Lease as and when delivered by Lessor to
Lessee in accordance with the terms thereof.
The Lease relates to the Aircraft, Parts and Engines as more precisely
described below. A counterpart of the Lease is attached hereto and this Lease
Supplement and the Lease shall form one document.
In consideration of the premises and other good and sufficient
consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under the Lease and
Lessee hereby accepts and leases from Lessor under the Lease, that certain
used Boeing 737-282 Advanced commercial jet Aircraft, Airframe and the two
(2) ▇▇▇▇▇ & Whitney Engines (each of which Engines has 750 or more rated
takeoff horsepower or the equivalent of such horsepower) described in
Schedule 1 herewith ("Aircraft").
2. The Delivery Date of the Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof.
3. The term for the Aircraft shall commence on the Delivery Date and
shall end on the Expiration Date, which shall be March 31, 2006, subject to
extension as contemplated by Section 1D of the Lease.
4. The amount of Rent for the Aircraft is set forth in the Lease, and
is payable as provided in the Lease. The Last Basic Rent Payment Date shall
be subject to revision as contemplated by Section 1D and Exhibit H of the
Lease. The Supplemental Rental is set forth on Schedule 2 hereto.
5. Lessee hereby confirms to Lessor that (i) the Aircraft and each
Engine installed thereon or belonging thereto have been duly marked in
accordance with the terms of Section 14 of the Lease, (ii) Lessee has
accepted the Aircraft for all purposes hereof and of the Lease, and (iii)
except as otherwise expressly agreed in writing by Lessor and Lessee, Lessee
has inspected the Aircraft and the Aircraft satisfies the conditions set
forth in the Lease.
6. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
7. This Lease Supplement may be executed in any number of
counterparts, each of such counterparts shall for all purposes be deemed to
be an original; and all such counterparts shall together constitute but one
and the same Lease Supplement.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
No. 1 to Aircraft Lease Agreement to be duly executed as of the day and year
first above written.
Aircraft No. 2, L.L.C., Lessor
AAR Corp. Manager
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Vice President
Title: Chief Financial Officer
--------------------------------
Aloha Airlines, Inc., Lessee
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
6. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
7. This Lease Supplement may be executed in any number of
counterparts, each of such counterparts shall for all purposes be deemed to
be an original; and all such counterparts shall together constitute but one
and the same Lease Supplement.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
No. 1 to Aircraft Lease Agreement to be duly executed as of the day and year
first above written.
Aircraft No. 2, L.L.C., Lessor
AAR Corp. Manager
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Aloha Airlines, Inc., Lessee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Sr. Vice President
Title: Finance & Planning and CFO
--------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Vice President
Title: Planning & Development
--------------------------------
SCHEDULE 1
TO
LEASE SUPPLEMENT NO. 1
One Used
Boeing 737-282A Advanced
Airframe
Manufacturer's Serial
FAA Registration No. No. Total Time* Total Cycles*
-------------------- --------------------- ----------- -------------
N824AL 23045 38152.6 hrs. 23199
Installed ▇▇▇▇▇ & ▇▇▇▇▇▇▇
Engines
Model No. Serial No. Total Time* Total Cycles*
-------------------- --------------------- ----------- -------------
JT8D-9A 665851 56495.4 hrs 39585
JT8D-9A 655014 61607.4 hrs 44700
Each of the above-described Aircraft Engines has 750 or more rated takeoff
horsepower or its equivalent.
* The total time and total cycles referred to above are as of March 19, 1998.
Such times and cycles are the actual hours and cycles at the time of this
Lease Supplement.
SCHEDULE 2
TO
LEASE SUPPLEMENT NO. I
[Intentionally Blank for FAA Filing Purposes]
Supplemental Rental: $ ________________ per month
59
LEASE AMENDMENT NO. 1
Lease Amendment No. 1 entered into as of ____________, 1998 (the
"Amendment") between Aircraft No. 2, L.L.C., an Illinois limited liability
company ("Lessor") and Aloha Airlines, Inc., a corporation organized under
the laws of Delaware.
WHEREAS, Lessor and Lessee entered into an Aircraft Lease Agreement
for one Boeing 737-282 Aircraft MSN 23045 with U.S. Registration N824AL (the
"Aircraft") dated as of August 11, 1997, as supplemented and amended from
time to time (the "Lease") (all terms used herein and not defined herein
shall have the meaning set forth in the Lease); and
WHEREAS, the Lease and Lease Supplement No. 1 thereto dated March
20, 1998, were recorded together as Conveyance No. F68824 on June 30, 1998;
and
WHEREAS, Lessor and Lessee desire to amend the Lease as hereinafter
set forth:
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the adequacy and receipt of which are
hereby acknowledged, the parties hereto agree as follows:
1. Schedule 2 to Lease supplement No. 1 is amended as of August 1,
1998 by the deletion of such Schedule and by substitution of the attached
revised Schedule 2 to Lease Supplement No. 1.
2. All other terms of the Lease shall remain unchanged.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their respective and duly authorized officers as of the date
first above written.
LESSOR LESSEE
AIRCRAFT NO. 2, L.L.C. ALOHA AIRLINES, INC.
By: AAR CORP., Manager
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------ -----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------ -----------------------------
Vice President Vice President
Title: Chief Financial Officer Title: Planning & Development
------------------------------ -----------------------------
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Staff Vice President
Title: Finance & Planning
-----------------------------
SCHEDULE 2
TO LEASE SUPPLEMENT NO. 1
(REVISED AS OF AUGUST 1, 1998)
[Intentionally Blank for FAA Filing Purposes]
Supplemental Rental: $27,250.93
EXHIBIT F
[Form of Letter of Credit to be furnished]
Intentionally deleted for FAA filing purposes.
48
EXHIBIT H
FINANCIAL TERMS
[This Exhibit is Blank for FAA Filing Purposes]
51
SCHEDULE 2
TO
LEASE SUPPLEMENT NO. 1
[Intentionally Blank for FAA Filing Purposes]
55
EXHIBIT J
ADDITIONAL ▇▇▇▇ OF WORK
[Intentionally Blank for FAA Filing Purposes]
56
SCHEDULE 2
TO
LEASE SUPPLEMENT NO. 1
[Intentionally Blank for FAA Filing Purposes]
FAA AIRCRAFT REGISTRY
CAMERA NO. 3 DATE 12-21-99
0 0 0 0 0 0 0 0 3 3 5
Y Y 9 1 5 8 3 7
CERTIFIED COPY
TO BE RECORDED BY FAA [Illegible stamp]
99 NOV 21 AM 10 20
[Illegible]
ASSIGNMENT OF AIRCRAFT LEASE
(Aircraft 23045)
INSTRUMENT OF ASSIGNMENT ("Assignment") dated as of August 31, 1999,
between BCI Aircraft Leasing 1999, L.L.C., an Illinois limited liability
company ("Assignor"), and Aircraft No. 2, L.L.C., an Illinois limited
liability company ("Assignee").
RECITALS:
A. The Assignor holds legal and record title to a Boeing 737-282A
aircraft bearing manufacturer's serial number 23045 and FAA Registration
Number N824AL (the "Airframe") and its two ▇▇▇▇▇ & Whitney JT8D-9A jet
engines bearing manufacturer's serial numbers 665851 and 655014
(collectively, the "Engines"; the Airframe and the Engines, together with all
avionics, appliances, radio and radar devices, accessories, and equipment
installed on the Airframe, being referred to herein as the "Aircraft").
