Exhibit 10.65
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LEASE AGREEMENT
dated as of February 4, 2000
between
▇▇▇▇▇▇ LEASE FINANCE CORPORATION,
Lessor
and
ALOHA ISLANDAIR, INC.
Lessee
Covering One (1) de Havilland
Dash 8-102 Aircraft
Manufacturer's Serial Number 023
U.S. Registration No. N811 PH,
Two (2) ▇▇▇▇▇ & Whitney
Model PW 120 Engines
Manufacturer's Serial
Numbers 120077 and 120096
and
Two (2) ▇▇▇▇▇▇▇▇ Standard
14 SF-7 Propellers,
Manufacturer's Serial
Numbers 850910 and 850911
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THIS LEASE AGREEMENT HAS BEEN EXECUTED IN COUNTERPARTS. TO THE EXTENT THAT
THIS LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE
UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO
SECURITY INTEREST IN THIS LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OR
POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL EXECUTED COUNTERPART
CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE LESSOR ON THE SIGNATURE PAGE
THEREOF.
TABLE OF CONTENTS
Page
LEASE AGREEMENT .............................................................1
SECTION 1. DEFINITIONS .................................................1
SECTION 2. AGREEMENT TO LEASE: TERM ....................................7
2.01 Leasing of Aircraft .........................................7
2.02 Acceptance ..................................................7
2.03 Delivery of Aircraft ........................................8
2.04 Term ........................................................8
SECTION 3. CONDITIONS PRECEDENT ........................................8
3.01 Conditions Precedent to Lessor's Obligations ................8
3.02 Conditions Precedent to Lessee's Obligations ...............10
SECTION 4. LESSEE'S REPRESENTATIONS AND WARRANTIES ....................11
4.01 Due Organization, Standing etc. ............................11
4.02 Operative Documents ........................................11
4.03 No Conflict; Consent .......................................11
4.04 Governmental Consents ......................................12
4.05 No Adverse Agreements ......................................12
4.06 No Defaults or Violations ..................................12
4.07 Litigation .................................................12
4.08 No Event of Default ........................................13
4.09 Financial Statements .......................................13
4.10 Chief Executive Office .....................................13
4.11 Filings Made ...............................................13
4.12 Certificate ................................................13
SECTION 5. LESSOR'S REPRESENTATIONS AND WARRANTIES ....................13
5.01 Due Organization, Standing etc. ............................14
5.02 Operative Documents ........................................14
SECTION 6. COVENANTS OF LESSEE ........................................14
6.01 Air Operator's Certificate .................................14
6.02 Financial and Other Information to be Supplied .............14
6.03 Existence ..................................................15
6.04 Inspection Rights; Records .................................15
6.05 Payment of Taxes and Claims ................................16
6.06 Notice of Litigation .......................................16
6.07 Merger .....................................................16
6.08 Chief Executive Office .....................................17
6.09 Certificate ................................................17
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Page
SECTION 7. PAYMENTS ...................................................17
7.01 Rent .......................................................17
7.02 Net Lease; No Set-Off or Deductions ........................17
7.03 Immediately Available Funds ................................18
7.04 Supplemental Rent; Overdue Rent ............................18
7.05 Reserved ...................................................18
7.06 Gross Up ...................................................18
SECTION 8. LIMITATION OF LESSOR'S LIABILITY ...........................18
SECTION 9. USE OPERATION AND MAINTENANCE...............................19
9.01 General ....................................................19
9.02 Operation and Use ..........................................19
9.03 Maintenance in General .....................................20
9.04 Specific Items of Maintenance ..............................21
9.05 Parts ......................................................22
9.06 Airworthiness Directives ...................................23
9.07 Service Bulletins: Nondiscrimination .......................23
9.08 Corrosion Control ..........................................24
9.09 Modifications ..............................................24
9.10 Possession; Subleasing; Equipment Substitution .............24
9.11 Repairs ....................................................26
9.12 Aircraft Records ...........................................26
9.13 Warranties .................................................26
9.14 Airport Charges ............................................27
9.15 Right to Inspect ...........................................27
9.16 Reporting ..................................................27
SECTION 10. RETURN OF AIRCRAFT ........................................27
10.01 Return ....................................................27
10.02 Condition of Aircraft .....................................27
10.03 Boroscope Inspection ......................................28
10.04 Historical Records; Trend Monitoring Data .................28
10.05 Inspection ................................................28
10.06 Operational Ground Check ..................................28
10.07 Operational Check Flight ..................................29
10.08 Acceptance ................................................29
10.09 Deferred, Discrepancy Correction ..........................29
10.10 Flight Cost ...............................................30
10.11 Indemnification ...........................................30
10.12 Insurance .................................................30
10.13 Manuals and Technical Records .............................30
10.14 Service Bulletin Kits .....................................31
10.15 Lessee's Special Exterior Markings ........................31
10.16 Ownership .................................................31
10.17 Storage Upon Return .......................................31
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Page
SECTION 11. TITLE; REGISTRATION; LIENS ................................31
11.01 Title .....................................................31
11.02 Registration; Filings; Registration .......................32
11.03 Liens .....................................................32
11.04 Notice of Ownership .......................................32
SECTION 12. INSURANCE .................................................33
12.01 All-Risk Insurance ........................................33
12.02 War Risk Insurance ........................................33
12.03 Liability Insurance .......................................34
12.04 Electronic Date Recognition Insurance .....................34
12.05 Deductibles and Self Insurance ............................34
12.06 Additional Requirements; Loss Payment .....................34
12.07 No Set-Off ................................................35
12.08 Notice of Material Alteration or Cancellation .............35
12.09 Application of Certain Insurance Proceeds .................35
12.10 Insurance for Own Account .................................36
12.11 Certificates and Reports ..................................36
SECTION 13. LOSS, DAMAGE OR REQUISITION ...............................36
13.01 An Event of Loss of Airframe ..............................36
13.02 Engine or Propeller Loss ..................................37
13.03 Payments from Governmental Authorities
for Requisition of Title or Use ...........................38
13.04 Application of Payments During Existence
of Event of Default .......................................38
SECTION 14. EVENT OF DEFAULT ..........................................39
14.01 Failure to Make Payments ..................................39
14.02 Failure to Obtain or Maintain Insurance ...................39
14.03 Failure to Perform Other Obligations ......................39
14.04 Representations and Warranties Untrue .....................39
14.05 Insolvency or Bankruptcy ..................................39
14.06 Loss of Registration or Protection ........................40
14.07 Loss of License ...........................................40
14.08 Other Lease ...............................................40
14.09 Final Judgment ............................................40
14.10 Other Default .............................................40
14.11 Contest ...................................................40
14.12 Failure to Maintain Letter of Credit ......................40
14.13 Failure to Maintain the Guaranty ..........................41
SECTION 15. REMEDIES ..................................................41
SECTION 16. INDEMNITIES AND EXPENSES ..................................43
16.01 General Indemnification and Waiver of Certain Claims ......43
16.02 General Tax Indemnity .....................................44
16.03 After-Tax Basis; Survival .................................49
16.04 Expenses ..................................................50
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Page
SECTION 17. QUIET ENJOYMENT ...........................................50
SECTION 18. ASSIGNMENT ................................................50
SECTION 19. NOTICES ...................................................51
SECTION 20. LESSOR'S RIGHT TO PERFORM FOR LESSEE ......................51
SECTION 21. LEASE; SECTION 1110 .......................................52
21.01 Lease .....................................................52
21.02 Section 1110 ..............................................52
SECTION 22. MISCELLANEOUS .............................................52
22.01 Waivers, Headings .........................................52
22.02 Counterparts ..............................................52
22.03 Governing Law .............................................52
22.04 Benefit and Binding Effect ................................53
22.05 Further Assurances ........................................53
22.06 Service of Process; Waiver of Jury Trial and Immunity .....53
22.07 Usury Laws ................................................53
22.08 Entire Agreement ..........................................54
Exhibit A Description of Aircraft
Schedule 1 to Exhibit A - Delivery Conditions
Exhibit B Rent and Other Financial Matters
Schedule 1 to Exhibit B - Letter of Credit
Exhibit C Acceptance Certificate
Exhibit D Schedule of Manuals and Technical Records
Exhibit E Return Acceptance Certificate
Exhibit F General Return Conditions of the Aircraft
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LEASE AGREEMENT
THIS LEASE AGREEMENT, dated as of February 4, 2000 ("Lease"), is between
▇▇▇▇▇▇ LEASE FINANCE CORPORATION ("Lessor"), a Delaware corporation having its
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and ALOHA
ISLANDAIR, INC. ("Lessee"), a Delaware corporation having its principal place of
business at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇.
WITNESSETH:
WHEREAS, Lessee desires to lease the Aircraft from Lessor, and Lessor
desires to lease the Aircraft to Lessee, pursuant to the terms and conditions of
this Lease;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
The following terms shall have the following respective meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined). All definitions of documents shall refer to such documents as
they may now or hereafter be amended or supplemented. All definitions of parties
hereto shall include the successors and permitted assigns of such parties.
"ACCEPTANCE CERTIFICATE" means a certificate in substantially the form of
Exhibit C, to be signed by Lessee on the Delivery Date as required under Section
2.02 hereof.
"AERONAUTICAL AUTHORITY" means as of any time of determination, the FAA or
other governmental airworthiness authority having jurisdiction over the Aircraft
under the laws of the country in which the Aircraft is then registered.
"AFFILIATE" with respect to a specified Person, means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For the purposes of this definition, "control"
when used with respect to any specified Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"AIRCRAFT" means (A) the Airframe and Engines and Propellers (or any engine
or propeller substituted for any of said Engines or Propellers pursuant to
Section 13.02 of this Lease), whether or not any of such Engines or Propellers
or engines or propellers may from time to time be installed on such Airframe or
may be installed on any other airframe or on any other aircraft; and (B) where
the context permits, the Manuals and Technical Records.
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"AIRFRAME" means (i) the aircraft (except the Engines or engines and
Propellers or propellers from time to time installed thereon) identified and
described in Exhibit A hereto and (ii) any and all Parts so long as the same
shall be incorporated or installed in or attached to the Airframe, or so long as
title thereto shall remain vested in Lessor in accordance with the terms of
Section 9.05 of this Lease after removal from the Airframe.
"AIR OPERATOR'S CERTIFICATE" means, the certificate, license or permit
required by the Aeronautical Authority or any other governmental authority
having jurisdiction required for the Lessee to carry passengers in common
carriage as it then does in its operations.
"AIRWORTHINESS DIRECTIVE(S)" has the meaning given in Section 9.06 hereof.
"APPLICABLE LAW" means all applicable laws, treaties, judgments,
decrees, injunctions, writs and orders of any court, governmental agency or
authority and rules, regulations, orders, directives, licenses and permits of
any governmental body, instrumentality, agency or authority and all
interpretations, implementation and enforcement of any of the foregoing,
whether or not enforceable as a matter of law, by any court, government body,
instrumentality, agency or authority.
"BASIC RENT" means the rent payable throughout the Term for the Aircraft
pursuant to Section 7.01 of the Lease in the amount and as set forth in Exhibit
B hereto.
"BUSINESS DAY(s)" means any day other than a Saturday, a Sunday or a day on
which banks are permitted or required to close in San Francisco, California or
Honolulu, Hawaii.
"CERTIFICATE OF AIRWORTHINESS" means, at any time that the FAA is the
Aeronautical Authority, a Standard Certificate of Airworthiness issued by the
FAA and, at any time that the FAA is not the Aeronautical Authority, any
analogous certificate, document or approval required by the Aeronautical
Authority for operation of the Aircraft in the manner that it will be operated
by Lessee.
"CERTIFICATED AIR CARRIER" means any U.S. air carrier holding an air
carrier operating certificate issued by the Secretary of Transportation
pursuant to Chapter 447 of Title 49 of the United States Code.
"CONTRIBUTION AMOUNT" has the meaning given in Exhibit B hereto.
"CYCLE" means one takeoff and landing of an aircraft.
"DEFAULT" means any event or condition which, with the lapse of time or
the giving of notice or both, would constitute an Event of Default.
"DELIVERY DATE" means the date on which the Acceptance Certificate is
delivered by the Lessee pursuant to Section 2.02 hereof.
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"DOLLARS" or "dollars" or the symbol "$" means dollars in lawful
currency of the United States of America.
"ENGINE" means: (i) any or all of the engines identified and described in
Exhibit A, whether or not from time to time installed on the Airframe or
installed on any other airframe; (ii) any engine that may from time to time be
substituted, pursuant to Section 9.10 or 13.02 of this Lease, for such Engine
and (iii) any and all Parts incorporated or installed in or attached thereto or
any and all Parts removed therefrom so long as title thereto shall remain vested
in Lessor in accordance with the terms of Section 9.05 of this Lease after
removal from such Engine. Each such engine is 750 or more rated takeoff
horsepower or the equivalent thereof.
"EVENT OF DEFAULT" has the meaning given in Section 14 hereof.
"EVENT OF LOSS" with respect to the Aircraft, Airframe or any Engine or
Propeller means any of the following events with respect to such property: (i)
loss of such property or the use thereof due to theft or disappearance for more
than 30 days; (ii) loss of such property or the use thereof due to destruction,
damage beyond repair or rendition of such property permanently unfit for normal
use; (iii) any event which should or does result in the receipt of insurance
proceeds with respect to such property on the basis of a total loss, arranged
total loss or constructive total loss; (iv)(A) the taking, confiscation or
seizure of title to the Aircraft or Airframe or (B) the condemnation, taking,
confiscation or seizure of the use of the Aircraft or Airframe for a period in
excess of 30 days by any government or agency or instrumentality thereof; or (v)
with respect to any Engine or Propeller, the taking of title or requisition for
use by any government and any divestiture of title deemed an Event of Loss
pursuant to Section 9.10 of this Lease. An Event of Loss with respect to the
Aircraft shall be deemed to occur if an Event of Loss occurs with respect to the
Airframe.
"FAA" means the United States Federal Aviation Administration, the
Administrator thereof and any agency or instrumentality of the United States
government succeeding to their functions.
"FLIGHT HOUR" means (i) with respect to the Airframe, any hour, including
calculating by aggregating fractions of an hour, occurring on any flight,
measured from the time the wheels of the Airframe leave the ground until the
wheels next touch the ground, or (ii) with respect to any Engine or Propeller,
any hour, including calculating by aggregating fractions of an hour, occurring
on any flight, measured from the time the wheels of any airframe, including the
Airframe, on which such Engine or Propeller is installed leave the ground until
the wheels next touch the ground.
"GUARANTOR" means Aloha Airgroup, Inc., a Hawaii corporation.
"GUARANTY" means the Guaranty, dated the date hereof, from the Guarantor in
favor of the Lessor.
"IMPOSITIONS" has the meaning given in Section 16.02 hereto.
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"INDEMNITEE" means the Lessor, its Affiliates, any permitted assignee of
the Lessor (whether such assignment is for security or other reasons and, if
such assignment is to an owner trustee, agent, indenture trustee or other Person
acting in a fiduciary or similar capacity for other Persons, such other Persons
shall also be Indemnitees), and each agent, director, employee, representative
and successor thereof.
"INSURED PARTY" means the Lessor, its Affiliates, any permitted assignee of
the Lessor (whether such assignment is for security or other reasons and, if
such assignment is to an owner trustee, agent, indenture trustee or other Person
acting in a fiduciary or similar capacity for other Persons, such other Persons
shall also be Insured Parties), including without limitation Lender, and any
successor thereof.
"LEASE" has the meaning given in the Introductory Statement hereof and
includes all Exhibits and Schedules hereto.
"LENDER" means any bank or other financial institution providing debt
financing to the Lessor.
"LESSEE" means the Lessee (as defined in the Introductory Statement hereof)
and its successors and permitted assigns.
"LESSOR" means the Lessor (as defined in the Introductory Statement hereof)
and its successors and permitted assigns.
"LESSORS LIENS" means any Lien arising as a result of (i) claims against
Lessor or its Affiliates not related to the transactions contemplated by the
Lease, (ii) any act or omission of Lessor or its Affiliates which is not related
to the transactions contemplated by the Lease or is in violation of any of the
terms of the Lease, (iii) claims against Lessor or its Affiliates with respect
to Taxes against which Lessee is not required to indemnify Lessor, (iv) claims
against the Aircraft arising out of events occurring prior to the commencement
of the Term or after the expiration or termination of the Term and the
redelivery of the Aircraft in accordance with this Lease and (v) claims against
the Lessor or its Affiliates for any acts or omissions of Lessor or its
Affiliates related to the transactions contemplated by this Lease; provided that
the same are not the direct or indirect result of any Default or Event of
Default hereunder and provided that the same are not covered by the Lessee's
indemnity obligations hereunder.