B. The Assignor has leased the Aircraft to Aloha Airlines, Inc.
("Lessee"), pursuant to an Aircraft Lease Agreement dated as of August 11,
1997 (the "Lease") as supplemented by Lease Supplement No. 1, dated March 20,
1998, and amended on July 21, 1998, and as collaterally assigned by the
Assignment of Aircraft Lease, dated as of March 20, 1998 between Assignor and
▇▇▇▇▇▇▇ Bank, N.A. now Bank of America, N.A., formerly NationsBank, N.A.
(recorded by the Federal Aviation Administration on December 7, 1998, as
Conveyance No. F68824).
C. The Assignee has agreed to advance to the Assignor $1,422,678
($U.S.) as a term loan (the "Loan") pursuant to a Term Note dated as of
August 31, 1999, between the Assignor and the Assignee (such Term Note as the
same may be amended or modified from time to time being hereinafter referred
to as the "Term Note").
D. The Borrower is indebted to NationsBank, N.A. (the "Senior Bank
Lender") in connection with financing of the Aircraft (the "Senior Debt").
E. Any lien granted herein to Lender is junior and subordinated to the
liens granted to the Senior Bank Lender securing the Senior Debt.
F. As a condition of its making the Term Loan and in consideration
thereof and as security for the repayment thereof, the Assignee has required,
among other things, that the Assignor enter into this Assignment.
NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the parties hereto hereby agree as follows:
FAA AIRCRAFT REGISTRY
CAMERA NO. 3 DATE 12-21-99
FILED WITH FAA
AIRCRAFT REGISTRATION ON
'99 OCT 14 AM 7 45
OKLAHOMA CITY
OKLAHOMA
FAA AIRCRAFT REGISTRY
CAMERA NO. 3 DATE 12-21-99
0 0 0 0 0 0 0 0 3 3 6
1. Capitalized terms used but not defined in this Assignment shall
have the respective meanings set forth in the Term Note. In the event of a
conflict between the terms of this Assignment and the Term Note, the terms of
the Term Note or this Assignment which provide the Assignee with the greatest
rights and remedies shall be controlling.
2. In order to secure the due and punctual performance by Assignor of
each and every obligation of Assignor under, and compliance by Assignor with
each and every provision of, the Term Note and the other Loan Documents,
Assignor hereby irrevocably assigns, transfers and sets over to Assignee, all
of Assignor's estate, right, title, interest, claim and demand in, to and
under the Lease and all payments due or to become due thereunder and damages
and other moneys from time to time payable to or receivable by Assignor
thereunder (said sums being herein called the "Moneys").
3. Notwithstanding the provisions of Section 2 hereof, unless and
until an Event of Default shall have occurred, and thereafter provided that
Assignor has remedied all Events of Default, Assignor shall be entitled to
exercise all of the Assignor's rights under the Lease, except (a) the right,
if any, to assign or grant a security interest in any such right, including
the right to receive Moneys, to any person other than Assignee, (b) to the
extent that such exercise would violate any provision of the Lease, and (c)
as otherwise provided herein. Upon the occurrence of an Event of Default and
for as long as the same shall be continuing, all rights and interest of the
Assignor in, to and under the Lease and the proceeds thereof, including,
without limitation, all rights to receive Moneys thereunder, shall be
exercisable solely by and shall inure solely and exclusively to the benefit
of Assignee. Accordingly, upon such occurrence of an Event of Default for as
long as the same shall be continuing in addition to any right or remedy
Assignee may have under the Term Note, the Aircraft Security Agreement and
the other Loan Documents, Assignee shall have the all rights, but shall not
be obligated, to enforce the Lease as if Assignee were a party thereto.
4. Any Moneys which would have been required to be paid to Assignor by
Lessee but for the existence of an Event of Default and which have been paid
to Assignee shall be held by Assignee and may be applied by Assignee to cure
any Event of Default or applied in reduction of the obligations under the
Term Note. Any Moneys remaining in the possession of Assignee after the
payment in full of all obligations under the Term Note shall be promptly paid
over to Assignor without interest.
5. The obligations of Assignor owing to Lessee under the Lease shall
continue to be obligations of Assignor, and Assignee shall have no
obligations or liability under the Lease by reason of, or arising out of,
this Assignment, and shall not be
-2-
FAA AIRCRAFT REGISTRY
CAMERA NO. 3 DATE 12-21-99
0 0 0 0 0 0 0 0 3 3 7
obligated to make any inquiry as to the sufficiency of any payment received
by it or to present or file any claim or to take any action to collect or
enforce any claim for any payment assigned hereunder. Notwithstanding the
foregoing sentence, in the event that an Event of Default (as defined in the
Lease) shall have occurred, Assignee, in its sole discretion, shall have the
right, but not the obligation, to undertake to assume and perform the
obligations of Assignor under the Lease and to have the Lessee deem and treat
Assignee as possessing all the rights granted Assignor under the Lease for
all purposes thereunder. Any performance by Assignee shall not constitute a
waiver or release of any obligation or any Event of Default (under the Term
Note) which may arise out of Assignor's non-performance of its obligations
under the Lease nor an election or waiver by Assignee of any remedy or right
available to Assignee under the Term Note or the other Loan Documents.
6. This Assignment shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
7. All notices, consents and other communications permitted or
required by this Assignment to be given or sent shall be in writing and, to
be effective hereunder, shall be hand delivered or sent by certified or
registered first class mail, return receipt requested, and addressed to the
party to whom directed at such party's address first above written or to such
other address as such party shall specify in a written notice to the other
party hereto.
8. This Assignment shall be governed by, and construed and enforced in
accordance with, the laws of the State of Illinois in effect from time to
time.
-3-
FAA AIRCRAFT REGISTRY
CAMERA NO. 3 DATE 12-21-99
0 0 0 0 0 0 0 0 3 3 8
IN WITNESS WHEREOF, the parties hereto have executed this agreement on
the day and year first above written.
AIRCRAFT NO. 2, L.L.C., an Illinois limited
liability company
By: AAR Corp., a Delaware corporation, as
manager
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
BCI AIRCRAFT LEASING 1999, L.L.C., an
Illinois limited liability company
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By:
MANAGER
(Acknowledgements appear on following page)
-4-
FAA AIRCRAFT REGISTRY
CAMERA NO. 3 DATE 12-21-99
0 0 0 0 0 0 0 0 3 3 9
STATE OF ILLINOIS )
) SS:
COUNTY OF DU PAGE )
The foregoing instrument was acknowledged before me this 22nd day of
September, 1999 by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Executive Vice President of AAR Corp.,
a Delaware corporation, as manager of Aircraft No. 2, L.L.C., an Illinois
limited liability company, on behalf of the corporation and the limited
liability company. He is personally known to me or has produced a driver's
license as identification.
Print or Stamp Name: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Notary Public, State of
---------------------
Commission No.: --------------------------------
My Commission Expires: OFFICIAL SEAL
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇
NOTARY PUBLIC, STATE OF ILLINOIS
MY COMMISSION EXPIRES: 09/06/00
--------------------------------
STATE OF ILLINOIS )
) SS:
COUNTY OF DU PAGE )
The foregoing instrument was acknowledged before me this 22nd day of
September, 1999 by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ as Manager of BCI Aircraft Leasing
1999, L.L.C., an Illinois limited liability company, on behalf of the limited
liability company. He is personally known to me or has produced a driver's
license as identification.
Print or Stamp Name: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Notary Public, State of
---------------------
Commission No.: --------------------------------
My Commission Expires: OFFICIAL SEAL
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇
NOTARY PUBLIC, STATE OF ILLINOIS
MY COMMISSION EXPIRES: 09/06/00
--------------------------------
-5-
FAA AIRCRAFT REGISTRY
CAMERA NO. 3 DATE: 12-21-99
0 0 0 0 0 0 0 0 3 2 7 V V 0 1 5 8 3 6
LEASE AGREEMENT ASSIGNMENT
This Lease Agreement Assignment (the "Assignment"), dated August 31, 1999,
is between BCI Aircraft Leasing 1999, L.L.C., an Illinois limited liability
company ("Assignee"), and Aircraft No. 2, L.L.C., an Illinois limited
liability company ("Assignor").
RECITALS:
WHEREAS, Assignor and Aloha Airlines, Inc., a Delaware corporation
("Lessee"), are parties to a Lease Agreement (the "Lease Agreement"), dated
as of August 11, 1997, between Assignor and Lessee, as amended on July 21,
1998, as supplemented by Lease Supplement No. 1, dated March 20, 1998, and
amended on July 21, 1998, and as collaterally assigned by the Assignment of
Aircraft Lease, dated as of March 20, 1998 between Assignor and ▇▇▇▇▇▇▇
Bank, N.A. now Bank of America, N.A., formerly NationsBank, N.A. (recorded by
the Federal Aviation Administration on December 7, 1998, as Conveyance
No. F68824) and the other agreements relating thereto as more fully described
in Schedule 1 hereto (collectively, the "Lease Documents"), pursuant to which
Assignor leases to Lessee one used Boeing 737-282A aircraft bearing
manufacturer's serial number (MSN 23045) and FAA registration number (N824AL),
and two ▇▇▇▇▇ & Whitney Model JT8D-9A engines bearing, respectively,
manufacturer's serial numbers P655014 and P665851 (the "Aircraft").
WHEREAS, Assignor has agreed to sell the Aircraft to Assignee (the
"Purchase") pursuant to the terms of that certain Purchase and Sale Agreement,
dated August 31, 1999 (the "Purchase Agreement"; capitalized terms used herein
and defined in the Purchase Agreement shall have the same meaning herein unless
otherwise defined herein), subject to the Lease Agreement, and to assign the
Lease Agreement, except the Assignor's Rights (as defined below), to Assignee.
NOW THEREFORE,in consideration of the foregoing premises, and for other
good and valuable consideration the adequacy and receipt of which are hereby
acknowledged, the parties herto agree as follows:
SECTION 1. EFFECTIVENESS. This Assignment, and the rights and obligations of
Assignor and Assignee hereunder, shall become effective upon, but only upon,
the occurrence of the Closing (as defined in the Purchase Agreement) of the
Purchase, or upon filing of this assignment with the Federal Aviation
Administration. Assignor and Assignee shall notify Lessee (a) of the
occurrence of this Assignment pursuant to a notice given on the date hereof
substantially in the form of Annex A hereto (the "Notice of Assignment"),
and (b) of the occurrence of the Purchase immediately upon delivery of the
Aircraft under the Purchase Agreement pursuant to a notice substantially in
the form of Attachment A to the Notice of Assignment.
SECTION 2. ASSIGNMENT. In consideration of the payment of US$1.00 by
Assignee to Assignor and for other good and valuable consideration, the adequacy
and receipt of which are
* which amendment was not filed with the federal Aviation Administration.
FAA AIRCRAFT REGISTRY
CAMERA NO. 3 DATE: 12-21-99
FILED WITH FAA
AIRCRAFT REGISTRATION BR
'99 OCT 14 AM 7 44
OKLAHOMA CITY
OKLAHOMA
FAA AIRCRAFT REGISTRY
CAMERA NO. 3 DATE: 12-21-99
0 0 0 0 0 0 0 0 3 2 8
hereby acknowledged, Assignor hereby sells, assigns, delegates, conveys,
transfers and sets over to Assignee all rights and obligations of Assignor
under the Lease Documents, subject to the rights of Lessee under the Lease
Documents and subject to the reservation by Assignor (on a non-exclusive
basis) of the Assignor's Rights as defined below, which Assignor's Rights
Assignor shall continue to benefit from after the Purchase. Assignor's Rights
means and includes the rights of the "Lessor" under the Lease Documents
(including Assignor): (a) to each and every defense (whether arising by
contract, law or equity) under or with respect to the Lease Documents, (b)
under the liability insurance provisions of the Lease Agreement, and (c)
under all indemnities made by the Lessee, and all disclaimers made by the
Lessor, under the Lease Agreement, in each case, to the extent such rights
vested, or relate to events occurring, prior to the time of Closing. The
retention by Assignor of the Assignor's rights shall not prejudice Assignee's
right to the benefit of the Assignor's Rights (including, without Limitation,
liability, insurance under the Lease Agreement, or the right to enforce any
of the foregoing) in each case to the full extent applicable to the Assignee
(whether or not relating to the period after the assignment of the Lease
Agreement).
SECTION 3. ASSIGNEE ACCEPTANCE AND ASSUMPTION. Assignee hereby accepts
and assumes all of Assignor's Rights (other than the Assignor's Right) and
obligations under the Lease Documents and Assignee shall perform all such
obligations to performed by "Lessor" under the Lease Documents.
SECTION 4. ENTIRE AGREEMENT. This Assignment (including the Schedule
hereto) and the Purchase Agreement constitutes the entire agreement between
the parties in relation to the subject matter hereof and supersedes all
previous proposals , agreements and other written and oral communications in
relation hereto. The parties acknowledge that there have been no
representations, warranties, promises, guarantees or agreements, express or
implied, except as set forth herein and the Purchase Agreement.
SECTION 5. ILLINOIS LAW. THIS ASSIGNMENT SHALL IN ALL RESPECTS BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS.
SECTION 6. COUNTERPARTS. This assignment may be executed in any number
of counterparts and by either party on one or more of such counterparts, each
of which when so executed shall be deemed to be an original, and such
counterparts together shall constitute one and the same instrument. A
facsimile signature on any counterpart hereto will be deemed an original for
all purposes.
SECTION 7. FURTHER ASSURANCE. Assignor agrees that from time to time
after the execution and delivery of the Agreement, it shall upon the request
of Assignee and at Assignee's expense duly execute and deliver such further
documents and instruments and take such further action as Assignee may
reasonably request in order to effectuate fully the intent and purposes of
this Agreement.
[The remainder of this page is intentionally left blank).
2
FAA AIRCRAFT REGISTRY
CAMERA NO. 3 DATE: 12-21-99
0 0 0 0 0 0 0 0 3 2 9
IN WITNESS WHEREOF, the parties have caused this Assignment to be duly
executed and delivered by their respective duly authorized officers as of the
day and year first above written.