"LETTER OF CREDIT" has the meaning given in Exhibit B hereto.
"LIFE LIMITED PART" means a part having a designated finite number of
Flight Hours, Cycles or days the Part can be used before being permanently
removed from use.
"LIEN" means any mortgage, pledge, lien, charge or encumbrance, lease,
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financing statement, claim, exercise of rights or security interest.
"MAINTENANCE PROGRAM" has the meaning given in Section 9.03 hereof.
"MANUALS AND TECHNICAL RECORDS" means all such manuals, technical data, log
books and other records pertaining to the Aircraft (including, without
limitation, the technical manuals and aircraft records listed in Exhibit D
hereto) to be maintained by Lessee or as shall be required to comply with the
requirements of the Aeronautical Authority from time to time in force. All such
manuals, technical data, logbooks and other records shall be maintained in
English or with English translations.
"MANUFACTURER" means, with respect to the Airframe, de Havilland, with
respect to the Engines, ▇▇▇▇▇ & Whitney Canada, and, with respect to the
Propellers, ▇▇▇▇▇▇▇▇ Standard.
"MODIFICATIONS" means Optional Modifications and Required Modifications.
"OFFICERS CERTIFICATE" means as to any company a certificate signed by a
duly authorized officer of the company.
"OPERATIVE DOCUMENTS" means this Lease, the Acceptance Certificate and the
Guaranty.
"OPTIONAL MODIFICATIONS" has the meaning given in Section 9.09(b) hereof.
"OTHER LEASE" means the Lease Agreement, between the Lessor and Lessee with
respect to the Other Aircraft.
"OTHER AIRCRAFT" means that certain de Havilland Dash 8-102 aircraft,
manufacturer's serial number 026, as further identified in the Other Lease.
"OVERDUE RATE" has the meaning given in Exhibit B hereto.
"PARTS" means all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
Engines or engines or Propellers or propellers) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or
Propeller or so long as title thereto shall remain vested in Lessor in
accordance with Section 9.05 after removal therefrom.
"PERMITTED LIENS" means (i) Lessors Liens; (ii) the respective rights of
Lessor and Lessee as provided herein; (iii) the rights of others under
agreements or arrangements to the extent expressly permitted in Section 9.10
hereof; (iv) Liens for Taxes either not yet due or being contested in good
faith (and for the payment of which adequate reserves have been provided) by
appropriate proceedings conducted in due diligence, so long as such proceedings
do not involve any material danger of the sale, forfeiture or loss of the
Airframe or any Engine or Propeller; (v) material suppliers', mechanics',
workers', repairers', employees' or other like liens arising in the ordinary
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course of business and for amounts the payment of which is either not yet
delinquent or is being contested in good faith (and for the payment of which
adequate reserves have been provided) by appropriate proceedings conducted in
due diligence, so long as such proceedings do not involve any material danger of
the sale, forfeiture or loss of the Airframe or any Engine or Propeller; and
(vi) Liens arising out of judgments or awards against Lessee with respect to
which at the time an appeal or proceeding for review is being prosecuted in good
faith (and for the payment of which adequate reserves have been provided) and
there shall have been secured a stay of execution pending such appeal or
proceeding for review.
"PERSON" means any natural person, corporation, partnership, joint venture,
firm, association, trust, unincorporated organization, government or
governmental agency or political subdivision or any other entity, whether acting
in an individual, fiduciary or other capacity.
"PROPELLER" means (i) any or all of the propellers identified and described
in Exhibit A, whether or not from time to time installed on an Engine or any
other engine; (ii) any propeller that may from time to time be substituted,
pursuant to Section 9.10 or 13.02 of this Lease, for such Propeller; and (iii)
any and all Parts incorporated or installed in or attached thereto or any and
all Parts removed therefrom so long as such title thereto shall remain vested in
Lessor in accordance with the terms of Section 9.05 of this Lease after removal
from such propeller. Each such propeller is capable of absorbing 750 or more
rated takeoff shaft horsepower or the equivalent thereof.
"REGISTRY" means, at any time that the FAA is the Aeronautical Authority,
the FAA and, at any time that the FAA is not the Aeronautical Authority, the
registry maintained in the country of registration of the Aircraft during the
Term to register and record ownership of and other interests in aircraft.
"RENT" means Basic Rent and Supplemental Rent.
"RENT PAYMENT DATE" means each day on which an installment of Basic Rent is
due throughout the Term as set forth in Exhibit B hereto.
"REPLACEMENT ENGINE" means an engine of the same or an improved model (and
manufactured by the same manufacturer) as an Engine being replaced pursuant to
Section 13.02 hereof, which is suitable for installation and use on the Airframe
without materially impairing the value or utility of the Airframe and having a
modification status, value (giving consideration to maintenance status and time
remaining to any scheduled or required replacement of any Life Limited Part),
condition and utility at least equal to the Engine it is replacing (assuming
such Engine was in the time status, modification status, condition and repair
required by the terms hereof' immediately prior to being replaced).
"REPLACEMENT PROPELLER" means a propeller of the same or an improved model
(and manufactured by the same manufacturer) as a Propeller being replaced
pursuant to Section 13.02 hereof, which is suitable for installation and use on
an Engine
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and the Airframe and having a time status, modification status, value,
condition and utility at least equal to the Propeller that it is replacing
(assuming such Propeller was in the time and Cycle status, modification status,
value, condition and repair required by the terms hereof immediately prior to
being replaced).
"REQUIRED MODIFICATION" has the meaning given in Section 9-09(a) hereof.
"RETURN LOCATION" has the meaning given in Section 10.01 hereof.
"SERVICE BULLETINS" means service bulletins issued by the Manufacturer or
any other manufacturer or vendor setting forth Alert and other service
procedures applicable to the Aircraft or any Engine or Propeller.
"STANDARD CERTIFICATE OF AIRWORTHINESS" means the certificate of
airworthiness issued by the Aeronautical Authority.
"Stipulated Loss Value" has the meaning given in Exhibit B hereto.
"SUPPLEMENTAL RENT" means all monetary amounts, liabilities and obligations
(other than Basic Rent) that Lessee assumes or agrees to pay or requires any
other person to pay under any Operative Documents to Lessor or others,
including, without limitation, indemnity payments, requisition proceeds and
Stipulated Loss Value.
"TAX" means all license, documentation and registration fees and all taxes,
levies, imposts, duties, charges, assessments or withholdings of any nature
whatsoever together with any penalties, additions to, tax, fines or interest
thereon, (including, without limitation, income, gross receipts, rental,
turnover, occupation, sales, use, excise, value added, personal property
(tangible and intangible) and other taxes imposed by any federal, state or local
or governmental taxing authority in the United States or any foreign government
or taxing authority.
"TERM" has the meaning given in Exhibit B hereto.
SECTION 2. AGREEMENT TO LEASE: TERM.
2.01 LEASING OF AIRCRAFT.
Subject to the terms and conditions hereof, Lessor agrees to lease the
Aircraft to Lessee hereunder on the Delivery Date, such leasing to be evidenced
by Lessee executing and delivering the Acceptance Certificate hereunder, and (to
the extent that it has not already done so) executing and delivering all
documents or certificates and taking such other actions as are required by
Lessor to be executed and delivered or taken on or before the Delivery Date
pursuant to the terms of any Operative Document.
2.02 ACCEPTANCE.
Subject to the terms and conditions hereof and of the other Operative
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Documents to which Lessee or Guarantor is a party, Lessee hereby agrees to
lease the Aircraft from Lessor hereunder on the Delivery Date, and (to the
extent that it has not already done so) taking the following action:
(a) Execute and deliver to Lessor the Acceptance Certificate; and
(b) Execute and deliver all other documents and certificates, and take all
other actions as are required to be executed and delivered or taken by Lessee on
or before the Delivery Date pursuant to the terms of any Operative Document to
which Lessee or Guarantor is a party.
2.03 DELIVERY OF AIRCRAFT.
The Aircraft shall be delivered for purposes of this Lease at Calgary,
Alberta, Canada, or at a mutually agreed location, which shall be in a
jurisdiction that is intended to avoid any sales, use, transfer and other
similar taxes payable upon the purchase and lease of the Aircraft. The Lessee
shall be obligated to accept delivery of the Aircraft pursuant to this Lease, at
the time and place and in the condition, AS IS, WHERE IS. The execution and
delivery of the Acceptance Certificate shall, as between Lessor and Lessee,
constitute conclusive evidence that the Aircraft satisfies such conditions
without prejudice,. however, to any claim Lessor or Lessee may have against any
Manufacturer.
2.04 TERM.
Except as otherwise provided herein, the Aircraft shall be leased for the
Term, which shall commence on the Delivery Date.
SECTION 3. CONDITIONS PRECEDENT.
3.01 CONDITIONS PRECEDENT TO LESSORS OBLIGATIONS.
The Lessor's obligation to Lease the Aircraft to Lessee hereunder is
subject to the prior satisfaction, as determined by Lessor, of the following
conditions precedent, including the determination by Lessor that each document,
certificate, opinion or other writing referred to below is in form and substance
satisfactory to Lessor:
(a) RESERVED.
(b) the Letter of Credit shall have been established and delivered to
Lessor.
(c) Lessor shall have received the following:
(i) the Chattel I Paper counterpart of the Lease, duly executed by Lessee;
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(ii) the Acceptance Certificate, duly executed by Lessee;
(iii) original copies of the other Operative Documents, each duly executed
by each of the parties thereto;
(iv) evidence that the Lease has been duly filed for recordation with the,
FAA;
(v) evidence that "precautionary" or other financing statements or other
instruments covering the Lease and Aircraft have been duly filed in a form
acceptable to Lessor under the Uniform Commercial Code or other applicable law
of all jurisdictions in which Lessor reasonably deems it necessary or desirable
in order to perfect and protect its interest in the Aircraft;
(vi) copies of the resolutions of the boards of directors of Lessee and of
the Guarantor approving the execution, delivery and performance by the Lessee
and the Guarantor of the Lease and other Operative Documents to which either is
a party, certified by the Lessee's and Guarantor's secretaries, together with
such other evidence of corporate action as Lessor shall reasonably request;
(vii) certificates of the Lessee's and Guarantors secretaries certifying as
to the incumbency and signatures of the persons authorized to execute and
deliver the Lease and other Operative Documents;
(viii) copies, certified by the Lessee's and Guarantors secretaries, of
Lessee's and Guarantor's charter documents and bylaws;
(ix) a certificate signed by an officer of Lessee to the effect that no
default or event which, with notice or the lapse of time, or both, would
constitute a default has occurred and is continuing or will exist under any of
the Operative Documents to which Lessee or Guarantor is a party upon delivery of
the Aircraft to the Lessee hereunder and that the representations and warranties
of Lessee in this Agreement are true and correct with the same force and effect
as if made on and as of the Delivery Date;
(x) certificates of corporate good standing for Lessee and Guarantor;
(xi) an insurance report of an independent insurance broker and
certificates of insurance as to Lessee's due compliance with the terms of
Section 12 of this Lease;
(xii) opinions from ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇▇, counsel for Lessee and
Guarantor, addressed to Lessor and covering such matters incident to the
transactions hereto as Lessor may reasonably request;
(xiii) an opinion of McAfee & ▇▇▇▇, special FAA counsel,
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addressed to Lessor and covering such matters incident to the transactions
hereto as Lessor may reasonably request;
(xiv) a letter from CT Corporation Systems accepting appointment as
Lessee's and Guarantor's agent for service of process in California;
(xv) a copy of Lessee's Air Operator Certificate; and
(xvi) a copy of the Summary of Lessee's Aeronautical Authority approved
Maintenance Program.
(d) No material adverse change in Lessee's or Guarantors financial or
operational condition or its ability to meet its obligations under the Operative
Documents shall have occurred, as determined by Lessor, since September 30,
1999.
(e) No change shall have occurred in Applicable Law after the date of this
Agreement that in the opinion of Lessor would make it illegal or inadvisable to
consummate the transactions contemplated hereunder.
(f) Lessee shall have paid the fees and expenses of Lessors FAA counsel as
to which invoices have been presented to Lessee and any other expenses payable
by Lessee pursuant to this Lease as to which invoices have been presented to
Lessee, which invoices are then due and owing.
(g) Lessee and Guarantor shall have taken such other actions, or delivered
such other documents, as may be reasonably requested by Lessor in connection
with the transactions contemplated herein.
3.02 Conditions Precedent to Lessee's Obligations.
The Lessee's obligations to Lessor hereunder are subject to the prior
satisfaction of the following conditions precedent:
(a) Lessee shall have received copies of the following:
(i) original copies of the Operative Documents, each duly executed by the
parties thereto;
(ii) copies of the resolutions of the Board of Directors of Lessor
approving the execution, delivery and performance by the Lessor of this Lease
and any other Operative Documents to which the Lessor is a party, certified by
the Lessors secretary, together with such other evidence of corporate action as
Lessee may reasonably request; and
(iii) a certificate of the Lessor's Secretary certifying as, to the
incumbency and signatures of the persons authorized to execute and deliver the
Lease and any other Operative Documents to which the Lessor is a party.
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(b) The Aircraft shall be registered in the name of Lessor with the FAA.
(c) The Aircraft shall have a Standard Certificate of Airworthiness.
(d) Lessee shall have viewed and approved the video borescope that was
performed on the Engines after last flight of the Aircraft operated by the
previous operator.
(e) The Engines shall have undergone a power assurance run at model 121
engine settings.
(f) The Engines shall have undergone and passed a power assurance at model
120A settings and all discrepancies shall have been corrected.
(g) The Aircraft shall be in substantially the same condition as when
inspected by Lessee in the week of January 24, 2000; and any Part that has been
replaced since such inspection shall be replaced by a part having a
modification status, value, condition and utility and remaining life, hour or
cycle status and overhaul status (whichever is applicable) at least equal to the
Part it is replacing.
SECTION 4. LESSEE'S REPRESENTATIONS AND WARRANTIES.
Lessee represents and warrants to Lessor on the date hereof and on the
Delivery Date as follows:
4.01 DUE ORGANIZATION, STANDING ETC.
Each of Lessee and Guarantor is a corporation duly organized and validly
existing in good standing under the laws of its jurisdiction of incorporation
and has the power and authority to enter into and to perform its obligations
under the Operative Documents to which either is a party. Each of Lessee and
Guarantor is duly qualified and in good standing in all of the jurisdictions in
which the character of the properties owned or it or the business conducted by
it makes such qualification necessary and the failure to so qualify would
adversely effect Lessee's or Guarantor's ability to perform its obligations
under the Operative Documents to which it is a party.
4.02 OPERATIVE DOCUMENTS.
The Operative Documents to which each is a party have been duly authorized,
executed and delivered by Lessee and Guarantor, and, assuming due authorization,
execution and delivery by the other parties thereto, are legal, valid and
binding agreements of Lessee and Guarantor, enforceable in accordance with their
resive terms.
4.03 NO CONFLICT, CONSENT.
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The execution and delivery by Lessee and Guarantor of the Operative
Documents to which either is a party are not, and the performance by Lessee and
Guarantor of their respective obligations under each will not be, inconsistent
with its charter or bylaws or other organizational documents, do not and will
not contravene any law, governmental rule or regulation, judgment or order
applicable to it, and do not and will not contravene the provisions of, or
constitute a default or result in the creation of any Lien upon any property of
Lessee or Guarantor under any indenture, mortgage, contract, agreement or other
instrument to which either is a Party or by which either is bound or require the
consent or approval of, the giving of notice to, the registration with or the
taking of any action in respect of or under any federal, state or local
governmental authority or agency in the United States or any foreign country,
except such as has been obtained, given or accomplished.
4.04 GOVERNMENTAL CONSENTS.
Neither the execution and delivery of any of the Operative Documents to
which Lessee or Guarantor is a party nor performance of any of the transactions
contemplated thereby by either Lessee or Guarantor, or, to the knowledge of
Lessee, Lessor, requires the consent or approval of, the giving of notice to,
the registration with, or the taking of any other action with respect to the
Aeronautical Authority or any other governmental authority or agency, including
any judicial body, in the United States or any other country, except for the
filings for recording and registration with the Registry referred to in Section
3.01(c)(iv) and (v) hereof and the other filings and Consents referred to in
Section 3.01 (c)(vi) and (xvi) hereof.