AIRCRAFT NO. 2, L.L.C.
as Assignor
By AAR Corp., as Manager
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
BCI AIRCRAFT LEASING 1999, L.L.C.
as Assignee
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Manager
3
FAA AIRCRAFT REGISTRY
CAMERA NO. 3 DATE: 12-21-99
0 0 0 0 0 0 0 0 3 3 0
Annex A
to Lease Agreement Assignment
NOTICE OF AND CONSENT TO ASSIGNMENT
Aloha Airlines, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President Finance and Planning
Re: NOTICE OF AND CONSENT TO ASSIGNMENT OF LEASE AGREEMENT
Dear Sir or Madam:
Reference is hereby made to that certain Lease Agreement, dated as August 11,
1997, between Aloha Airlines, Inc. ("Leasee") and Aircraft No. 1, L.L.C.,
as amended, modified and supplemented (the "Lease Agreement"), pursuant to
which Aircraft No. 1, L.L.C. ("Assignor") is leasing to you one Boeing 737-282C
aircraft bearing manufacturer's serial number 23051 (the "Aircraft").
You are hereby notified that Assignor has assigned and delegated all of its
rights (other than Assignor's Right) and obligations under the Lease Agreement
and related documents (as set forth on Schedule 1 hereto) to BCI Aircraft
Leasing 1999, L.L.C. ("Assignee") pursuant to a Lease Agreement Assignment
between Assignor and Assignee (a copy of which Lease Agreement Assignment is
attached hereto (the "Assignment")). Such assignment and delegation shall
become effective upon consummation of the purchase of the Aircraft by
Assignee from Assignor. Assignor and Assignee shall give you notice of
consummation of the purchase of the Aircraft by Assignee (the "Purchase
Notice") in the form attached hereto as Attachment A.
Capitalized terms used but not defined herein shall have the respective
meanings ascribed thereto in the Lease Agreement Assignment.
SECTION 1. LEASE PROVISIONS. With effect from the date of the
Purchase Notice:
(a) PAYMENTS. Until the Note (as defined in the Purchase
Agreement) is paid in full, all rental payments and other payments due from
Lessee under the Lease will be paid to Lessor's NationsBank, N.A. account
(Routing #, ABA 063 100 277, Account # ▇▇▇ ▇▇▇ ▇▇▇▇).
(b) NOTICE. All notices and other communications from Lessee to
"Lessor" under the Lease Agreement and the other Lease Documents shall be
delivered to:
FAA AIRCRAFT REGISTRY
CAMERA NO. 3 DATE: 12-21-99
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BCI Aircraft Leasing 1999, L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Att: President
(c) INSURANCE. Lessee shall modify the insurance policies
covering the Aircraft to acknowledge BCI Aircraft Leasing 1999, L.L.C. as
owner and Lessor of the Aircraft and Aircraft No. 1, L.L.C. as additional
loss payee as its interests may appear.
SECTION 2. LESSEE CONSENT. With effect from the date of the
Purchase Notice, Lessee consents to the Assignment and consummation of the
transactions contemplated thereby.
SECTION 3. ASSIGNOR RELEASE. With effect from the date of the
Purchase Notice, Assignor shall have no further obligaitons under the Lease
Agreement (and all agreements, instruments and documents relating thereto)
and is hereby released therefrom.
SECTION 4. LESSEE'S REPRESENTATIONS. Pursuant to the Lease
Agreement, Lessee hereby confirms that:
(a) Other than as listed in the documents listed in Schedule 1
to this Agreement, there has been no amendment or modification of the Lease
Agreement.
(b) The Basic Rent and Supplemental Rent (as defined in the
Lease Agreement) have each been paid through September 30, 1999 and no Basic
Rent or Supplemental Rent has been prepaid.
(c) Lessee has no claim against Assignor by reason of the
condition of the Aircraft as of the date hereof.
(d) The Lease Agreement is in full force and effect.
(e) There are no uncured defaults under the Lease Agreement.
(f) Assignor is in full compliance with the provisions of the
Lease Agreement and Lessee has no claims for unperformed obligations or
liabilities of Assignor.
(g) With effect from the date of the Purchase Notice, Lessee
will perform, observe and comply with all of its obligations and undertakings
under the Lease Agreement and the other Lease Documents in favor of the
Assignee and for the benefit of Assignee as if Assignee were named as "Lessor"
therein instead of the Assignor.
(h) Lessee acknowledges that, as provided in the Lease
Assignment, the retention by Assignor of the Assignor's Rights and that such
retention shall not prejudice Assignee's rights to the benefits of the
relevant provisions of the Lease Documents to the extent applicable to
Assignee (whether or not relating to the period after the date of the Purchase
Notice).
FAA AIRCRAFT REGISTRY
CAMERA NO. 3 DATE: 12-21-99
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SECTION 6. ILLINOIS LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS.
SECTION 7. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by andy party on one or more of such counterparts,
each of which when so executed shall be deemed to be an original, and such
counterparts together shall constitute one and the same instrument. A
facsimile signature on any counterpart hereto will be deemed an original for
all purposes.
If you are in agreement with the foregoing, please so indicate
by signing and returning a copy of this letter to the undersigned.
Thank you for your cooperation.
Very truly yours,
AIRCRAFT NO. 1, L.L.C
By: AAR Corp., as Manager
By:_________________
Title:______________
BCI AIRCRAFT LEASING 1999, L.L.C.
By:_________________
Title:______________
Accepted and Agreed:
ALOHA AIRLINES, INC.
By:_________________
Title:______________
FAA AIRCRAFT REGISTRY
CAMERA NO. 3 DATE: 12-21-99
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Attachment A to
Notice of Assignment
September____, 1999
Aircraft No. 1, L.L.C.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
BCI Aircraft Leasing 1999, L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Aloha Airlines, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇
Attention: Senior Vice President Finance and Planning
Re: NOTICE OF EFFECTIVENESS OF SALE
Dear Sir or Madam:
Reference is hereby made to that certain Lease Assignment Agreement (the
"Agreement"), dated as of August 31, 1999, between Aircraft No. 1, L.L.C. and
BCI Aircraft Leasing 1999, L.L.C., relating to One Boeing 737-282C aircraft
bearing manufacturer's serial number 23051 (and U.S. registration number
N826AL).
Capitalized terms used but not defined herein shall have the respective meanings
ascribed thereto in the Agreement.
Pursuant to the Notice to Lessee, delivered under the Agreement, you are hereby
notified that the Purchase has occurred and the Agreement is, consequently,
effective.
FAA AIRCRAFT REGISTRY
CAMERA NO. 3 DATE: 12-21-99
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This letter may be executed in any number of counterparts and by either party
on one or more of such counterparts.
Very truly yours,
AIRCRAFT NO. 1, L.L.C. BCI AIRCRAFT LEASING 1999, L.L.C.
By: AAR Corp., as Manager
By:__________________ By:__________________
Title:_______________ Title:_______________
[NUMBER ILLEGIBLE]
Execution Version
[STAMP ILLEGIBLE]
ASSIGNMENT OF LEASE 824 AND LETTER OF CREDIT
--------------------------------------------
This ASSIGNMENT OF LEASE 824 AND LETTER OF CREDIT, dated as of March 31,
2000 (this "Agreement"), is between FIRST SECURITY BANK, NATIONAL ASSOCIATION
("FSB"), a national banking association, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, as owner trustee under the Trust Agreement, dated as
of March 28, 2000, between BCI AIRCRAFT LEASING 1999, L.L.C. (the
"Beneficiary") and FSB ("Debtor"), and COAST BUSINESS CREDIT, a division of
Southern Pacific Bank, a California corporation, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Secured Party").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Debtor is the Lessor (as transferee of Aircraft No. 2 L.L.C.)
under that certain Aircraft Lease Agreement 824 dated as of August 11, 1999,
between Aircraft No. 2, L.L.C. and Aloha Airlines, Inc., a Delaware corporation
(the "Lessee"), as supplemented by Lease Supplement No. 1 dated March 20, 1998
between Aircraft No. 2 L.L.C. and Lessee, recorded by the Federal Aviation
Administration (the "FAA") on June 30, 1998, as Conveyance No. F68824
as further described on Schedule 1 (together with all amendments,
modifications, supplements, addenda and extensions thereto from time to time,
the "Lease 824"), covering one Boeing model 737-282A airframe, manufacturer's
serial number 23045, United States registration number N824AL, together with
two (2) ▇▇▇▇▇ & ▇▇▇▇▇▇▇ model JT8D-9A aircraft engines, manufacturer's serial
numbers 665851 and 635014 (the "Engines" and, collectively, the "Aircraft
824");
WHEREAS, the Letter of Credit has been furnished by the Lessee as
security for the performance of the obligations of the Lessee under the Lease
824, and has been amended to name the Secured Party as beneficiary;
WHEREAS, in connection with financing from the Secured Party, Debtor has
entered into (i) the Loan Agreement 824, dated as of March 31, 2000 (the
"Loan Agreement") among the Debtor, as Borrower, the Beneficiary, as
Beneficiary and Secured Party, as Lender, pursuant to which Secured Party has
advanced some or all of the Loan 824 (as defined therein) to the Debtor, (ii)
the Aircraft Security Agreement 824 dated as of the date hereof between
Debtor and Secured Party (the "Aircraft Security Agreement 824"), (iii) the
Loan Agreement 826, dated as of March 31, 2000 (the "Loan Agreement") among
the Debtor, as Borrower, the Beneficiary, as Beneficiary and Secured party,
as Lender, pursuant to which Secured Party has advanced some or all of the
Loan 826 (as defined therein) to the Debtor and (ii) the Aircraft Security
Agreement 826 dated as of the date hereof between Debtor and Secured Party
(the "Aircraft Security Agreement 826"); and
FILED WITH FAA
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OKLAHOMA CITY
OKLAHOMA
[NUMBER ILLEGIBLE]
WHEREAS, all capitalized terms used herein and not otherwise defined
herein shall have the meanings provided therefor in the Lease 824 or the Loan
Agreement 824, PROVIDED FURTHER that any definition of a document used herein
shall refer to such document as it may now or later be amended or
supplemented;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agree as follows:
1. As security for the payment and performance of the Liabilities
(whether as scheduled, upon acceleration or otherwise, including, without
limitation, repayment of the Loans made or to be made by the Secured Party
under the Loan Agreement 826 and Loan Agreement 824 as they may be
outstanding from time to time, accrued interest thereon, the Prepayment Fee
and all other interest, fees and expenses payable by the Debtor pursuant to
the Loan Agreement 826 and Loan Agreement 824 and the other Operative
Documents) and of all costs of collection and enforcement of the Liabilities,
the Debtor hereby collaterally assigns, transfers, conveys and sets over to
the Secured party all of its right, title and interest in, to and under, the
Lease 824 and the Letter of Credit and any replacements or renewals thereof
furnished under the terms of Section 29 of the Lease 824 (but non of Debtor's
obligations thereunder), including, without limitation, the right under the
Lease 824 (i) to collect all Base Rental, Supplemental Rental, Variable
Rental, and other income, proceeds (including, but not limited to insurance
proceeds), awards, revenues and other sums payable by Lessee to Debtor
pursuant to the Lease, and (ii) after the occurrence and during the
continuance of a Lease Event of Default, to enforce all of Debtor's other
rights and remedies under the Lease 824 and the Letter of Credit, but not
limited to the right to apply any of the Lease 824 payments in accordance
with the term of the Lease 824.
2. All notices, demands and other communications made by one party to
the other party in connection with this Agreement shall be in writing and
given to or made upon such party as provided in Section 11.01 of the Loan
Agreement 824.
3. This Agreement shall be binding upon and inure to the benefit of
the Debtor and the Secured Party and their respective successors and
permitted assigns. This Agreement may not be assigned by the Debtor, in whole
or in part, without the prior written consent of the Secured Party. The
parties hereto acknowledge and agree that the Secured Party may assign its
rights hereunder to a Transferee (as defined in the Loan Agreement 824) as
provided in Section 11.08 of the Loan Agreement 824.
4. This Agreement may be executed in one or more counterparts, each of
which shall constitute an original and all of such counterparts shall
constitute one and the same Agreement.
5. This Agreement has been delivered in the State of
New York. Each
party hereto agrees that, to the maximum extent permitted by the law of the
State of
New York, this Agreement, and the rights and duties of the parties
hereunder, shall be governed by, and construed in accordance with, the laws
of the State of New York (including sections 5-1401 and 5-1402 of the New York
- 2 -
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General Obligations Law) in all respects, including in respect of all matters
of construction, validity and performance but without giving effect to any
provision thereof that may require application of the laws of another
jurisdiction.
6. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST DEBTOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT MAY BE BROUGHT IN NEW YORK SUPREME COURT,
MANHATTAN COUNTY OR THE UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT OF
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, DEBTOR ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE
OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT (SUBJECT TO ANY RIGHT OF
APPEAL BY A HIGHER COURT). Debtor hereby agrees that service of all process
upon it may be made by registered or certified mail, return receipt
requested, to the debtor at its address for notices specified or determined
in accordance with Section 11.01 of the Loan Agreement, such service being
hereby acknowledged by the Debtor to be sufficient for personal jurisdiction
in any action against the Debtor in connection with this Agreement and to be
otherwise effective and binding service in every respect. Debtor hereby
confirms that service of process to it should be sent to Superintendent of
Banking of the State of New York, State of New York Banking Department, ▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ reasonably acceptable to Secured
Party (the "Process Agent") and agrees that service of process upon such Process
Agent shall be deemed to be service of process upon the Debtor, with respect
to any proceeding related to this Agreement. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of Secured Party to bring proceedings against the Debtor in the courts
of any other jurisdiction, including, but limited to, where some or all of the
Aircraft is located.
7. EACH OF DEBTOR AND SECURED PARTY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON OR ARISING OUT OF OR IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE SECURED PARTY ENTERING INTO THE LOAN AGREEMENT AND MAKING
THE LOAN TO DEBTOR TO FINANCE THE AIRCRAFT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty
claims and all other common law and statutory claims. Each of Debtor and
Secured Party further warrants and represents that it has reviewed this
waiver with its legal counsel and that it knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO
- 3 -
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THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as written
consent to a trial by the court.
- 4 -
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IN WITNESS WHEREOF, the parties hereto have caused this Assignment of
Lease 824 to be executed by their duly Authorized Officers as of the day
first above written.