4.05 NO ADVERSE AGREEMENTS.
Neither Lessee nor Guarantor is a party to any agreement or instrument or
subject to any charter or any corporate restriction which, if performed in
accordance with its terms, would materially and adversely affect Lessee's or
Guarantor's financial condition, business or operations or the ability of Lessee
or Guarantor to perform its obligations under any of the Operative Documents to
which it is a party.
4.06 NO DEFAULTS OR VIOLATIONS.
Neither Lessee nor Guarantor is in default under any mortgage, deed of
trust, indenture or other instrument or agreement to which it is a party or by
which it or any of its properties or assets may be bound, or in violation of any
Applicable Law, which default or violation would have a material adverse effect
on the financial condition, business or operations of Lessee or Guarantor or its
ability to perform any of its obligations under any of the Operative Documents
to which it is a party.
4.07 LITIGATION.
Except as the Lessee has otherwise disclosed to the Lessor in writing on or
before the date hereof there are no pending or threatened actions, proceedings
or investigations (or any basis therefore known to Lessee) that would either
individually or
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in the aggregate materially and adversely affect the financial condition,
business or operations of Lessee or Guarantor or the ability of Lessee or
Guarantor to perform its obligations under any of the Operative Documents to
which it is a party.
4.08 NO EVENT OF DEFAULT.
No event exists attributable to Lessee's or Guarantor's acts or, omissions
which, upon delivery and leasing of the Aircraft hereunder, would be an Event of
Default or Default.
4.09 FINANCIAL STATEMENTS.
The consolidated audited financial statements of the Guarantor and its
Affiliates delivered to Lessor, each prepared in accordance with generally
accepted accounting principles and practices, fairly present the financial
position of the Guarantor and its Affiliates as of the dates covered thereby.
Since the date of such financials there has been no material adverse change in
the overall financial condition, business or operations of the Guarantor and its
Affiliates.
4.10 CHIEF EXECUTIVE OFFICE.
The chief executive office of Lessee and its records with respect to the
Aircraft are located at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇.
4.11 FILINGS MADE.
Except for the filing and recording of the Lease with the Registry, the
"precautionary" UCC Financing Statement in Hawaii and Delaware and the
filings referred to in the opinion required by Section 3.01(c)(xiv) hereof,
no further action (including filing any financing statement in respect
thereof under the Uniform Commercial Code of any applicable jurisdiction) is
necessary in order to establish and perfect Lessor's interest in the Aircraft
and Lease in any jurisdiction in the United States or elsewhere.
4.12 CERTIFICATE.
Lessee holds an air carrier operating certificate issued by the U.S.
Secretary of Transportation pursuant to Chapter 447 of Title 49 of the United
States Code.
SECTION 5. LESSOR'S REPRESENTATIONS AND WARRANTIES.
Lessor represents and warrants to Lessee on the date hereof and on the
Delivery Date as follows:
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5.01 DUE ORGANIZATION, STANDING ETC.
Lessor is a corporation duly organized and validly existing in good
standing under the laws of its jurisdiction of incorporation and has the power
and authority to enter into and to perform its obligations under the Operative
Documents to which it is a party. Lessor is duly qualified and in good standing
in all of the jurisdictions in which the character of the properties owned or
leased by it or the business conducted by it makes such qualification necessary
and the failure to so qualify would adversely effect Lessor's ability to perform
its obligations under the Operative Documents to which it is a party.
5.02 OPERATIVE DOCUMENTS.
The Operative Documents to which Lessor is a party have been duly
authorized, executed and delivered by Lessor, and, assuming due authorization,
execution and delivery by the other parties thereto, are legal, valid and
binding agreements of Lessor, enforceable in accordance with their respective
terms.
SECTION 6. COVENANTS OF LESSEE.
From the Delivery Date and until the return of the Aircraft pursuant to
Section 10 hereof, Lessee covenants to Lessor that Lessee shall:
6.01 AIR OPERATOR'S CERTIFICATE.
Maintain its Air Operator's Certificate and any other required licenses and
permits from the Aeronautical Authority and any other governmental authority
having jurisdiction required to enable Lessee to carry passengers in common
carriage.
6.02 FINANCIAL AND OTHER INFORMATION TO BE SUPPLIED.
Furnish to Lessor:
(a) as soon as possible and in any event within 10 days after the
occurrence of an Event of Default, an Officer's Certificate setting forth in
detail the nature of such Event of Default and the action which Lessee proposes
to take with respect thereto;
(b) as soon as available, and in any event within 60 days after the end of
each of the first three fiscal quarters in each fiscal year of Guarantor,
consolidated balance sheets of Guarantor and its Affiliates as of the end of
such quarter and related statements of income and shareholders' equity and
changes in financial condition of Guarantor and its Affiliates for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding period in such other preceding fiscal year, all in
reasonable detail and duly certified (subject to year-end audit adjustments) by
a financial officer of Guarantor as having been prepared
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in accordance with generally accepted accounting principles and practices,
together with detailed information regarding any Event of Default as may have
occurred in the relevant period and the action taken or proposed to be taken
with respect thereto;
(c) as soon as available, and in any event within 90 days after the end of
each fiscal year of Guarantor, a copy of the annual report for such year for
Guarantor and the affiliated group of which Guarantor is a member on a
consolidated basis, including therein consolidated balance sheets of Guarantor
as of the end of such fiscal year and related statement of income, shareholders'
equity and changes in financial condition of Guarantor and its Affiliates for
such fiscal year, in comparative form with the preceding fiscal year, in each
case certified by independent certified public accountants of national standing
as having beer, prepared in accordance with generally accepted accounting
principles and practices consistently applied (except as noted therein; PROVIDED
that any changes in accounting principle or practices must be disclosed by such
accountants), together with detailed information regarding any Event of Default
as may have occurred in the relevant period and the action taken or proposed to
be taken with respect thereto;
(d) from time to time, such other information relating to its financial,
operational or business affairs or conditions as Lessor may reasonably request
by written notice including, but not limited to, correspondence with any
Manufacturer and with Lessee's insurance carriers or brokers.
6.03 EXISTENCE.
At all times maintain its corporate existence and do, or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
rights, powers, privileges and franchises except for any corporate right, power,
privilege or franchise that it determines is no longer necessary or desirable in
the conduct of its business as a common carrier for the commercial transport of
passengers and the loss of which will not materially adversely affect or
diminish the rights of Lessor under the Operative Documents.
6.04 INSPECTION RIGHTS; RECORDS.
(a) Permit any duly authorized representative or designee of Lessor (which
may be a manufacturer's representative, an outside consultant or representative
of Lessor or of a lender secured by the Aircraft) to inspect the Aircraft, to
examine Lessee's technical books and Aircraft records, to take memoranda and
extracts therefrom and to make copies thereof, and to discuss the affairs,
finances and accounts of Lessee. Such inspections shall be at Lessor's expense
unless an Event of Default exists, in which case inspections shall be at
Lessee's expense. Unless an Event of Default exists, such inspections may only
take place at any reasonable time. Lessee shall notify Lessor in writing when
"C" and "D" Checks, if Lessee shall no longer be utilizing the de Havilland
Equalized Maintenance Program, are scheduled to take place
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and if Lessee shall be utilizing the de Havilland Equalized Maintenance
Program, when structural inspections required by the Maintenance Program and not
included in the de Havilland Equalized Maintenance Program are scheduled to take
place and if Lessor advises Lessee in writing that it or its designee will be
inspecting during such check, the parties will use reasonable efforts to
coordinate regarding the exact time and place thereof. Lessee shall also provide
Lessor, quarterly, with scheduling information regarding the performance of the
various segments of the de Havilland Equalized Maintenance Program required to
be performed or performed during each such quarter and if Lessor advises Lessee
in writing that it or its designee will be inspecting during such segments, the
parties will use reasonable efforts to coordinate regarding the exact time and
place thereof.
(b) Maintain or cause to be maintained at all times records adequate to
identify the Aircraft and to disclose its location, use and maintenance.
6.05 PAYMENT OF TAXES AND CLAIMS.
Pay when due all Lessee's Taxes, assessments and other liabilities except
as contested in good faith and by appropriate proceedings, provided that
adequate reserves have been established with respect thereto to the extent
required by generally accepted accounting principles as established in the
United States.
6.06 NOTICE OF LITIGATION.
Give prompt written notice to Lessor of any litigation or governmental
proceeding pending or, to its knowledge, overtly threatened against Lessee or
Guarantor which, if determined adversely to Lessee, might materially adversely
affect the financial condition of Lessee or adversely affect the ability of
Lessee or Guarantor to perform its obligations under the Operative Agreements to
which either is a party.
6.07 MERGER
Not, without prior written consent of Lessor, merge into or with any
Person, or be acquired by any Person, or sell or agree to sell all or
substantially all of its assets (whether directly or through a series of
transactions) unless (a) the successor to Lessee or purchaser in such
transaction enters into an agreement acceptable to Lessor to assume all
obligations of Lessee under the Operative Documents unless such successor or
purchaser succeeds to such obligations by operation of law and provides an
opinion of counsel acceptable to Lessor with respect thereto in, form and
substance acceptable to Lessor and (b) such transaction shall not give rise to a
Default or Event of Default; provided, however, the written consent of Lessor
shall not be required if such successor or purchaser shall be an Affiliate of
Guarantor of which Guarantor is the owner of all of the outstanding capital
stock or other ownership interests and the consolidated net worth of the
Guarantor and its Affiliates after giving effect to such transaction shall be
equal to or greater than such net worth immediately prior to giving effect to
such transaction.
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6.08 CHIEF EXECUTIVE OFFICE.
Lessee shall provide Lessor with not less than 30 days prior written notice
of any change in its chief executive office or office where records pertaining
to the Aircraft are kept, if moved, to any place or location outside of the
State of Hawaii and will file such financing statements or other filings as may
be reasonably requested by Lessor with respect to such change.
6.09 CERTIFICATE.
Lessee shall maintain the certificate described in Section 4.12.
SECTION 7. PAYMENTS.
7.01 RENT.
During the Term, Lessee shall pay Basic Rent as follows:
(a) BASIC RENT. On each Rent Payment Date during the Term, Lessee shall pay
to Lessor Basic Rent with respect to the Aircraft in the amount and as provided
in Exhibit B hereto.
(b) REPORTS. At least quarterly during the Term and on the 10th day of the
first calendar month following termination of the Term, Lessee shall deliver to
Lessor internally generated reports setting forth the number of Flight Hours and
Cycles flown by the Airframe and each Engine during the preceding calendar
quarter.
7.02 NET LEASE; NO SET-OFF OR DEDUCTIONS.
This Lease is a net lease, and Lessee acknowledges and agrees that Lessee's
obligation to pay all Rent and the rights of Lessor in and to such Rent shall be
ABSOLUTE AND UNCONDITIONAL UNDER ALL CIRCUMSTANCES and shall not be subject to
any abatement, reduction, set-off, defense, counterclaim or recoupment
("Abatements ") for any reason whatsoever (other than Impositions as defined in
Section 16.02 with respect to which Lessee is not required to indemnify Lessor
or any Indemnitee under Section 16.02), including without limitation, Abatements
due to any present or future claims of Lessee against Lessor under this Lease or
otherwise or against the Manufacturer or against any other Person for whatever
reason. Except as otherwise expressly provided herein, this Lease shall not
terminate for any cause, nor shall the obligations of Lessee be affected, by
reason of any invalidity of title or any defect in the title, condition, design,
merchantability or fitness for use of, or operation of the Aircraft or any
Engine or Propeller or Part thereof as a result of damage to, or any loss, or
destruction of the Aircraft or any Engine or Propeller or any Part thereof from
whatsoever cause, or the interference with the use thereof by Lessor or any
Person, the invalidity or unenforceability of this Lease or any other Operative
Document, the insolvency, bankruptcy or reorganization of any Person, or for any
other cause, whether similar or dissimilar to the foregoing, any present or
future law or regulation to the
- 17 -
contrary notwithstanding. Lessee hereby waives, to the extent permitted by
Applicable Law, any and all rights which it may now or hereafter have, by
statute or otherwise, to terminate, cancel, quit or surrender the Lease and the
leasing thereunder of the Aircraft, it being the express intention of Lessor and
Lessee that all Rent payable by Lessee hereunder shall be, and continue to be,
payable in all events unless the obligation to pay the same shall be terminated
pursuant to the express provisions of this Lease. Notwithstanding the foregoing,
Lessee shall retain separate rights of action with respect to any present or
future claims against Lessor under this Lease.
7.03 IMMEDIATELY AVAILABLE FUNDS.
All Rent shall be paid by wire transfer in immediately available funds by
1:00 p.m. San Francisco, California time on the day in question to the Lessor at
the account listed on Exhibit B hereto or at such other account as shall be
designated in writing by Lessor to Lessee. Funds not received by such time on
such day shall be deemed to have been received on the next day that the
recipient bank is open for business. If any Rent is due on a day which is not a
Business Day, it shall be due on the next succeeding Business Day. All payments
hereunder shall be in United States Dollars.
7.04 SUPPLEMENTAL RENT; OVERDUE RENT.
Lessee also agrees to pay to Lessor or to whomsoever shall be entitled
thereto any and all Supplemental Rent when the same shall become due and owing,
and in the event of any failure on the part of Lessee to pay any Supplemental
Rent, Lessor shall have all rights, powers and remedies provided for herein or
by law or equity in the case of nonpayment of Basic Rent. Without limitation of
the foregoing, Lessee shall pay interest at the Overdue Rate on any payment of
Rent not paid when due hereunder for the period in which such Rent remains
overdue and not paid.
7.05 RESERVED.
7.06 GROSS UP.
All Rent shall be paid free and clear of, and without deduction for, any
taxes, levies, imposts, charges, duties, fees or withholdings of any nature
whatsoever now or hereafter imposed by or within any governmental authority or
pursuant to any governmental rule or regulation or any administrative
subdivision or taxing authority thereof or therein, respectively, unless Lessee
is compelled by law to deduct or withhold such taxes, levies, imposts, charges,
duties or fees, in which event Lessee shall pay such additional amounts as shall
result in the effective receipt by Lessor of the Rent due to Lessor or any other
Person had no such deduction or withholding been made.
SECTION 8. LIMITATION OF, LESSOR'S LIABILITY.
LESSOR LEASES THE AIRCRAFT HEREUNDER "AS-IS","WHERE-IS" AND LESSOR HAS NOT
MADE, AND SHALL NOT BE DEEMED TO HAVE MADE
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ANY REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, CONDITION, DESIGN, OPERATION, MERCHANTABILITY, OR FITNESS FOR USE
OR PARTICULAR PURPOSE OF THE AIRCRAFT, AS TO THE ABSENCE OF ANY INFRINGEMENT OF
ANY PATENT, TRADEMARK OR COPYRIGHT, OR AS TO THE QUALITY OF THE MATERIAL OR
WORKMANSHIP OF THE AIRCRAFT, OR AS TO ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING, WITHOUT
LIMITATION, ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM
NEGLIGENCE, STRICT LIABILITY, ANY IMPLIED WARRANTY FROM COURSE OF PERFORMANCE OR
DEALING OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS,
OR OTHER CONSEQUENTIAL DAMAGES, except that on the Delivery Date, Lessor (a)
warrants that the Aircraft shall be, free of Lessors Liens and (b) agrees that
it will not directly or indirectly create, incur, assume or suffer to exist any
Lessor's Lien on or with respect to the Airframe or any Engine or Propeller.
SECTION 9. USE OPERATION AND MAINTENANCE.
9.01 GENERAL.
Lessee, at its own cost and expense shall (i) service, repair, maintain and
overhaul or cause the same to be done to the Airframe and each Engine and
Propeller under the Maintenance Program in the same manner and with the same
care as used by Lessee with similar aircraft and engines and propellers operated
by Lessee and so as to keep the Airframe and each Engine and Propeller in as
good operating condition as when delivered to the Lessee hereunder, ordinary
wear and tear excepted, and (ii) maintain the Manuals and Technical Records in
the English language in accordance with the Maintenance Program.
9.02 OPERATION AND USE.
(a) Lessee agrees not to operate or locate the Airframe or any Engine or
Propeller, or suffer the Airframe or any Engine or Propeller to be operated or
located by any other Person, in any area (i) excluded from coverage by any
insurance policy required to be maintained hereunder with respect to the
Airframe or Engines or Propellers or (ii) in any recognized or threatened area
of hostilities. Lessee agrees not to operate the Airframe or any Engine or
Propeller, or suffer the Airframe or any Engine or Propeller to be operated by
any other Person (1) unless the Airframe and Engine and Propeller are covered by
insurance as required by the provisions of Section 12 hereof or (2) contrary to
the terms of such insurance as required by the provisions of Section 12 hereof.
(b) Lessee agrees not to (i) operate the Airframe or any Engine or
Propeller except in a passenger configuration, in commercial operations for
which Lessee is duly authorized by the Aeronautical Authority or (ii) use the
Aircraft for a purpose for which the Aircraft is not designed or reasonably
suitable. Lessee will not maintain, use or operate the Aircraft in violation of
any Applicable Law, or contrary to
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any manufacturers operating manuals or instructions.
9.03 MAINTENANCE IN GENERAL.
Lessee agrees that until the Aircraft is redelivered to Lessor pursuant to
Section 10 (except as specified below), it has the sole obligation to, and shall
maintain and repair or to cause to be maintained and repaired the Airframe and
the Engines and Propellers under Lessee's Aeronautical Authority approved
maintenance program as in effect on the Delivery Date as the same may be amended
from time to time in accordance with the second sentence of this paragraph with
respect to the Airframe and the Engines and Propellers (the "Maintenance
Program") and so as to keep them in as good a condition as on the Delivery Date,
ordinary wear and tear excepted. If any material changes (including without
limitation, time limit changes) shall be made to such Maintenance Program,
including without limitation, any change from the de Havilland Equalized
Maintenance Program, Lessee shall give Lessor not less than 30 days' advance
written notice thereof and no such changes shall be implemented until approved
by the Aeronautical Authority. Included within the obligation of maintenance and
repair is the obligation and affirmative undertaking by Lessee to replace or
cause to be replaced from time to time all unserviceable or defective Parts, to
the extent required to cause the Aircraft to be in an airworthy condition in all
respects, and covered by a valid Certificate of Airworthiness at all times.
Notwithstanding the above, Lessor agrees, on a one time only basis, at its
sole cost and expense to:
(i) reimburse Lessee for the cost of the first major refurbishment
following the Delivery Date of Engines serial numbers 120077 and
120096. Such costs, payable within 30 days after invoices,
satisfactory to the Lessor, are received, shall be for the
refurbishment of the Engines only. All other costs, including but not
limited to, removal and installation of the Engines, transportation
and/or substitute engine(s) are for the account of the Lessee.
Notwithstanding the foregoing, if the refurbishment is performed due
to foreign object damage ("FOD") or FOD is discovered during
performance of the refurbishment under this subsection 9.03(i), (A)
Lessee will use commercially reasonable best efforts to recover the
maximum damage amount recoverable from any and all insurance providers
with respect to the Aircraft and (B) Lessee shall contribute an amount
up to the full amount of any applicable insurance deductible and the
full amount of any recovery from any insurance provider with respect
to such damage toward the cost of the refurbishment. For purposes of
this subpart (i), refurbishment shall include the replacement of all
Life Limited Parts having fewer than 10,000 cycles remaining.
(ii) either provide Lessee serviceable replacement flaps and necessary,
modified to eliminate the repeat inspection requirements of DHC-8
Maintenance Program task numbers 5750/09A and 5750/10A
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through the term or reimburse Lessee for the cost of replacing such
flaps and carriages. Not less than 180 days prior to the estimated
date the flaps will accumulate 60,000 total Cycles, Lessor and Lessee
will commence cooperation with each other in locating such replacement
flaps and carriages. In the event Lessor replaces such flaps and
carriages, as necessary, Lessor shall furnish such flaps and carriages
to Lessee between 90 and 180 days prior to the estimated date the
flaps will accumulate 60,000 total cycles. In the event Lessee
replaces such flaps and carriages, as necessary, and Lessor is to
reimburse Lessee for the cost of replacing such flaps and carriages,
such cost, payable within 30 days after invoices satisfactory to the
Lessor are received, shall be for the Lessee's reasonable net cost of
such flaps and carriages only. Notification in writing, from the
Lessee to the Lessor, shall be given no later than 12 months prior to
the date the Lessee estimates the flaps will have accumulated 60,000
total Cycles.
(iii) reimburse Lessee for the reasonable cost of replacing landing gear
Life Limited Parts replaced because of expired life. Such cost,
payable within 30 days after invoices satisfactory to the Lessor are
received, shall be for the Lessee's reasonable net cost of the part
only.
(iv) reimburse Lessee the cost of modifying the Aircraft to a model
DHC-8-103 including the cost of converting the Engines to P/W 121's.
Such cost shall be payable within 30 days after invoices satisfactory
to the Lessor have been received.
(v) reimburse Lessee the cost of stripping the entire Aircraft and
painting the Lessee's livery up to a total aggregate amount of $60,000
for the painting of Lessee's livery on the Aircraft and the Other
Aircraft.
9.04 SPECIFIC ITEMS OF MAINTENANCE.
Lessee agrees that maintenance and repairs shall include, but shall not be
limited to, the following specific items:
(a) to perform or have performed in accordance with the Maintenance Program
all routine maintenance work, including on-line maintenance on the Aircraft, and
to ensure that all such maintenance shall be in accordance with the regulations
and directives of the Aeronautical Authority. Lessee shall cause all maintenance
and repairs to be performed at repair facilities approved by the Aeronautical
Authority;
(b) to maintain or cause to be maintained all Aircraft documentation,
including, without limitation, the Manuals and Technical Records, in compliance
with Aeronautical Authority regulations and in up-to-date status (if necessary,
through manufacturers' revision service) and to make these available for review
by Lessor on reasonable notice at Lessee's principal maintenance base;
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(c) if required by Aeronautical Authority regulations, to notify the
Manufacturer promptly (with a copy to Lessor) of any modifications or
configuration changes to the Airframe which would have a material effect on or
be a material change to the type design and/or the manuals relating to the
Airframe (such as flight, operations and maintenance); and
(d) on Lessors request to furnish Lessor promptly with copies of any
written communications with manufacturers with respect to material defects or
malfunctions of the Aircraft.
9.05 PARTS.
(a) Lessee, at its own cost and expense, will promptly replace all Parts
that may from time to time become unserviceable, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair or permanently rendered unfit for use
for any reason whatsoever. In addition, in the ordinary course of maintenance,
service, repair, overhaul or testing, Lessee may remove any Parts, whether or
not unserviceable, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use, provided that Lessee shall replace
such Parts as promptly as practicable with replacement parts. All replacement
parts shall be made by the same manufacturer and shall be of the same or an
improved model number and modification status or substitutes (whether or not the
same manufacturer is involved) approved by the Aeronautical Authority and
normally used by Lessee, shall be free and clear of all Liens except Permitted
Liens and shall be in as good operating condition as, and shall have a value,
utility and a remaining useful life at least equal to that of the Parts replaced
assuming such replaced Parts were in the condition and repair required to be
maintained by the terms hereof.
(b) Except as provided in Section 9.05(d), all Parts at any time removed
from the Airframe or any Engine or Propeller shall remain the property of
Lessor and subject to this Lease, no matter where located, until such time as
such Parts shall be replaced by parts that have been incorporated or
installed in or attached to such Airframe or Engine or Propeller and that
meet the requirements for replacement Parts specified in clause (a) of this
Section 9.05. Immediately upon any replacement part becoming incorporated or
installed in or attached to such Airframe or Engine or Propeller as provided
in clause (a) hereof, without further act, (i) title to such replacement part
shall thereupon vest in Lessor and it shall become a Part for all purposes
hereof to the same extent as the Part originally incorporated or installed in
or attached to such Airframe or Engine or Propeller; and (ii) title to the
replaced Part shall thereupon vest in Lessee, free and clear of all rights of
Lessor and free and clear of Lessor Liens (other than Lessor Liens arising
out of events occurring after the transfer which are not attributable to
actions of the Lessor or omissions by the Lessor of actions which the Lessor
is legally obligated to take) and such replaced Part shall no longer be
deemed a Part hereunder.
(c) Title to all parts incorporated or installed in or attached or added to
the Airframe or any Engine or Propeller as the result of any alteration,
modification or
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addition effected by Lessee shall, without further act, vest in Lessor and
become subject to this Lease and such part shall be deemed to be a Part for all
purposes hereof.
(d) Lessee may remove Parts which Lessee determines in its reasonable
judgment to be obsolete or no longer suitable or appropriate for use by Lessee
on the Airframe or any Engine or Propeller ("Obsolete Parts"), PROVIDED that
(i) such removal is being applied by Lessee on a fleet-wide basis and does not
discriminate against the Aircraft and (ii) removal of any such Part shall not
diminish the fair market value, utility or remaining useful life of the Airframe
or such Engine or Propeller, or materially impair the condition or impair the
airworthiness thereof, below the fair market value, utility, condition,
airworthiness or remaining useful life thereof immediately prior to such
removal assuming the Airframe or such Engine or Propeller was then of the fair
market value and utility and in the condition and airworthiness required to be
maintained by the terms of this Lease.
9.06 AIRWORTHINESS DIRECTIVES.
(a) Lessee agrees to carry out or cause to be carried out in accordance
with the requirements thereof on the Aircraft any airworthiness directive or any
other mandatory regulation or directive ("Airworthiness Directive") which the
Aeronautical Authority from time to time may issue and which becomes due prior
to the later of the end of the Term or return of the Aircraft to the Lessor
pursuant to Section 10, which shall include without limitation, compliance with
any terminating action with which compliance must be met prior to the later of
the end of the Term or the return of the Aircraft to the Lessor pursuant to
Section 10. All Airworthiness Directives shall be timely accomplished in
accordance with all applicable bulletins and manuals published by the
Manufacturer of the Airframe or Engines or Propellers or Parts or data approved
by the Aeronautical Authority to the extent the same are incorporated in or by
reference into the Airworthiness Directive.
(b) Title to any parts installed on the Aircraft pursuant to an
Airworthiness Directive issued after the Delivery Date shall vest in Lessor free
and clear of any Liens except Permitted Liens and such parts shall be deemed to
be Parts for all purposes hereof.
(c) Lessee shall pay the cost of complying with all Airworthiness
Directives.
9.07 SERVICE BULLETINS: NONDISCRIMINATION.
Lessee agrees, at its sole cost and expense to incorporate. Service
Bulletins into the Aircraft which Lessee has accomplished on 30% of it's
Aircraft fleet during the Term of this Lease. It is not the intent of the
parties that the Aircraft shall be discriminated from the rest of the Lessee's
Aircraft fleet in Service Bulletin compliance
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or other maintenance, provided, however, the foregoing shall not be
interpreted to, expand Lessee's obligations beyond the express requirements of
Section 10 and Exhibit "F".
9.08 CORROSION CONTROL.
Lessee shall carry out such work as may be required for the control of
corrosion, including without limitation, periodic inspections by penetration of
fuel tanks, periodic inspection and clean-up under galleys, forward and aft
cargo pit areas and lavatories, periodic treatment of all mild corrosion and
correcting of all moderate and severe or exfoliation corrosion in accordance
with the Maintenance Program.
9.09 MODIFICATIONS.
(a) Lessee, at its own expense, shall make such alterations and
modifications in and additions to the Airframe or any Engine or Propeller as may
be required to be made from time to time by Applicable Law during the Term
regardless upon whom such requirements are, by their terms, nominally imposed
("Required Modifications").
(b) Lessee shall not, without Lessor's prior written consent, make any
major modifications, alterations or additions (collectively, "Optional
Modifications") to the Aircraft, other than Required Modifications, including,
without limitation, Optional Modifications which will result in changes to the
Aircraft structure or performance, or which could adversely affect spare parts,
interchangeability or irreplaceability.
(c) NOTWITHSTANDING ANY OTHER PROVISION OF THIS LEASE, NO OPTIONAL
MODIFICATION SHALL BE MADE WHICH HAS THE EFFECT OF DECREASING THE UTILITY, VALUE
OR REMAINING USEFUL LIFE OF THE AIRCRAFT OR ADVERSELY AFFECTING ITS
AIRWORTHINESS OR USE FOR TRANSPORTING PASSENGERS OR CARGO IN COMMERCIAL SERVICE.
(d) All Modifications shall be accomplished at Lessee's expense except for
modifications in (1) below which Lessee will make at Lessor's expense provided
the rent is adjusted per Exhibit B and only by a Person approved by the FAA.
Lessee shall provide copies of all drawings and data to be used by Lessee in
accomplishing such Optional Modifications for Lessors consent prior to such
work.
(1) Lessor will reimburse Lessee for Optional Modifications
accomplished in accordance with Section 9.09(b)(c) and (d)
above in an amount not to exceed the Contribution Amount.
Basic Rent will be increased for such modifications per
Exhibit B, 4(a) of the Lease.
9.10 POSSESSION; SUBLEASING; EQUIPMENT SUBSTITUTION
Lessee shall not sublease the Aircraft or otherwise in any manner deliver,
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relinquish or transfer possession of the Airframe or any Engine or Propeller
to any Person or install any Engine, or permit any Engine to be installed, on
any airframe other than the Airframe or install any Propeller, or permit any
Propeller to be installed, on any engine other than an Engine or permit any
other Person to do any of the foregoing during the Term, without the prior
written consent of Lessor, PROVIDED, HOWEVER, that so long as Lessee shall
comply with the provisions of Section 12 hereof, Lessee, without the prior
written consent of Lessor (except as specified below) may:
(a) deliver possession of the Airframe or an Engine or Propeller to the
Manufacturer thereof for testing or other similar purposes or to any qualified
organization for service, repair, maintenance or overhaul work on such Airframe
or such Engine or Propeller or for alterations or modifications in or additions
to such Airframe or such Engine or Propeller, to the extent required or
permitted by the terms of this Lease;
(b) with the prior consent of Lessor, subject any Engine or Propeller to
normal interchange or pooling agreements or arrangements, entered into with any
Certificated Air Carrier consented to in advance of such arrangement in writing
by the Lessor (a "Permitted Air Carrier"), provided that (i) no such agreement
or arrangement contemplates or requires the transfer of title to such Engine or
Propeller; and (ii) if Lessor's title to any Engine or Propeller shall be
divested under any such agreement or arrangement, such divestiture shall be
deemed to be an Event of Loss with respect to such Engine or Propeller and
Lessee shall comply with Section 13 hereof in respect of such Engine or
Propeller;
(c) install an Engine on an airframe owned by Lessee free and clear of all
Liens, except (i) Permitted Liens, and (ii) those which apply only to the
engines (other than Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than Parts) installed on
such airframe (but not to the airframe as an entirety), and (iii) those created
by the rights of other Permitted Air Carriers under normal interchange or
pooling agreements or arrangements customary in the airline industry which do
not contemplate, permit or require the transfer of title to such engines
installed thereon; or
(d) install an Engine on an airframe leased to Lessee or owned by Lessee
subject to a conditional sale or other security agreement, PROVIDED that (i)
such airframe is free and clear of all Liens except (A) the rights of the
parties to the lease, conditional sale or other security agreement and (B)
Liens of the type permitted by clause (c) above, and (ii) such lease,
conditional sale or other security agreement effectively provides that such
Engine shall not become subject to the Lien of such lease, conditional sale or
other security agreement, notwithstanding the installation thereof on such
airframe in which particular connection, a provision contained in such lease,
conditional sale or other security agreement substantially to the effect of
clause (e) of this Section 9.10 shall be deemed to so effectively provide;
PROVIDED that the rights of a transferee who receives possession by reason
of a transfer permitted by this Section 9.10 shall be subject and subordinate to
all the terms of this Lease and the rights of the Lessor hereunder to repossess
such property and any such
- 25 -
arrangement shall expressly state it is so subordinate or contain a
provision substantially to the effect of clause (e) of this Section 9.10, and
Lessee shall remain primarily liable hereunder for the performance of all of
the terms of this Lease to the same extent as if such transfer had not occurred.