Debtor: FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Owner Trustee
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Secured Party: COAST BUSINESS CREDIT,
a division of Southern Pacific Bank
By:
-------------------------------------
Name:
Title:
Assignment of Lease and Letter of Credit 824
Boeing Model 737-282A Aircraft
U.S. Registration No. N824AL
[NUMBER ILLEGIBLE]
IN WITNESS WHEREOF, the parties hereto have caused this Assignment of
Lease 824 to be executed by their duly Authorized Officers as of the day
first above written.
Debtor: FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Owner Trustee
By:
--------------------------------------
Name:
Title:
Secured Party: COAST BUSINESS CREDIT,
a division of Southern Pacific Bank
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President / Underwriter
Assignment of Lease and Letter of Credit 824
Boeing Model 737-282A Aircraft
U.S. Registration No. N824AL
SCHEDULE 1
DESCRIPTION OF LEASE
--------------------
Aircraft Lease Agreement dated as of August 11, 1997, between Aircraft No. 2,
L.L.C. as lessor and Aloha Airlines, Inc. as lessee, as supplemented by Lease
Supplement No. 1 dated March 20, 1998, recorded by the Federal Aviation
Administration on June 30, 1998, as Conveyance No. F68824 and as assigned by
the Lease Agreement Assignment dated as of August 31, 1999, between Aircraft
No. 2, L.L.C. as assignor and BCI Aircraft Leasing 1999, L.L.C. as assignee,
recorded November 24, 1999, as Conveyance No. VV015836 and the Lease Agreement
Assignment dated as of March 31, 2000, between BCI Aircraft Leasing, L.L.C.
as assignor and First Security Bank, National Association, as Owner Trustee,
assignee, which is being filed simultaneously herewith.
0 0 0 0 0 0 0 2 0 4 7
G 3 0 2 U 2 8 2
[Illegible Stamp]
LEASE AGREEMENT ASSIGNMENT
This Lease Agreement Assignment (the "Assignment"), dated as of March 31,
2000 between BCI Aircraft Leasing 1999, L.L.C., an Illinois limited liability
company ("Assignor"), and First Security Bank, National Association, not in
its individual capacity, but solely as owner Trustee ("Assignee").
RECITALS:
--------
WHEREAS, pursuant to a Lease Agreement Assignment dated as of August 31,
1999 from Aircraft No. 2, L.L.C. ("Aircraft No. 2"), as assignor, to
Assignor, as Assignee, recorded by the Federal Aviation Administration on
November 24, 1999 as Conveyance No. VV015836, Aircraft No. 2 and Aloha
Airlines, Inc., a Delaware corporation ("Lessee"), are parties to a Lease
Agreement (the "Lease Agreement"), dated as of August 11, 1997, between
Aircraft No. 2 and Lessee, as amended on July 21, 1998, as supplemented by
Lease Supplement No. 1, dated March 20, 1998, and amended on July 21, 1998
(recorded by the Federal Aviation Administration on June 30, 1998, as
Conveyance No. F68824) and the other agreements relating thereto as more
fully described in Schedule 1 hereto (collectively, the "Lease Documents"),
pursuant to which Aircraft No. 2 leases to Lessee one used Boeing 737-282A
aircraft bearing manufacturer's serial number (MSN 23045) and FAA
registration number (N824AL), and two ▇▇▇▇▇ & ▇▇▇▇▇▇▇ Model JT8D-9A engines
bearing, respectively, manufacturer's serial numbers P655014 and P665851 (the
"Aircraft").
WHEREAS, Assignor has agreed to sell the Aircraft to Assignee (the
"Purchase") pursuant to the terms of that certain Purchase and Sale
Agreement, dated March 31, 2000 (the "Purchase Agreement"; capitalized terms
used herein and defined in the Purchase Agreement shall have the same meaning
herein unless otherwise defined herein), subject to the Lease Agreement, and
to assign the Lease Agreement, except the Assignor's Rights (as defined
below), to Assignee.
NOW THEREFORE, in consideration of the foregoing premises, and for other
good and valuable consideration the adequacy and receipt of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. EFFECTIVENESS. This Assignment, and the rights and obligations
of Assignor and Assignee hereunder, shall become effective upon, but only
upon, the occurrence of the Closing (as defined in the Purchase Agreement) of
the Purchase, or upon filing of this assignment with the Federal Aviation
Administration. Assignor and Assignee shall notify Lessee (a) of the
occurrence of this Assignment pursuant to a notice given on the date hereof
substantially in the form of Annex A hereto (the "Notice of Assignment"), and
(b) of the occurrence of the Purchase immediately upon delivery of the
Aircraft under the Purchase Agreement pursuant to a notice substantially in
the form of Attachment A to the Notice of Assignment.
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OKLAHOMA CITY
OKLAHOMA
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Section 2. ASSIGNMENT. In consideration of the payment of US$1.00 by
Assignee to Assignor and for other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, Assignor hereby sells,
assigns, delegates, conveys, transfers and sets over to Assignee all rights
and obligations of Assignor under the Lease Documents, subject to the rights
of Lessee under the Lease Documents and subject to the reservation by
Assignor (on a non-exclusive basis) of the Assignor's Rights as defined
below, which Assignor's Rights assignor shall continue to benefit from after
the Purchase. Assignor's Rights means and includes the rights of the "Lessor"
under the Lease Documents (including Assignor): (a) to each and every defense
(whether arising by contract, law or equity) under or with respect to the
Lease Documents, (b) under the liability insurance provisions of the Lease
Agreement, and (c) under all indemnities made by the Lessee, and all
disclaimers made by the Lessor, under the Lease Agreement, in each case, to
the extent such rights vested, or relate to the events occurring, prior to
the time of Closing. The retention by Assignor of the Assignor's Rights shall
not prejudice Assignee's right to the benefit of the Assignor's Rights
(including, without limitation, liability insurance under the Lease
Agreement, or the right to enforce any of the foregoing) in each case to the
full extent applicable to the Assignee (whether or not relating to the period
after the assignment of the Lease Agreement).
Section 3. ASSIGNEE ACCEPTANCE AND ASSUMPTION. Assignee hereby accepts
and assumes all of Assignor's rights (other than the Assignor's Rights) and
obligations under the Lease Documents and Assignee shall perform all such
obligations to be performed by "Lessor" under the Lease Documents.
Section 4. ENTIRE AGREEMENT. This Agreement (including the Schedule
hereto) and the Purchase Agreement constitutes the entire agreement between
the parties in relation to the subject matter hereof and supersedes all
previous proposals, agreements and other written and oral communications in
relation hereto. The parties acknowledge that there have been no
representations, warranties, promises, guarantees or agreements, express or
implied, except as set forth herein and the Purchase Agreement.
Section 5. ILLINOIS LAW. THIS ASSIGNMENT SHALL IN ALL RESPECTS BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS.
Section 6. COUNTERPARTS. This Assignment may be executed in any number of
counterparts and by either party on one or more of such counterparts, each of
which when so executed shall be deemed to be an original, and such
counterparts together shall constitute one and the same instrument. A
facsimile signature on any counterpart hereto will be deemed an original for
all purposes.
Section 7. FURTHER ASSURANCES. Assignor agrees that from time to time
after the execution and delivery of this Agreement, it shall upon the request
of Assignee and at Assignee's expense duly execute and deliver such further
documents and instruments and take such further action as Assignee may
reasonably request in order to effectuate fully the intent and purposes of
this Agreement.
2
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IN WITNESS WHEREOF, the parties have caused this Assignment to be duly
executed and delivered by their respective duly authorized officers as of the
day and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity, but solely as
Owner Trustee, as Assignor
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
BCI AIRCRAFT LEASING 1999, L.L.C.
as Assignee
By:
-------------------------
▇▇▇▇▇ Hollager
Manager
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IN WITNESS WHEREOF, the parties have caused this Assignment to be duly
executed and delivered by their respective duly authorized officers as of the
day and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity, but solely as
Owner Trustee, as Assignor
By:
-------------------------
Name:
Title:
BCI AIRCRAFT LEASING 1999, L.L.C.
as Assignee
By: /s/ ▇▇▇▇▇ HOLLAGER
-------------------------
▇▇▇▇▇ Hollager
Manager
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Annex A
to Lease Agreement Assignment
NOTICE OF AND CONSENT TO ASSIGNMENT
Aloha Airlines, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President Finance and Planning
Re: NOTICE OF AND CONSENT TO ASSIGNMENT OF LEASE AGREEMENT
Ladies and Gentlemen:
Reference is hereby made to that certain Lease Agreement, dated as of
August 11, 1997, between Aloha Airlines, Inc. ("Lessee") and BCI Aircraft
Leasing 1999, L.L.C., as assignee of Aircraft No. 1 L.L.C., as amended,
modified and supplemented (the "Lease Agreement"), pursuant to which BCI
Aircraft Leasing 1999 L.L.C. ("Assignor") is leasing to you one Boeing
737-282A aircraft bearing manufacturer's serial number 23045 (the "Aircraft").
You are hereby notified that Assignor has assigned and delegated all of
its rights (other than Assignor's Rights) and obligations under the Lease
Agreement and related documents (as set forth on Schedule 1 hereto) to First
Security Bank, National Association, not in its individual capacity, but
solely as Owner Trustee ("Assignee") pursuant to a Lease Agreement Assignment
between Assignor and Assignee (a copy of which Lease Agreement Assignment is
attached hereto (the "Assignment")). Such assignment and delegation shall
become effective upon consummation of the purchase of the Aircraft by
Assignee from Assignor. Assignor and Assignee shall give you notice of
consummation of the purchase of the Aircraft by Assignee (the "Purchase
Notice") in the form attached hereto as Attachment A.
Capitalized terms used but not defined herein shall have the respective
meanings ascribed thereto in the Lease Agreement Assignment.
SECTION 1. LEASE PROVISIONS. With effect from the date of the Purchase
Notice:
(a) PAYMENTS. All rental payments and other payments due from Lessee
under the Lease will be paid to Assignee's account ABA No. ▇▇▇▇-▇▇▇▇-▇ at
Southern Pacific Bank, Los Angeles, California.
(b) NOTICES. All notices and other communications from Lessee to
"Lessor" under the Lease Agreement and the other Lease Documents shall be
delivered to:
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First Security Bank, National Association
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Attention: Corporate Trust Department
with a copy to:
BCI Aircraft Leasing 1999, L.L.C.
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Attn: President
(c) INSURANCE. Lessee shall modify the insurance policies covering the
Aircraft to acknowledge First Security Bank, National Association, as owner
and Lessor of the Aircraft and BCI Aircraft Leasing 1999, L.L.C. as
additional loss payee as its interests may appear.
SECTION 2. LESSEE CONSENT. With effect from the date of the Purchase
Notice, Lessee consents to the Assignment and consummation of the
transactions contemplated thereby.
SECTION 3. LESSEE'S REPRESENTATIONS. Pursuant to the Lease Agreement,
Lessee hereby confirms that:
(a) Other than as listed in the documents listed in Schedule 1 to this
Agreement, there has been no amendment or modification of the Lease Agreement.
(b) The Basic Rent and Supplemental Rent (as defined in the Lease
Agreement) have each been paid through ________________________ and no Basic
Rent or Supplemental Rent has been prepaid.
(c) The Lease Agreement is in full force and effect.
(d) Assignor is in full compliance with the provisions of the Lease
Agreement and Lessee has no claims for unperformed obligations or liabilities
of Assignor.
(e) With effect from the date of the Purchase Notice, Lessee will
perform, observe and comply with all of its obligations and undertakings
under the Lease Agreement and the other Lease Documents in favor of the
Assignee and for the benefit of Assignee as if Assignee were named as
"Lessor" therein instead of the Assignor.
(f) Lessee acknowledges that, as provided in the Lease Assignment, the
retention by Assignor of the Assignor's Rights and that such retention shall
not prejudice Assignee's rights to the benefits of the relevant provisions of
the Lease Documents to the extent applicable to Assignee (whether or not
relating to the period after the date of the Purchase Notice).
SECTION 4. ILLINOIS LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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SECTION 5. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by any party on one or more of such counterparts, each of
which when so executed shall be deemed to be an original, and such
counterparts together shall constitute one and the same instrument. A
facsimile signature on any counterpart hereto will be deemed an original for
all purposes.
If you are in agreement with the foregoing, please so indicate by signing
and returning a copy of this letter to the undersigned.
Thank you for your cooperation,
Very truly yours,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS OWNER TRUSTEE
By: __________________________________
Name:
Title:
BCI AIRCRAFT LEASING 1999, L.L.C.
By: __________________________________
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Manager
ACCEPTED AND AGREED:
ALOHA AIRLINES, INC.
By: __________________________________
Name:
Title:
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Attachment A
to Notice of Assignment
First Security Bank, National Association
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Attn: Corporate Trust Department
BCI Aircraft Leasing 1999, L.L.C.
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Aloha Airlines, Inc.
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Attention: Senior Vice President Finance and Planning
Re: NOTICE OF EFFECTIVENESS OF SALE
Ladies and Gentlemen:
Reference is hereby made to that certain Lease Assignment Agreement (the
"Agreement"), dated as of March 31, 2000, between First Security Bank,
National Association, not in its individual capacity, but solely as Owner
Trustee, and BCI Aircraft Leasing 1999, L.L.C., relating to One Boeing
737-282A aircraft bearing manufacturer's serial number 23045 (and U.S.
registration number N824AL).
Capitalized terms used but not defined herein shall have the respective
meanings ascribed thereto in the Agreement.
Pursuant to the Notice to Lessee, delivered under the Agreement, you are
hereby notified that the Purchase has occurred and the Agreement is,
consequently, effective.
This letter may be executed in any number of counterparts and by either
party on one or more of such counterparts.
Very truly yours,
FIRST SECURITY BANK, BCI AIRCRAFT LEASING 1999, L.L.C.