(e) The Lessor agrees, for the benefit of the Lessee and any mortgagee or
holder of any other security interest in any engine (other than an Engine) or
propeller (other than a Propeller) owned by the Lessee, any lessor of any engine
(other than an Engine) or propeller (other than a Propeller) leased to the
Lessee and any conditional vendor of any engine (other than an Engine) or
propeller (other than a Propeller) purchased by the Lessee subject to a
conditional sale agreement or any other security agreement, that no right, title
to or interest in any such engine or propeller shall be exercised or asserted by
the Lessor and the Lessor acknowledges and confirms that it will not acquire any
right, title or interest to or in any such engine or propeller as a result of
its installation on the Airframe.
9.11 REPAIRS.
Any repair to the. Aircraft accomplished prior to return of the Aircraft to
Lessor pursuant to Section 10 hereof shall be accomplished where applicable
pursuant to the appropriate Manufacturers repair manual instructions (if any)
and the Maintenance Program. All such repairs, inclusive of corrosion control
repairs, are to be documented and mapped identifying the location, dimensions
and repair procedure.
9.12 AIRCRAFT RECORDS.
All records maintained by Lessee prior to return of the Aircraft
pursuant to Section 10 hereof relating to the location, service, inspection,
Maintenance, modification, repair and overhaul of the Airframe, Engines and
Parts installed therein, will at all times be maintained in accordance with
all applicable requirements of the Aeronautical Authority and any other
governmental authority having jurisdiction with respect thereto and shall be
kept current, up to date, in English, accurate and complete.
9.13 WARRANTIES.
Lessor agrees that during the Term, so long as no Default or Event of
Default has occurred and is continuing, Lessee shall have the right to
enforce all manufacturer and vendor warranties with respect to the Aircraft,
PROVIDED, HOWEVER, that (i) all such rights shall immediately revert to the
Lessor upon expiration of the Term or upon the occurrence and continuance of
a Default or Event of Default, (ii) Lessee shall not attempt to enforce any
such warranties by legal proceedings without Lessors approval and (iii)
Lessee shall indemnify Lessor and each other Indemnitee against any
Impositions with respect to any warranties or enforcement of warranties
pursuant to Section 16.01 hereof and (iv) Lessor makes no warranties or
representations whatever to Lessee as to the existence or enforceability of
any such warranties. Lessee agrees that it shall maintain the Aircraft in
such a manner so as not to knowingly void any available warranties.
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9.14 AIRPORT CHARGES.
Lessee shall as the same become due, pay and discharge, or procure the
payment and discharge of any and all charges, fees, taxes, imposts and levies of
whatsoever nature which are incurred by Lessee or Lessee's sublessees in the
course of the operation of the Aircraft under this Lease or of any other
aircraft under the management or control of Lessee or Lessee's sublessees,
including without limitation all charges of airport authorities (whether
relating to landing fees, parking fees, handling charges or otherwise), all
charges imposed by air navigation authorities whatsoever and all charges of
aviation authorities whether relating to navigation or otherwise and will upon
written request therefore by Lessor supply evidence of payment of any such
charges.
9.15 RIGHT TO INSPECT.
The Lessor or its designee(s) shall have the right, but not the obligation,
after ten (10) Business Days written notice to the Lessee, periodically to
inspect the Aircraft, Technical Records and Manuals, for condition and
compliance with this Lease. Except as otherwise provided in Section 6.04, such
inspections shall be at the cost of the Lessor.
9.16 REPORTING.
Lessee agrees to provide to the Lessor no less frequently than quarterly
such operational data as may be requested by the Lessor to maintain a record of
the Aircraft maintenance and parts status including the Engines, Propellers and
landing gear.
SECTION 1O. RETURN OF AIRCRAFT.
10.01 RETURN.
At the end of the Term or upon termination of this Lease pursuant to
Section 15 hereof, Lessee, at Lessee's expense, shall return the Aircraft to
Lessor at an airport located in the western continental United States selected
by Lessor (the "Return Location"). The Aircraft at the time of its return shall
be free and clear of all Liens other than Lessors Liens. At the time of return
of the Aircraft to Lessor, Lessor shall execute a return acceptance certificate
(the "Return Acceptance Certificate") in the form attached hereto as Exhibit E.
10.02 CONDITION OF AIRCRAFT.
The Aircraft at the time of its return to Lessor shall have been maintained
and repaired in accordance with the Maintenance Program and this Lease, and
shall meet the requirements set forth in Exhibit F hereof.
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10.03 BOROSCOPE INSPECTION.
A boroscope inspection shall be performed by Lessor at Lessee's expense at
the time of the Aircrafts return to Lessor and Lessee shall provide evidence
satisfactory to Lessor reflecting the correction of any discrepancies found
during such inspection and determined not to have been in compliance with the
Maintenance Program.
10.04 HISTORICAL RECORDS: TREND MONITORING DATA.
If the Engine historical and maintenance records or trend monitoring data
indicate a rate of acceleration in performance deterioration of any Engine which
is outside of the parameters permitted by the ▇▇▇▇▇ & ▇▇▇▇▇▇▇ maintenance
manual, Lessee shall, prior to the Aircraft's return, correct or cause to be
corrected such conditions which are determined to have caused such increased
deterioration, such correction to be made in compliance with the ▇▇▇▇▇ & Whitney
maintenance manual.
10.05 INSPECTION.
(a) During the last twelve (12) months of the Term, Lessor, from time to
time, may wish to make the Aircraft available for inspection to designated
representatives or technical teams evaluating the Aircraft for use after the
Term. Lessor agrees to give Lessee not less than 10 Business Days' advance
written notice of such inspection and Lessee agrees to cooperate fully with
Lessor's requests in making the Aircraft and the Manuals and Technical Records
available to such authorized technical teams and Lessor agrees that such
requests will be reasonable and will be coordinated with Lessee so as to
minimize disturbance to Lessee's operations and its personnel, provided,
however, the parties agree that such inspections shall be scheduled in such
manner that scheduled flights shall not be delayed or cancelled.
(b) The Aircraft (including the Manuals and Technical Records to be
returned therewith as set forth in this Section 10 and Exhibit F) shall be made
available to Lessor or its designee for ground inspection by Lessor or its
designee at Lessee's facilities or where the heavy maintenance check or its
equivalent, if required by Exhibit F hereto, is being performed, while such
heavy maintenance check or its equivalent is being performed. Lessee shall
remove the Aircraft from scheduled service and open the areas of the Aircraft as
required by the Maintenance Program for such heavy maintenance check, and shall
allow Lessor or its designee to accomplish its inspection in order to determine
that the Aircraft (including the Manuals and Technical Records) is in the
condition required by the provisions of this Section 10 and Exhibit F hereto.
Lessee shall promptly correct any discrepancies from the condition required by
the provisions of this Section 10 and Exhibit F hereto which are observed during
such inspection.
10.06 OPERATIONAL GROUND CHECK.
Promptly after completion of any corrections required under Section
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10.05(b) above, Lessee shall conduct an operational ground check in
accordance with the requirements of the Maintenance Program and shall correct
any discrepancies disclosed by such check.
10.07 OPERATIONAL CHECK FLIGHT.
Promptly after completion of all corrections required under Section 10.05
and 10.06 above, the Aircraft shall be check flown by Lessee at Lessee's risk
and expense, using qualified flight personnel, for not more than two (2) hours
on a noncommercial flight, for the purpose of demonstrating to Lessor the
satisfactory operation of the Aircraft and its equipment and systems. If no
major discrepancy is found, the Aircraft may proceed to the Return Location.
Lessor's representatives may participate in such flight as observers. Lessee's
pilot shall be in command of the Aircraft. Such flight shall be flown using de
Havilland's operational check flight procedures sufficient to demonstrate the
proper operation of all systems for normal passenger use. Upon completion of
such operational check flight, the representatives of Lessee and Lessor
participating in such flight shall agree in writing upon any discrepancies in
such Aircraft required to be corrected by Lessee in order to comply with the
provisions of this Section 10 and Exhibit F hereto and Lessee shall promptly
correct or cause to be corrected at Lessee's expense any such discrepancies. If
any of the discrepancies referred to in Sections 10.05 and 10.06 or 10.07
continue to persist, Lessor may (but shall not be obligated to) accept delivery
of the Aircraft and apply the procedure set forth in Section 10.9 for such
discrepancies.
10.08 ACCEPTANCE.
Unless otherwise mutually agreed, the operational check flight shall take
place at the location in the United States where the final maintenance to put
the Aircraft into the required return condition is being performed ("Maintenance
Location"). Upon completion of the operational check flight or after Lessee has
corrected the discrepancies as required to comply with this Section, the
Aircraft shall be technically accepted at the Maintenance Location and be
ferried by Lessee at its risk and expense, including accumulation of Basic Rent,
to the Return Location. To the extent possible, the operational check flight
will be combined with the ferry flight to the Return Location. Lessee shall
remedy or correct any defects or deficiencies that may be discovered during such
flight.
10.09 DEFERRED DISCREPANCY CORRECTION.
Any discrepancies found during the ground inspection, operational ground
check and operational check flight set forth in Sections 10.05, 10.06 and 10.07
above, which were not corrected by Lessee prior to return of Aircraft to Lessor,
may be corrected by Lessor or its designee after return of the Aircraft and
Lessee shall reimburse Lessor for all reasonable direct costs and expenses paid
by Lessor or its designee for accomplishing such discrepancy corrections. Lessee
shall pay Lessor or its designee for all such costs and expenses incurred within
10 days of the date of receipt of an invoice therefor.
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10.10 FLIGHT COST
All flights pursuant to Section 10.07 and 10.08 shall be made at
Lessee's expense and Lessee shall pay for any and all reasonable costs
associated with such flights including, but not limited to, costs for crew,
oil, airport fees, insurance, takeoff/landing fees, airway communication
fees, ground handling fees and customs duties, if any. All obligations and
risks with respect to the Aircraft under this Lease or otherwise shall be
Lessor's from and after technical acceptance by Lessor under Section 10.08,
except as otherwise expressly provided herein.
10.11 INDEMNIFICATION.
Section 16 hereof shall apply to all activity pursuant to this Section 10
and shall cover Lessors representatives with regard to the return of the
Aircraft.
10.12 INSURANCE.
To the extent not covered by the existing insurance certificates, with
respect to Lessee's aviation liability insurance, Lessee shall (i) cause
Lessor to be named as an additional insured under Lessee's aviation liability
insurance policies to the extent of Lessee's undertaking set forth in Section
10.11 and (ii) shall furnish to Lessor not later than 7 Business Days prior
to the start of Lessor's ground inspection of the Aircraft certificates from
Lessee's aviation liability insurance carriers in a form reasonably
satisfactory to Lessor stating the limits and terms of Lessee's liability
insurance coverage, and showing that Lessor has been named as an additional
insured and specifically referring to Section 10.11. With respect to Lessee's
hull insurance, Lessee shall (i) cause Lessee's hull and war risk insurance
carriers to waive all rights of subrogation against Lessor and Lender to the
extent of Lessee's undertaking set forth in Section 10.11 and (ii) shall
furnish to Lessor, not later than 7 Business Days prior to the start of
Lessors ground inspection on the Aircraft, certificates from Lessee's hull
and war risk insurance carriers, in a form acceptable to Lessor (such
approval not to be unreasonably withheld), stating that such carriers have so
waived all rights of subrogation against Lessor and specifically referring to
Section 10.11.
10.13 MANUALS AND TECHNICAL RECORDS.
(a) Lessee shall return to Lessor, at the time the Aircraft is returned to
Lessor, all of the Manuals and Technical Records and other data previously
provided to Lessee at delivery as described in Exhibit D hereto, as updated and
maintained by Lessee through the date of return of the Aircraft subject to
retention time limits of the Aeronautical Authority. In addition, Lessee shall
also provide Lessor at the time the Aircraft is returned to Lessor, all records,
documents, manuals, authorizations, drawings and data in English which were
developed or caused to be developed by Lessee or required by the Aeronautical
Authority, updated and maintained by Lessee for the Aircraft and through the
date of return of the Aircraft in an accurate and correct condition.
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(b) All Manuals and Technical Records which have been supplied by Lessor to
Lessee shall be returned in accordance with United States FAA F.A.R. 91.417 and
121.380.
10.14 SERVICE BULLETIN KITS.
All vendors' and manufacturers' Service Bulletin kits ordered and received
by Lessee at the time of redelivery of the Aircraft and which Lessee obtained
free of charge from such vendors or manufacturers for the Aircraft but not
installed therein shall be returned with the Aircraft, as part of the Aircraft
at the time of return, free of charge to Lessor and shall be loaded by Lessee on
board the Aircraft as cargo.
10.15 LESSEE'S SPECIAL EXTERIOR MARKINGS.
At the time of the return of the Aircraft, Lessee shall paint the Aircraft
solid white. In the event that, notwithstanding Lessee's obligation to do so,
Lessee does not paint the Aircraft solid white, Lessor shall have no obligation
to remove any markings prior to the sale, lease, or other disposition of the
Aircraft by Lessor after its return; however, if Lessor elects to paint the
Aircraft solid white, Lessee shall pay Lessors reasonable direct costs and
expenses paid for such painting within 10 days of the date of Lessors invoice
therefor.
10.16 OWNERSHIP.
Any documents, equipment and any other items returned to Lessor pursuant to
this Section 10 which are not already owned by Lessor shall thereupon become the
property of Lessor.
10.17 STORAGE UPON RETURN.
Upon request of Lessor received at least 30 days prior to the end of the
Term, Lessee will store the Aircraft at its expense in Honolulu, Hawaii for a
period not exceeding 60 days. Lessee shall at its expense maintain liability and
hull insurance with respect to the Aircraft during such storage period that meet
industry standards for a stored aircraft and Lessor shall be named an additional
insured and loss payee under such insurance.
SECTION 11. TITLE; REGISTRATION; LIENS.
11.01 TITLE.
Lessee acknowledges that during the Lease Term full legal title to the
Aircraft shall remain vested in Lessor notwithstanding the possession and use
thereof by Lessee, and Lessee shall take all actions, subject to Section 18,
where applicable, at its expense that Lessor may reasonably require to evidence
the interest of Lessor in the Aircraft or to protect such interest against the
claims of any other Person (other than claimants under Lessor Liens). Lessee
shall not attempt to hold itself out as having any power to sell or dispose of
the Aircraft or any Engine or Propeller.
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11.02 REGISTRATION; FILINGS; REGISTRATION.
(a) The Aircraft shall be registered at the FAA in the name of Lessor
throughout the Term and Lessee shall not do, and shall further use its best
endeavors to ensure that no third party (except with regard to Lessor Liens)
does, any act or thing which might prejudice or cancel such registration.
(b) Lessee shall take or cause to be taken, at Lessee's cost and expense,
such actions as are necessary or requested by Lessor and appropriate to
maintain, so long as this Lease is in effect, (i) registration of the Aircraft
at the FAA, in the name of the Lessor including, without limitation, the filing
of all reports and applications and the payment of all fees and (ii)
maintaining the ownership interest of Lessor in the Aircraft, provided, however,
the foregoing shall not be deemed to impose upon Lessee any obligation with
respect to Lessor Liens. Lessee shall take such actions at Lessee's expense as
are necessary or reasonably requested by Lessor to maintain the perfection of
any security interest that may be claimed to be created by this Lease, including
without limitation, the recording, filing, re-recording, and refiling of this
Lease, any other Operative Document, any financing statements or other
instruments. Lessee shall take no action adversely affecting the due
registration of the Aircraft with the FAA in the name of the Lessor.
11.03 LIENS.
Lessee shall not directly or indirectly create, incur, assume or suffer to
exist any Lien on or with respect to the Airframe or any Engine or Propeller
other than Permitted Liens. Lessee promptly, at its own expense, shall take such
action as may be necessary to duly discharge any Lien other than a Permitted
Lien if the same shall arise at any time and shall indemnify Lessor with respect
to any charge or cost incurred in connection with such Lien.
11.04 NOTICE OF OWNERSHIP.
As soon as practicable after the Delivery Date but in any event within 5
Business Days of the Delivery Date, Lessee shall affix in a reasonably prominent
position on the flight deck or cockpit, and on each of the Engines, a reasonably
legible notice which shall be provided by Lessor, reading as follows:
"▇▇▇▇▇▇ LEASE FINANCE CORPORATION,
Owner and Lessor,
Leased to ALOHA ISLANDAIR,INC., Lessee
Once affixed as aforesaid, such notice shall not be defaced, covered or
removed during the Term, unless the Lessor instructs Lessee by notice
hereunder to change such notice. Lessee will not allow the name of any person
other than Lessor or a lender designated in writing by Lessor to be placed on
the Airframe or any Engine or Propeller
- 32 -
as a designation that might be interpreted as a claim of ownership or any
security or other interest therein.
SECTION 12. INSURANCE.
On or before the Delivery Date and until the Aircraft is returned to Lessor
in accordance with Section 10 hereof, Lessee, at its cost and expense, shall
obtain, maintain and keep in full force and effect the following insurance with
respect to the Aircraft (Lessor recognizes that such insurances may not cover
the Manuals and Technical Records), carded with insurers and re-insurers of
recognized standing who normally participate in aviation insurances in the
leading international insurance markets:
12.01 ALL-RISK INSURANCE.
All-risk hull, ground and flight insurance on the Aircraft (with flight,
taxiing and ingestion coverages) in an amount not less than the Stipulated Loss
Value. Such hull insurance shall cover Engines or engines, Propellers or
propellers and Parts temporarily removed from the Airframe pending installation
of the same or similar Engines, engines, Propellers or propellers or Parts on
the Airframe in an amount not less than their replacement cost.
12.02 WAR RISK INSURANCE.
War risk and allied perils insurance on the Aircraft in an amount not less
than the Stipulated Loss Value covering the perils of:
(a) war, invasion, acts of foreign enemies, hostilities (whether war be
declared or not), civil war, rebellion, revolution, insurrection, martial law,
military or usurped power, or attempts at usurpation of power;
(b) strikes, dots, civil commotions or labor disturbances;
(c) any act of one or more persons, whether or not agents of a sovereign
power, for political or terrorist purposes and whether the loss or damage
therefrom is accidental or intentional;
(d) any malicious act or act of sabotage;
(e) confiscation, nationalization, seizure, restraint, detention,
appropriation, requisition of title or use by or under the order of any
government (whether civil, military or de facto) or public or local authority
other than the government or any public or local authority of the country of
registration; and
(f) hijacking or any unlawful seizure or wrongful seizure or wrongful
exercise of control of the Aircraft or crew in flight (including any attempt at
such seizure or control) made by any person or persons on board this Aircraft
acting without the consent of Lessee.
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12.03 LIABILITY INSURANCE.
Public liability insurance for a combined single limit of not less than
the amount set forth in Exhibit B hereto for public liability insurance which
shall:
(a) include public liability insurance, passenger liability insurance and
property damage liability insurance; and
(b) provide that all the provisions thereof, except the limits of
liability, shall operate in the same manner as if there were a separate policy
covering each such insured.
12.04 ELECTRONIC DATE RECOGNITION INSURANCE.
Satisfactory coverage against the risks associated with electronic date
recognition problems, in the form of Date Recognition Limited Coverage Clauses
AVN2000 and AVN2001, or equivalent, substitute or replacement in respect thereof
in accordance with then current market practice (and Lessee shall make and
comply with the warranties, representations, and undertakings required to be
given in connection with obtaining/maintaining such clauses).
12.05 DEDUCTIBLES AND SELF INSURANCE.
Any insurance carried in accordance with this Section 12 may contain a
provision for a deductible or self insurance in an amount not to exceed the
amount set out in Exhibit B hereto as the permitted insurance deductible.
12.06 ADDITIONAL REQUIREMENTS; LOSS PAYMENT.
The insurance required under this Section 12 shall be provided on an agreed
value basis (as to the Aircraft as a whole, but not as to its individual parts)
and the policies shall, where applicable:
(a) name Lessor and each other Insured Party as additional insureds as its
interests may appear;
(b) provide that the insurance shall not be invalidated by any action or
inaction by Lessee or any other Person and insure the interest of Lessor and
each other Insured Party regardless of any breach or violation by Lessee or any
other Insured Party of any warranty, declaration or condition contained in such
policies;
(c) provide that the insurers shall waive any right of subrogation against
Lessor and any other Insured Party;
(d) provide that in the event of separate insurance being arranged to
cover the all-risk hull insurance. and the war risk and allied perils
insurance, the underwriters subscribing to such insurance agree to a 50/50
claim funding arrangement in the event of any dispute as to which insurance
is applicable;
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(e) be of the type usually carried by major airlines owning and operating
similar aircraft, engines and propellers, and covering risks of the kind
customarily insured against by such airlines;
(f) be primary and without right of contribution from other insurance which
may be available to Lessor and any other Insured Party;
(g) provide that Lessor and each other Insured Party shall have no
liability for premiums, commissions, calls or assessments with respect to such
policies; and
(h) subject to Section 12.09 hereof, name Lessor (or any lender or other
assignee designated by Lessor) as loss payees, as their interests may appear,
and provide that losses will be adjusted with lessee and payable to loss payees,
as their interests may appear, to the extent of coverage required herein by
Section 12.
(i) contain a "cut through" clause satisfactory to Lessor.
12.07 NO SET-OFF.
Each insurance policy to be maintained under this Section 12 shall contain
a waiver of any right of the insurers to any set-off or counterclaim or any
other deduction against Lessee, and Lessor and each other Insured Party other
than with respect to unpaid premiums then due and owing with respect to the
Aircraft (and not any other aircraft).
12.08 NOTICE OF MATERIAL ALTERATION OR CANCELLATION.
Each insurance policy to be maintained under this Section 12 shall provide
that no cancellation or lapse of coverage for nonpayment of premium or
otherwise, and no substantial change of coverage which adversely affects Lessor
or Lender shall be effective as to Lessor or Lender until not less than thirty
(30) days (seven (7) days in the case of war risk policies) after issuance to,
Lessor or Lender (as the case may be) of written notice from the insurers of
such cancellation, lapse or change.
12.09 APPLICATION OF CERTAIN INSURANCE PROCEEDS.
As among Lessor and Lessee, any payments received under policies of
insurance required to be maintained by Lessee pursuant to Sections 12.01 or
12.02, shall be applied as follows:
(a) if such payments are received with respect to loss or damage (including
an Event of Loss with respect to an Engine or Propeller) not constituting an
Event of Loss with respect to the Airframe, such payments shall be paid over to
Lessee or at Lessee's election, to the repair facility jointly with Lessee, upon
performance by Lessee of the Lessee's repair obligations or (if applicable)
replacement obligations
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under this Lease pursuant to Section 13-02 hereof to the reasonable
satisfaction of Lessor and, where appropriate, Lessor shall issue any necessary
payment orders with respect to such payments;
(b) if such payments are received with respect to an Event of Loss with
respect to the Aircraft, so much of such payments as shall not exceed the amount
required to be paid by Lessee pursuant to Section 13.01 hereof shall be applied
by Lessor in reduction of Lessee's obligation to pay such amount if not already
paid by Lessee, and to reimburse Lessee if it shall have paid all or part of
such amount; and the balance, if any, of such payments shall be paid over to or
retained by Lessee.
12.10 INSURANCE FOR OWN ACCOUNT.
Nothing in this Section 12 shall prohibit Lessee, Lessor or any other
Insured Party (in that order of priority should insurance capacity in excess of
the insurances required in this Section 12 be limited as to availability or
amount), at its cost, from obtaining insurance for its own account and any
proceeds payable thereunder shall be payable as provided in the insurance policy
relating thereto, provided that no such insurance may be obtained which would
limit or otherwise adversely affect the coverage or payment of any insurance
required to be obtained or maintained pursuant to this Section 12.
12.11 CERTIFICATES AND REPORTS.
Lessee shall furnish to Lessor and Lender not later than the Delivery Date
certificates of insurance satisfactory to Lessor and Lender and a report signed
by a firm of independent insurance brokers satisfactory to Lessor and Lender,
such report stating the opinion of such firm that the insurance then carried and
maintained on the Aircraft complies with the terms of this Section 12. Lessee
will odor to the renewal dates of the insurance policies required pursuant to
this Section 12 (but in any event prior to the cancellation, lapse or expiration
of such insurance policies) provide additional certificates and a report to
Lessor and Lender meeting the terms of the preceding sentence. Lessee will cause
such firm to advise Lessor and Lender in writing promptly of any default in the
payment of any premium and of any other act or omissions on the part of Lessee
of which they have knowledge and which would in such firm's opinion invalidate
or render unenforceable, in whole or in any material part, any insurance on the
Aircraft. Lessee will also cause such firm to advise Lessor and Lender in
writing at least thirty (30) days (seven (7) days in the case of war risk
insurance) prior to the termination or cancellation of, or material adverse
change in, such insurance carried and maintained on the Aircraft pursuant to
this Section 12.
SECTION 13. LOSS, DAMAGE OR REQUISITION.
13.01 AN EVENT OF LOSS OF AIRFRAME.
(a) Upon the occurrence of an Event of Loss with respect to the Aircraft
during the Term, Lessee shall give Lessor written notice of such Event of Loss
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as soon as is practicable but in no event later than ten (10) Business Days
after such occurrence. Lessee shall thereafter pay or cause to be paid to the
Lessor in immediately available funds upon the earlier of (i) receipt of
insurance proceeds with respect to such Event of Loss or (ii) 60 days following
the Event of Loss, an amount equal to (A) the Basic Rent, if any, due and
payable pursuant to the terms of Section 7.01 and Exhibit B hereto due on or
before such date of payment, PLUS (B) all unpaid Supplemental Rent (other than
Stipulated Loss Value) due on or before such date of payment, PLUS (C) the
Stipulated Loss Value for the Aircraft determined as of the date of payment.
(b) In the event of a payment in full of the Stipulated Loss Value for the
Aircraft and other Rent payable as provided in Section 13.01(a) above, (i) this
Lease and the obligations of Lessee to pay Basic Rent and Supplemental Rent
shall terminate; and (ii) Lessor shall convey to Lessee all of Lessors right,
title and interest, AS-IS, WHERE-IS WITHOUT RECOURSE OR WARRANTY, EXPRESS OR
IMPLIED except for a warranty against Lessor's Liens, in and to (1) the Airframe
and Engines and Propellers and (2) all claims for damage to the Airframe and
Engines and Propellers, if any, against third persons arising from the Event of
Loss (unless any insurance carrier requires that such claims be assigned to it).
13.02 ENGINE OR PROPELLER LOSS.
Upon the occurrence during the Term of an Event of Loss with respect to an
Engine or Propeller not then installed on the Airframe or an Event of Loss with
respect to an Engine or Propeller installed on the Airframe not involving an
Event of Loss with respect to the Airframe, Lessee shall give Lessor and Lender
written notice thereof as soon as is practicable but in no event later than ten
(10) Business Days after such occurrence and shall within 45 days of the
occurrence of such Event of Loss and on at least 5 days' prior written notice to
Lessor substitute a Replacement Engine for such Engine or a Replacement
Propeller for such Propeller. In such event, immediately upon the effectiveness
of such substitution on the date set forth in such notice and without further
act, (i) title to the Replacement Engine or Replacement Propeller shall
thereupon vest in Lessor (subject only to Permitted Liens), (ii) title to the
replaced Engine or Propeller shall thereupon vest in Lessee, in AS-IS, WHERE-IS
CONDITION, free and clear of all rights of Lessor and free and clear of Lessor
Liens (other than Lessor Liens arising out of events occurring after the
transfer which are not attributable to actions of the Lessor or omissions by the
Lessor of actions which the Lessor is legally obligated to take) and shall no
longer be deemed an Engine or Propeller hereunder, and (iii) such Replacement
Engine or Replacement Propeller shall become subject to this Lease and be deemed
part of the Aircraft for all purposes hereof to the same extent as the Engine
or Propeller originally installed on or attached to the Airframe. Upon such
substitution, Lessee shall execute and deliver to Lessor such bills of sale,
opinions and other documents and instruments as Lessor shall reasonably request
by notice hereunder to evidence the interest of Lessor and conveyance to Lessor
of good and marketable title to such Replacement Engine or Replacement
Propeller. Upon such substitution, (x) Lessor shall execute and deliver to
Lessee such
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bills of sale and other documents and instruments, prepared at Lessee's
expense, as Lessee shall reasonably request to evidence such transfer and
vesting of title in and to the replaced Engine or Propeller in Lessee, free and
clear of all rights of Lessor and (y) Lessee shall receive all insurance
proceeds and proceeds in respect of any Event of Loss causing such replacement.
No Event of Loss with respect to an Engine or Propeller under the circumstances
contemplated by this Section 13.02 shall result in any reduction of Lessee's
obligations to pay Rent hereunder. Lessee agrees that it shall at all times
during the Term maintain or cause to be maintained one (1) Engine, or other
aircraft engine and one (1) Propeller or other aircraft Propeller suitable and
available for use on the Airframe and/or the airframe included with the Other
Aircraft.
13.03 PAYMENTS FROM GOVERNMENTAL AUTHORITIES FOR REQUISITION OF TITLE OR
USE.
(a) Any payments on account of an Event of Loss (other than insurance
proceeds or other payments the application of which are provided for in this
Section 13, or elsewhere in this Lease, as the case may be) received at any time
by Lessor or by Lessee from any governmental authority or other Person will be
applied as follows:
(i) if such payments are received with respect to an Engine or
Propeller, such payments shall be paid over to, or retained by,
the Lessor, and upon completion of (or, if requested by Lessee,
simultaneously with) Lessee's replacement obligation, shall be
paid over to, or retained by, Lessee; and
(ii) if such payments are received with respect to the Aircraft, (A)
so much of such payments as shall not exceed the Stipulated Loss
Value and any other amount required to be paid by Lessee pursuant
to Section 9.01 hereof, shall be applied in reduction of
Lessee's obligation to pay such Stipulated Loss Value and other
amounts, to the extent not already paid by Lessee, and, to the
extent already paid by Lessee shall be applied to reimburse
Lessee for such payment, (B) the balance, if any, of such payment
remaining thereafter shall be retained by Lessor; and
(b) In the event of a requisition for use by any government, so long as it
does not constitute an Event of Loss of the Airframe and the Engine or engines
or Propellers or propellers installed thereon during the Term, Lessee shall
promptly notify Lessor of such requisition and all Lessee's obligations under
this Lease shall continue to the same extent as if such requisition had not
occurred. Any payments received by Lessor or Lessee from such government with
respect to such requisition shall be paid over to or retained by, Lessee.
13.04 APPLICATION OF PAYMENTS DURING EXISTENCE OF EVENT OF DEFAULT.
Any amount referred to in Section 13 or Section 12 hereof which is payable
to Lessee shall not be paid to Lessee, or, if it has been previously paid
directly
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to Lessee, shall not be retained by Lessee if at the time of such payment
an Event of Default shall have occurred and be continuing, but shall be paid to
and held by the Lessor as security for the obligations of Lessee under this
Lease and/or applied to any unpaid Rent hereunder then due, and at such time as
there shall not be continuing any such Event of Default, such remaining amount
shall be paid over to Lessee.
SECTION 14. EVENT OF DEFAULT
Each of the following events shall be an Event of Default:
14.01 FAILURE TO MAKE PAYMENTS.
If Lessee or Guarantor shall fail to pay in full in the manner provided in,
and at the place required by the terms of, Section 7 and Exhibit B hereof, any
payment of Rent when due and such failure shall continue for five (5) Business
Days.
14.02 FAILURE TO OBTAIN OR MAINTAIN INSURANCE.
If Lessee fails to obtain or maintain any insurance pursuant to the
provisions of Section 12 of this Lease or operates or locates or permits
operation or location of the Aircraft in violation of Section 9.02 hereof.
14.03 FAILURE TO PERFORM OTHER OBLIGATIONS.
If Lessee or Guarantor fails to duly observe or perform any of its other
obligations or agreements under any Operative Document and such failure shall
not have been remedied within a period of ten (10) Business Days after delivery
of written notice to Lessee or Guarantor, as the case may be, specifying the
same from Lessor unless such failure is curable and Lessee or Guarantor, as the
case may be, shall after the delivery of such notice, be diligently proceeding
to correct such failure and shall in fact correct such failure within thirty
(30) days after the delivery of such notice.
14.04 REPRESENTATIONS AND WARRANTIES UNTRUE.
If any representation or warranty made by Lessee in any Operative Document
or in any document or certificate furnished to Lessor or Lender in connection
therewith shall be untrue, inaccurate or incomplete in any material respect.