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By: _____________________________ By: _____________________________
Name: Name:
Title: Title:
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SCHEDULE I
DESCRIPTION OF LEASE
--------------------
Aircraft Lease Agreement dated as of August 11, 1997, between Aircraft No. 2,
L.L.C. as lessor and Aloha Airlines, Inc. as lessee, as supplemented by Lease
Supplement No. 1 dated March 20, 1998, recorded by the Federal Aviation
Administration on June 30, 1998, as Conveyance No. F68824 and as assigned by
the Lease Agreement Assignment dated as of August 31, 1999, between Aircraft
No. 2, L.L.C. as assignor and BCI Aircraft Leasing 1999, L.L.C. as assignee,
recorded November 24, 1999, as Conveyance No. VV015836 and the Lease
Agreement Assignment dated as of March 31, 2000, between BCI Aircraft
Leasing, L.L.C. as assignor and First Security Bank, National Association, as
Owner Trustee, assignee, which is being filed simultaneously herewith.
EXECUTION VERSION
AGREEMENT 824
THIS AGREEMENT 824 (this "Agreement") dated the 7th day of November, 2001,
is by and among Aloha Airlines, Inc. (the "Lessee"), ▇▇▇▇▇ Fargo Bank Northwest,
National Association (formerly known as First Security Bank, National
Association), as Owner Trustee (the "Lessor") and Coast Business Credit, a
division of Southern Pacific Bank (the "Secured Party"), and consented to by BCI
Aircraft Leasing 1999, L.L.C. (the "Beneficiary") and BCI Aircraft Leasing 1999,
L.L.C. (the "Guarantor"). Capitalized terms used herein and not otherwise
defined are used as defined in Appendix A to the Loan Agreement (as defined
below).
WHEREAS, Lessee and Lessor (as assignee of Aircraft No. 2, L.L.C.) are
parties to Aircraft Lease Agreement dated August 11, 1997 (as extended, amended
and supplemented from time to time, the "Lease"), as collaterally assigned by
Lessor to Secured Party pursuant to the Assignment of Lease 824 and Letter of
Credit dated as of April 3, 2000 between Lessor and Secured Party (the "Lease
Assignment") which Lease Assignment has been consented to by Lessee pursuant to
the Consent and Agreement 824 dated as of April 3, 2000 among Lessee, Lessor and
Secured Party (the "Lessee Consent"), each such document relates to one Boeing
model 737-282A Aircraft bearing manufacturer's serial number 23045 and United
States Registration No. N824AL together with two ▇▇▇▇▇ & ▇▇▇▇▇▇▇ model JT8D-9A
aircraft engines bearing manufacturer's serial numbers 665851 and 655014
(collectively, the "Aircraft");
WHEREAS, Lessor, Beneficiary and Secured Party are parties to Loan
Agreement 824 dated as of April 3, 2000 (the "Loan Agreement"), pursuant to
which Secured Party provided financing for Lessor's purchase of the Aircraft;
WHEREAS, Guarantor executed and delivered in favor of the Secured Party a
Guaranty dated April 3, 2000 (the "Guaranty") with respect to certain
obligations of the Lessor under the Loan Agreement;
WHEREAS, an Event of Default (as defined in the Lease) has occurred and is
continuing under Clause A of Section 16 of the Lease by reason of Lessee's
failure to make payment of Basic Rental on October 1, 2001 (a Rent Date)
pursuant to Clause A(i)(a) of Exhibit H of the Lease; and
WHEREAS, an Event of Default (as defined in the Loan Agreement) has
occurred and is continuing under each of Sections 9.01(a) and 9.01(f) of the
Loan Agreement by reason of, among other things, Borrower's failure to make
payment of principal and interest (including, but not limited to, Interest
Deficiency) on October 1, 2001 (a Payment Date) pursuant to Section 2.04
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of Loan Agreement, Guarantor's failure to make payment of Interest Deficiency on
October 1, 2001 (a Payment Date) pursuant to Section 1.1(A) of the Guaranty and
Lessee's failure to make payment of Basic Rental on October 1, 2001 (a Rent
Date) pursuant to Clause A(i)(a) of Exhibit H of the Lease.
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
[These provisions have been omitted as confidential information and
filed separately with the Commission]
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5. Except with respect to any payment defaults cured by application of the
drawings under the Letter of Credit, Lessor does not waive, and should not be
deemed to waive, any of its rights or remedies with respect to existing or
future Events of Default under the Lease by virtue of this Agreement or any
negotiations that it may engage in regarding the Events of Default described
herein and Lessor hereby expressly reserve the right to pursue its rights and
remedies at a time and in a manner of its choosing with respect to the Events of
Default described above and any other Event of Default that has occurred or may
occur in the future. Pursuant to Clause C of Section 17 of the Lease, Lessee is
responsible for all of Lessor's and Secured Party's (as Lessor's assignee
pursuant to the Lease Assignment and Lessee Consent) costs and expenses
reasonably incurred by reason of the occurrence of any Event of Default and the
exercise of Lessor's and Secured Party's (as Lessor's assignee pursuant to the
Lease Assignment and Lessee Consent) remedies with respect thereto.
6. Lessee and Lessor hereby expressly agree that any default by Lessee in
the performance of its obligations under this Agreement shall constitute an
Event of Default under the Lease.
7. By countersigning this Agreement, Beneficiary hereby directs the Lessor
under the Trust Agreement to execute and deliver this Agreement.
8. By countersigning this Agreement, each of Beneficiary and Guarantor
hereby consents to all the terms of this Agreement and agrees to be bound by all
such terms in all respects.
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9. This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.
10. This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the laws of the State of New
York.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement 824 to be
executed by their duly Authorized Officers as of the day first above written.
LESSEE: ALOHA AIRLINES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President & CFO
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President Planning
and Business Development
LESSOR: ▇▇▇▇▇ FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION (formerly known as
First Security Bank, National Association),
as Owner Trustee
By:
------------------------------------
Name:
Title:
SECURED PARTY: COAST BUSINESS CREDIT,
A DIVISION OF SOUTHERN PACIFIC BANK
By:
------------------------------------
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have caused this Agreement 824 to be
executed by their duly Authorized Officers as of the day first above written.
LESSEE: ALOHA AIRLINES, INC.
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
LESSOR: ▇▇▇▇▇ FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION (formerly known as
First Security Bank, National Association),
as Owner Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Vice President
SECURED PARTY: COAST BUSINESS CREDIT,
A DIVISION OF SOUTHERN PACIFIC BANK
By:
------------------------------------
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have caused this Agreement 824 to be
executed by their duly Authorized Officers as of the day first above written.
LESSEE: ALOHA AIRLINES, INC.
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
LESSOR: ▇▇▇▇▇ FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION (formerly known as
First Security Bank, National Association),
as Owner Trustee
By:
------------------------------------
Name:
Title:
SECURED PARTY: COAST BUSINESS CREDIT,
A DIVISION OF SOUTHERN PACIFIC BANK
By: /s/ ▇▇▇▇▇▇ Oon
------------------------------------
Name: ▇▇▇▇▇▇ Oon
Title: Vice President
EACH OF THE UNDERSIGNED BENEFICIARY AND GUARANTOR HEREBY CONSENTS TO ALL THE
TERMS OF THE FOREGOING AGREEMENT AND AGREES TO BE BOUND BY ALL SUCH TERMS IN ALL
RESPECTS.
BCI AIRCRAFT LEASING 1999, L.L.C., as Beneficiary
by BCI Aircraft Leasing, Inc., as Manager
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
BCI AIRCRAFT LEASING 1999, L.L.C., as Guarantor
by BCI Aircraft Leasing, Inc., as Manager
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President