14.05 INSOLVENCY OR BANKRUPT
(a) If Lessee or Guarantor shall become insolvent or shall generally not
pay its debts as they mature or acknowledges that it cannot pay its debts as
they mature or Lessee or Guarantor shall apply for, shall consent to, or
acquiesce in the appointment of a trustee, custodian, liquidator or receiver of
Lessee or Guarantor or its property; or, in the absence of such application,
consent or acquiescence, a trustee, custodian, liquidator or receiver shall be
appointed for Lessee or Guarantor by a court of competent jurisdiction or for a
material part of its property; or any bankruptcy, reorganization, debt
arrangement or other proceedings under any bankruptcy or
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insolvency law shall be instituted by or against Lessee or Guarantor.
(b) If any bankruptcy, reorganization, dissolution or liquidation
proceeding shall be instituted (i) by Lessee or Guarantor or (ii) against Lessee
or Guarantor and not be vacated within 60 days of the initiation of such
preceding.
14.06 LOSS OF REGISTRATION OR PROTECTION.
If Lessee fails to comply with its obligations under Section 11.02 hereof.
14.07 LOSS OF LICENSE.
If Lessee shall fail to remain a Certificated Air Carrier or Lessee shall
suspend all or substantially all of its airline operations or Lessee shall fail
to retain a valid Air Operator's Certificate.
14.08 OTHER LEASE.
If an "Event of Default" (as defined therein) shall occur under the Other
Lease or any other lease between the Lessor and the Lessee.
14.09 FINAL JUDGEMENT.
Final judgment for the payment of money in excess of $500,000 or final
judgments for the payment of money in excess of $500,000 in the aggregate shall
be rendered against Lessee or Guarantor unless such judgment(s) shall have been
stayed, insured against or adequate reserves for the payment thereof shall have
been set aside in accordance with generally accepted accounting principles.
14.10 OTHER DEFAULT.
Any event of default shall have been declared under any agreement relating
to Lessee's or Guarantor's debt or lease obligations in an amount exceeding
$500,000 individually or in the aggregate (and determined, in the case of lease
obligations, by the present value of the remaining lease payments).
14.11 CONTEST.
The existence, validity or enforceability of the rights of the Lessor under
the Lease are contested by Lessee.
14.12 FAILURE TO MAINTAIN LETTER OF CREDIT.
If Lessee fails to deliver to Lessor and keep in full force and effect an
acceptable Letter of Credit at the times and in the form and amounts required
under Exhibit B hereto.
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14.13 FAILURE TO MAINTAIN THE GUARANTY.
If, for any reason, the Guaranty ceases to be in full force and effect.
SECTION 15. REMEDIES.
Upon the occurrence of any Event of Default and at any time thereafter so
long as the same shall be continuing, Lessor, at its option, may declare this
Lease to be in default; and at any time thereafter so long as Lessee shall not
have remedied all outstanding Events of Default, Lessor may do, and Lessee shall
comply with, one or more of the following with respect to all or any part of the
Airframe and the Engines and Propellers, as Lessor in its sole discretion shall
elect, to the extent permitted by, and subject to compliance with any mandatory
requirements of, Applicable Law then in effect:
(a) Cause Lessee, upon notice hereunder to Lessee by Lessor and at Lessee's
expense, to, and Lessee shall, promptly return all or such part of the Airframe
or the Engines or Propellers as Lessor may demand to Lessor at such location in
the United States as selected by Lessor in the manner and condition required by,
and otherwise in accordance with all of the provisions of, Section 10 hereof; or
Lessor, at its option, may enter upon the premises where the Airframe or any or
all Engines or Propellers are located or believed to be located and take
immediate possession of and remove such Airframe or Engines or Propellers
without the necessity for first instituting proceedings, or by summary
proceedings or otherwise, in which connection, to the extent permitted by
Applicable law, Lessee waives and agrees to waive any requirement that Lessor
post any bond or other security in connection with any such proceedings, and
Lessee shall comply therewith, all without liability to Lessor for or by reason
of such entry or taking possession, whether for the restoration or damage to
property caused by such taking or otherwise;
(b) Sell or otherwise dispose of any or all of the Aircraft, at public or
private sale and with or without notice to Lessee or advertisement, as Lessor
may determine or hold, use, operate, lease to others or keep idle all or any
part of the Airframe or any Engine or Propeller as Lessor, in its sole
discretion, may determine, in any such case free and clear of any rights of
Lessee except as hereinafter set forth in this Section 15 and without any duty
to account to Lessee with respect to such action or inaction or for any proceeds
with respect thereto and the proceeds of any such sale shall be applied by
Lessor to reduce Lessee's obligations under 15(d) below or otherwise due
hereunder;
(c) Whether or not Lessor shall have exercised, or shall thereafter at
any time exercise, any of its rights under paragraph (a) or paragraph (b)
above with respect to all or any part of the Aircraft, (i) if Lessor
shall have succeeded in repossessing the Aircraft as a result of the
exercise of such rights within thirty (30) Business Days following such
declaration of default, Lessor shall have the right to recover from Lessee
any amounts which may be then due and unpaid or which may become due
for the use of the Aircraft (including, without limitation, any Basic Rent and
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other obligations accruing hereunder after the date of the occurrence of
the Event of Default through the date the Lessor is revested with possession of
the Aircraft as a result of the exercise of such rights) and also to immediately
recover from Lessee any damages, costs and expenses, including reasonable
Attorney's fees which Lessor shall have sustained by reason of such Event(s) of
Default or any other breach by Lessee of its obligations hereunder; or (ii) if
Lessor shall not have succeeded in repossessing the Aircraft as a result of the
exercise of such rights within thirty (30) Business Days following such
declaration of default, Lessor, by written notice to Lessee specifying a payment
date not earlier than ten (10) days from the date of such notice, may demand
that the Lessee pay to Lessor, and Lessee shall pay Lessor, on the payment date
specified in such notice, as liquidated damages for loss of a bargain and not as
a penalty (in lieu of the Basic Rent due for periods commencing on or after the
payment date specified in such notice), any unpaid Basic Rent due for periods
prior to the period commencing with the payment date specified in such notice,
plus whichever of the following amounts Lessor, in its sole discretion, shall
specify in such notice: (aa) an amount equal to the excess, if any, of the
Stipulated Loss Value for the Aircraft, computed as of the payment date
specified in such notice, over the aggregate fair market rental value (computed
as hereafter in this Section provided) of the Aircraft for the remainder of the
scheduled Term, after discounting such aggregate fair market rental value to
present worth using a discount rate equal to 1/2 of 1% per annum above the
prime rate as announced from time to time by Citibank, N.A. in effect on the
date of computation; or (bb) an amount equal to the excess, if any, of the
Stipulated Loss Value for the Aircraft on the payment date specified as the
payment date in such notice over the fair market sales value of the Aircraft
(computed as hereafter in this Section provided) as of the payment date
specified in such notice;
(d) In the event Lessor, pursuant to paragraph (b) above, shall have sold
the Aircraft, Lessor, in lieu of exercising its rights under paragraph (c) above
with respect to the Aircraft, may, if it shall so elect, demand that Lessee pay
Lessor, and Lessee shall pay to Lessor, on the date of such sale, as liquidated
damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent
due for periods commencing on or after such date of sale), any unpaid Basic Rent
due for periods up to and including the period in which such sale occurs, plus
the amount of any deficiency between the net proceeds of such sale (after
deduction of all costs of sale including, without limitation, costs of overhaul,
maintenance, brokers fees, preparation and moving to sale) and the Stipulated
Loss Value; and/or
(e) Terminate this Lease as to the Airframe or any or all of the Engines or
Propellers, or exercise any other right or remedy which may be available under
Applicable Law or proceed by appropriate court action to enforce the terms
hereof or to recover damages for the breach hereof (which shall include recovery
of the present value, calculated at a discount rate equalling the prime rate as
announced from time to time of Citibank, N.A. as in effect on the date of
calculation, of all Basic Rent for the period corresponding to the unexpired
portion of the Term), provided, however, that this Lease shall be deemed to be
terminated automatically and immediately upon the occurrence of any Event of
Default under Section 14.05.
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In addition, Lessee shall be liable for any and all Rent due hereunder
before or after any termination hereof, together with interest on such unpaid
amounts at the Overdue Rate, and all costs and expenses (including reasonable
attorneys' fees and disbursements) paid by Lessor as a result of the occurrence
of any Event of Default or the exercise of remedies with respect thereto
including all costs and expenses incurred in connection with the return of the
Airframe or any Engine or Propeller in accordance with the terms of Section 10
hereof or in placing the Aircraft in the condition and with airworthiness
certification as required by such Section and such obligation shall survive any
termination of the Lease. Except as otherwise expressly provided above, no
remedy referred to in this Section 15 is intended to be exclusive, but each
shall be cumulative and in addition, to any other remedy referred to above or
otherwise available to Lessor at law or in equity; and the exercise or beginning
of exercise by Lessor of any one or more of such remedies shall not preclude the
simultaneous or later exercise by Lessor of any or all such other remedies. No
express or implied waiver by Lessor of any Default or Event of Default hereunder
shall in any way be, or be construed to be, a waiver of any future or subsequent
Default or Event of Default.
For the purposes of paragraph (c) above, the "aggregate fair market rental
value" or the "fair market sales value" of the Aircraft shall be the rental
value or sales value, as the case may be, Which would be obtained in an
arm's-length transaction between an informed and willing lessee or purchaser, as
the case may be, under no compulsion to lease or purchase, as the case may be,
and an informed and willing lessor or seller, as the case may be, in each case
based upon the actual condition and location of the Aircraft, which value shall
be determined by mutual agreement or, in the absence of mutual written
agreement, pursuant to an appraisal prepared and delivered in the United States
by a nationally recognized firm of independent aircraft appraisers selected by
Lessor. The cost of such appraisal shall be borne by Lessee.
(f) To the extent permitted by applicable law, Lessee waives any and all
rights and remedies conferred upon a lessee by UCC Sections 2A-508 through
2A-522 (where applicable), including (without limitation) any rights to (i)
cancel or repudiate this Lease, (ii) reject or revoke acceptance of any
Aircraft, (iii) recover damages from Lessor for breach of warranty or for any
other reason, (iv) claim a security interest in any rejected property in
Lessee's possession or control, (v) deduct from the Rent or other sums due and
payable under this Lease all or any part of any claimed damages resulting from
Lessors alleged defaults under this Lease, (vi) recover from Lessor any general,
special, incidental or consequential damages for any reason whatsoever, and
(vii) specific performance, replevin or the like for the Aircraft. Lessee
further waives its rights under Section 2A-401 and 2A-402 to suspend performance
of any of its obligations under this Lease with respect to the Aircraft. Lessee
waives any and all rights to notice and to a judicial hearing with respect to
the repossession of the Aircraft by Lessor upon the occurrence of an Event of
Default hereunder.
SECTION 16. INDEMNITIES AND EXPENSES.
16.01 GENERAL INDEMNIFICATION AND WAIVER OF CERTAIN CLAIMS.
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(a) INDEMNIFICATION. Lessee assumes liability for, and hereby agrees to
indemnify, protect, save and keep harmless each Indemnitee from and against any
and all liabilities, obligations, losses, damages, injuries, penalties, claims
(including, without limitation, claims involving or alleging any Indemnitee's
negligence and claims involving strict or absolute liability in tort), demands,
actions, penalties, suits, costs, expenses and disbursements (including, without
limitation, legal fees and expenses, consultation fees and costs of
environmental investigation and remediation) of any kind and nature whatsoever
(collectively, a "CLAIM") which may be imposed on, incurred by or asserted
against an Indemnitee, whether or not such Indemnitee shall also be indemnified
as to any such Claim by any other Person, in any way relating to or arising out
of this Lease, any Operative Document to which Lessee or Guarantor is a party,
or any other document contemplated hereby, or the performance or enforcement of
any of the terms hereof or thereof, or in any way relating to or arising out of
the manufacture, purchase, acceptance, rejection, ownership, delivery, lease,
sublease, possession, use, operation, maintenance, condition, registration,
sale, return, storage or other disposition of each Aircraft or any Engine or
Part thereof or any accident in connection therewith (including, without
limitation, latent and other defects, whether or not discoverable and any claim
for patent, trademark or copyright infringement), regardless of where, how and
by whom operated the failure of Lessee to perform or comply with any law or any
provision of the Operative Documents to which Lessee or Guarantor is a party or
the breach by Lessee of its obligations or representations and warranties
hereunder or the failure of Lessee to comply with any law; provided, however,
that Lessee shall not be required to indemnify any Indemnitee for any Claim in
respect of any Aircraft arising from acts or events which occur prior to
commencement of the Term of this Lease or after possession of such Aircraft has
been re-delivered to Lessor in accordance with Section 10 hereof. Further
provided that Lessee shall not be required to indemnify (i) an Indemnitee for
any Claim resulting from acts which would constitute the willful misconduct or
gross negligence of such Indemnitee, (ii) Lessor or its Affiliates for any Claim
resulting from acts which would constitute the willful misconduct or gross
negligence of any respective agent, director, employee or representative, if
acting within the scope of their employment or duties, of Lessor or its
Affiliates, or (iii) any other Indemnitee for any Claim resulting from acts
which would constitute the willful misconduct or gross negligence of any agent,
director, employee or representative, if acting within the scope of their
employment or duties, of such Indemnitee.
(b) WAIVER OF CERTAIN CLAIMS. Lessee hereby waives and releases any Claim
now or hereafter existing against any Indemnified Person arising out of death or
personal injury to personnel of the Lessee, loss or damage to property of
Lessee, or the loss of use of any property of Lessee, which may result from or
arise out of the condition, use or operation of the Aircraft during the Term,
including without limitation any latent or patent defect whether or not
discoverable.
16.02 GENERAL TAX INDEMNITY.
(a) INDEMNITY. Lessee agrees to pay and to indemnify each
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Indemnitee for, and hold each Indemnitee harmless from and against, all
license and registration fees, income, franchise, gross receipts, sales, use,
excise (including without limitation, any excise tax imposed by the State of
Hawaii), personal property, ad valorem, value added (except as indicated in
subclause 16.02(a)(i) below), leasing, leasing use, stamp documentary, landing,
airport use or other taxes, and all levies, imposts, duties, charges, or
withholdings of any nature, each of the foregoing together with any penalties,
forfeitures, fines or interest thereon ("Impositions"), arising out of the
transactions contemplated by this Lease and imposed against an Indemnite, Lessee
or the Aircraft or any part thereof by any Federal, state, local or foreign
government or other taxing authority upon or with respect to the Aircraft or any
part thereof or upon the sale, purchase, ownership, delivery, leasing,
possession, use, operation, return, transfer or other disposition thereof or
based on or measured by the rentals, receipts or earnings arising therefrom, or
upon or with respect to this Lease. Notwithstanding the provisions of the above
paragraph, Lessee's obligations under this Section 16.02 shall not include any
of the following:
(i) Impositions on, based on, or measured by, net income of any
Indemnitee (other than taxes in the nature of sales, use, property or value
added tax but including within this exclusion, any value added tax,
consumption tax or similar tax in the event such tax is enacted by a taxing
jurisdiction, as a complete substitute or replacement of an Imposition on,
based on, or measured by, net income as a revenue source for that
jurisdiction), imposed by the United States of America or any United States
federal taxing authority or imposed by any state or local political
subdivision or taxing authority in any jurisdiction where the Lessor
maintains an office or other place of business (and for this purpose the
ownership or leasing of the Aircraft in any such jurisdiction shall not be
deemed to constitute the maintenance of a place of business) and in which
the Lessor would have been subject to taxation without regard to the
transactions contemplated by this Lease;
(ii) any Impositions imposed as a result of a voluntary sale, transfer
of title, mortgaging, pledging, financing, or other voluntary disposition.
by any Indemnitee of the Aircraft or part thereof or interest therein, or
any interest in the Rent or part thereof or any interest in the Lease or
part thereof, unless such sale, transfer, mortgage, pledge or disposition
occurs by reason of the occurrence of a Default or an Event of Default or
the exercise of Lessors remedies under this Lease upon an Event of Default;
(iii) any Impositions imposed on any Indemnitee to the extent caused
by the gross negligence or willful misconduct of such Indemnitee;
(iv) Impositions relating to the Aircraft or any part thereof, or
interest therein, for any taxable period or portion thereof, relating to
events occurring prior to commencement of the Term of this Lease or after
the expiration of the Term of this Lease and the redelivery of the Aircraft
in accordance with this Lease;
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(v) indemnification of the Lessor, but without prejudice to the rights
of indemnification of any other Indemnitee, with respect to any impositions
imposed as a direct result of the willful misconduct or gross negligence of
the Lessor or its affiliates or, if acting within the scope of their
employment or duties, of Lessor's officers, directors, employees, agents or
representatives or as a direct result of a breach by Lessor of its express
obligations under this Lease or as a direct result of an express
representation or warranty given by Lessor in this Lease not being true and
correct at the date when, or when deemed to have been, given or made;
(vi) indemnification of any lender to Lessor or any permitted
successor or assign thereof, but without prejudice to the rights of
indemnification of any other Indemnitee, (aa) with respect to any
Impositions imposed on such lender, successor or assign as a direct result
of its own willful misconduct or gross negligence or, if acting within the
scope of their employment or duties, the willful misconduct or gross
negligence of the officers, directors, employees, agents or representatives
of such lender, successor or assign otherwise asserting the right to
indemnification hereunder; or (bb) in the event any such lender, its
successor or assign shall, in the course of the exercise of rights and
remedies under the relevant security agreement or other assignment,
exercise the rights and remedies of the Lessor under this Lease, (i) with
respect to any Impositions imposed on such lender, successor or assign as a
direct result of its own breach of its own obligations expressly undertaken
in its own capacity (and not merely as successor in interest to Lessor
under the relevant security agreement or other assignment); or (ii) with
respect to any Imposition imposed as a direct result of an express
representation or warranty given by such lender, successor or assign in its
own capacity (and not merely as successor in interest to Lessor under the
relevant security agreement or other assignment) not being true and correct
at the date when, or when deemed to have been, given or made;
(vii) Impositions imposed on an Indemnitee by a taxing jurisdiction
(other than the United States or any jurisdiction in which the Lessee is
organized, maintains a place of business or from which the Lessee may make
payments under this Lease or where the Aircraft may be located or operated)
which would not have been imposed on such Indemnitee but for such
Indemnitee engaging in transactions unrelated to the transactions
contemplated by this Lease; or
(viii) any Canadian federal goods and services tax, and any penalties
and interest thereon, which is imposed as the result of the delivery of the
Aircraft by Lessor to Lessee pursuant to Section 2.03 of this Lease while
the Aircraft is located in Canada and which would not have been imposed but
for Lessor's carrying on business in Canada.
(b) Reports. In case of any report or return to be made with respect to
any Imposition or possible Imposition, Lessee will either make such report or
return in
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such manner as will show the ownership in Lessor of the Aircraft, and when
requested by an Indemnitee send a copy of such report or return to the
Indemnitee, or will notify the Indemnitee of such requirement and make such
report or return in such manner as shall be satisfactory to the Indemnitee.
Lessee shall, at its own expense, duly file all required reports and returns
respecting all Impositions paid or indemnified against by Lessee pursuant to
this Section 16.02 to the extent Lessee is permitted by Applicable Law to do so.
If the same must be filed by an Indemnitee, Lessee will advise such Indemnitee
of the necessity of filing the same and, in sufficient time before the same is
due, furnish such Indemnitee with a completed copy thereof. Lessee shall hold
each Indemnitee harmless from and against any liabilities, obligations, losses,
damages, penalties, claims, actions, suits and costs arising out of any
insufficiency or inaccuracy in any information in such report or return filed
or supplied by Lessee, except to the extent that the same is attributable to an
Indemnitee's failure to timely provide Lessee accurate information which Lessee
has requested, in writing, with specificity and which Lessee needs to fulfill
its reporting or return obligations, an Indemnitee's failure to timely and
properly file returns which have been timely prepared by Lessee and timely
delivered to such Indemnitee or with respect to which Lessee has provided such
Indemnitee the necessary information which would enable such Indemnitee to do
so. If actual notice is given by any authority to an Indemnitee that a report
or return is required to be filed with respect to any such Impositions referred
to in this Section 16.02 and Lessor has actual notice thereof, Lessor shall
cause that Indemnitee to promptly notify Lessee of such required report or
return. Lessor agrees to cause each Indemnitee to respond to any reasonable
request, of which Lessor has actual notice, of Lessee for information within the
control of such Indemnitee with respect to the filing of any such report or
return. Lessee agrees to pay any reasonable costs, fees or other charges of
independent counsel or independent accountants incurred by Lessor or such
Indemnitee in connection with any such response or request contemplated by this
subsection.
(c) Contests. If claim is made against an Indemnitee for any Imposition
with respect to which Lessee has an obligation under this Section 16.02 and
Lessor has actual notice thereof, Lessor shall cause such Indemnitee to promptly
notify the Lessee but failure to so notify the Lessee shall not reduce the
Lessee's obligations hereunder except to the extent that Lessee is thereby
precluded from contesting such claim or Imposition. If reasonably requested by
the Lessee in writing and provided no Default or Event of Default shall have
occurred and is continuing, Lessor, at the sole expense of the Lessee, shall
itself (or shall cause such Indemnitee to) in good faith and diligently contest
(and not settle without Lessee's written consent) or shall (or shall cause such
Indemnitee to) permit the Lessee, if desired by the Lessee, to contest in the
name of the Lessee the validity, applicability or amount of such Imposition.
Lessee may contest, or require that Lessor or such Indemnitee contest, by (a)
resisting payment thereof if practicable, (b) not paying the same except under
protest with funds advanced by Lessee on an interest-free basis, if protest is
necessary and proper, and (c) if payments be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial proceedings;
provided, however, that, in each such instance, the Lessor and such Indemnitee
shall not be required to undertake any contest unless:
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(i) Lessee shall have provided Lessor with an opinion of legal counsel
reasonably acceptable to Lessor to the effect that a reasonable basis
exists to contest such claim and, prior to the commencement of any appeal
of an adverse judicial decision, with an opinion of such legal counsel to
be effect that a reasonable basis exists to appeal such adverse judicial
decision (which opinions shall be obtained at Lessee's sole cost and
expense);
(ii) such proceedings do not involve any material risk or danger of
the sale, forfeiture or loss of the Aircraft or any part thereof or
interest therein or the imposition of civil or criminal fines, penalties,
forfeitures or sanctions against Lessor or such Indemnitee or the creation
of any Lien other than a Lien for Impositions not yet due or being
contested in good faith by appropriate proceedings, and for payment of
which such reserves if any, as are required to be provided under generally
accepted accounting principles have been made unless Lessee has provided to
Lessor a bond or other security reasonably satisfactory to Lessor (provided
that in the case of civil or criminal fines, penalties, forfeitures or
sanctions such bond or other security shall be satisfactory to Lessor in
its sole discretion) to protect against such risk or danger;
(iii) in the event that the subject matter of the contest is of a
continuing nature and has previously been decided adversely pursuant to
the contest provisions of this Section 16.02 by the highest court to which
an appeal could be taken (other than the U.S. Supreme Court), there has
been a change in the law (including, without limitation, amendments to
statutes or regulations, administrative rulings and court decisions) after
such claim shall have been so previously decided and Lessor shall have
received an opinion of independent tax counsel selected by the Lessee and
reasonably acceptable to Lessor, which opinion shall be obtained at the
Lessee's sole expense, to the effect that, as a result of such change, it
is more likely than not that the position which Lessor, an Indemnitee or
the Lessee, as the case may be, had asserted in such previous contest would
prevail;
(iv) no Default or Event of Default shall have occurred and be
continuing;
(v) prior to the commencement of any contest undertaken by the Lessee
or any contest undertaken by Lessor or any Indemnitee with respect to which
Lessor or such Indemnitee is required to follow the direction of the
Lessee, the Lessee shall have delivered to Lessor a written acknowledgement
of its obligations to indemnify fully Lessor and such Indemnitee to the
extent that the contest is not successful;
(vi) if such contest is to be initiated by the payment of, and the
claiming of a refund for, such Imposition, Lessee shall have advanced to
Lessor or such Indemnitee sufficient funds (on an interest-free basis) to
make such payments, provided, however, that Lessee shall indemnify Lessor
and such Indemnitee for any adverse tax consequences resulting from such
advance; and
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(vii) such contest does not involve any Imposition or taxes of any
Indemnitee not indemnified hereunder.
Lessee shall not be deemed to be in default under any of the above
indemnification provisions of this Section 16.02 so long as Lessee shall
diligently prosecute a contest in conformity with the requirements of this
Section 16.02(c), or in the case where the Lessor or an Indemnitee shall be
prosecuting such contest pursuant to this Section 16.02(c), Lessee has
fulfilled all of its obligations under this Section 16.02(c) with respect
to such contest. Notwithstanding the foregoing, if a claim is made against
an Indemnitee which, if successful, would result in an Imposition under
circumstances which would require the Lessee to indemnity such Indemnitee,
such Indemnitee shall be released from its responsibility to contest such
claim, or part thereof, if it agrees in writing with Lessee not to seek
indemnification from Lessee in respect of the claim, or such part thereof
to be contested. In the event an Indemnitee fails diligently to contest, or
refuses to permit the Lessee to contest, a claim or part thereof which such
Indemnitee has the obligation to contest or to permit Lessee to contest
under this Section 16.02, then Lessee shall not be obligated to indemnify
such Indemnitee for such claim or such part thereof to the extent that
Lessee is precluded thereby from contesting any such claim and Lessor shall
cause such Indemnitee to refund to Lessee to such extent any amounts paid
or advanced by Lessee in connection with such Imposition that were the
subject of such claim (plus interest from the date payment is due at the
rate established for refunds by the authority imposing such Imposition).
(d) Refunds. If an Indemnitee shall obtain a refund of all or any part of
such Imposition paid by Lessee, Lessor shall cause such Indemnitee to pay the
Lessee the amount of such refund less the amount of any Impositions payable by
such Indemnitee in respect of the receipt of such refund; provided that such
amount shall not be payable (x) before such time as the Lessee shall have made
all payments or indemnities then due to Lessor under the Lease, or (y) while any
Default or Event of Default is outstanding and continues unremedied. If in
addition to such refund, such Indemnitee shall receive an amount representing
attorneys fees, interest or other amount with respect to of such refund, the
Lessee shall be paid that proportion of such amounts (net of any Impositions
imposed on the receipt of such amounts by such Indemnitee) which is fairly
attributable to Impositions paid by the Lessee prior to the receipt of such
refund.
16.03 AFTER-TAX BASIS: SURVIVAL.
It is understood and agreed that all payments for which Lessee is obligated
hereunder are to be made on an "after tax basis" so that the amount the Lessee
shall be required to pay with respect to any Claim or Imposition indemnified
against hereunder shall be an amount sufficient to restore the Indemnitee(s) to
the same position such Indemnitee(s) would have been in had such Claim not been
asserted or such Imposition not been incurred taking into account, INTER ALIA,
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Impositions, fees and other charges, however imposed, required to be paid
on the receipt of an indemnity under this Section 16 and further taking into
account any tax benefits realized by such Indemnitee(s) that is attributable to
such indemnifiable Imposition. The Lessee's obligations hereunder shall survive
the expiration or earlier termination of this Lease and return of the Aircraft
to Lessor.
16.04 EXPENSES.
Lessee shall pay its own legal fees and disbursements and its other fees
and expenses incurred in connection with documenting and negotiating this
transaction, together with the fees and disbursements of Lessor's FAA counsel.
Lessor shall pay all of Lessor's other fees and expenses including the fees and
disbursements of its outside counsel.
SECTION 17. QUIET ENJOYMENT.
The Lessor agrees that unless a Default or Event of Default hereunder has
occurred and is continuing, neither the Lessor nor any Person claiming through
or under any of them will interfere with the quiet enjoyment, use and operation
of the Aircraft by the Lessee as provided hereunder, including, without
limitation, Lessee's possession and use of the Aircraft.
SECTION 18. ASSIGNMENT.
Lessee shall not assign or transfer any of its rights or obligations under
this Lease or in the Aircraft without the prior written consent of Lessor.
Lessor may assign all or any portion of its rights or obligations in the
Aircraft and Lease without consent of the Lessee, for security or for any other
purpose, and Lessee shall take such actions in connection therewith as Lessor
shall reasonably request, including, but not limited to, (i) delivering an
estoppel certificate causing such assignee to be named as an additional insured
and loss payee under the insurances required hereunder, naming such assignee as
an indemnified party under the indemnities provided hereunder and addressing
such additional matters as Lessor may reasonably request, (ii) causing an
insurance report and certificates to be issued confirming that the assignee has
been named as additional insured and loss payee under the insurances required
hereunder, (iii) delivering an opinion of counsel to Lessee and (iv) taking such
additional action, and delivering such additional documents as Lessor may
reasonably request. Without limitation of the foregoing, any assignment by
Lessor may (but shall not be required to be) be to an owner trustee, indenture
trustee, agent or other Person acting in a fiduciary or similar capacity on
behalf of other Persons and such other Persons (as well as such trustee, agent
or other Person acting on behalf of such Persons) shall be entitled to be
Indemnitees and Insured Persons hereunder. No assignment by Lessor hereunder
shall release Lessor from its obligations hereunder except that if, pursuant to
any assignment, Lessor assigns all of its right, title and interest to the
Aircraft and Lease, the assignee thereof shall assume, in a written agreement
reasonably satisfactory to Lessee, all of the Lessor's obligations under the
Lease from and after such assignment,
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the Lessor shall be released from all such obligations and such assignee
shall be the "Lessor" hereunder for all purposes of this Lease. Lessor will pay
the reasonable out-of-pocket expenses of the Lessee in connection with an
assignment by the Lessor hereunder. No assignment by Lessor hereunder shall
result in an increase in Lessee's obligations under this Lease.
SECTION 19. NOTICES.
Unless otherwise specifically provided herein, all notices required or
permitted by the terms hereof shall be in writing. Any written notice shall
become effective when received. Any written notice shall be sent by telecopy,
commercial courier service or delivered by hand. Any notice shall be addressed
as follows:
If to Lessor:
▇▇▇▇▇▇ Lease Finance Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lessee:
Aloha Islandair, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone:
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Such persons and addresses may be changed, from time to time, by means of a
notice given in the manner provided in this Section 19.
SECTION 20. LESSOR'S RIGHT TO PERFORM FOR LESSEE
If Lessee fails to perform or comply with any of its payment or other
obligations herein, Lessor may itself pay or perform such obligation, and the
amount of such payment and the amount of the reasonable expenses of Lessor
incurred in connection with such payment or the performance of such obligation,
as the case may be, together with interest thereon at the Overdue Rate, shall be
deemed Supplemental Rent, payable by Lessee upon demand by notice hereunder. No
such payment or performance by Lessor shall be deemed to waive any Default or
Event of Default or relieve Lessee of any of its obligations hereunder.
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SECTION 21. LEASE; SECTION 1110.
21.01 LEASE.
Lessee and Lessor agree that this Lease is to be treated as a Lease for
Federal income tax purposes, that the Lessor is the owner of the Aircraft for
Federal income tax purposes and all other purposes and that the interest of the
Lessee in the Aircraft is that of a lessee only.
21.02 SECTION 1110.
TO THE EXTENT PROVIDED THEREBY (OR TO THE FULLEST EXTENT IT MAY LAWFULLY SO
AGREE, WHETHER OR NOT PROVIDED THEREBY), LESSEE HEREBY AGREES THAT ANY RIGHT OF
LESSOR TO TAKE POSSESSION OF THE AIRCRAFT OR ENGINES OR PROPELLERS IN COMPLIANCE
WITH THE PROVISIONS OF THIS LEASE AND IN ACCORDANCE WITH SECTION ▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ CODE OR ANY SIMILAR PROVISION OF ANY SUPERSEDING
STATUTE, AS AMENDED FROM TIME TO TIME, SHALL NOT BE AFFECTED BY THE PROVISIONS
OF SECTIONS 362, 363 OR 1129 OF SAID TITLE, OR OTHER ANALOGOUS PART OF ANY
SUPERSEDING STATUTE, AS AMENDED FROM TIME TO TIME, AND ACCORDINGLY, IT IS THE
INTENTION OF THE PARTIES HERETO THAT TO THE FULLEST EXTENT THAT THE PARTIES
HERETO MAY LAWFULLY SO AGREE THIS AGREEMENT BE AFFORDED THE BENEFITS OF SAID
SECTION 1110.
SECTION 22. MISCELLANEOUS.
22.01 WAIVERS, HEADINGS.
No term or provision of this Lease may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought. The headings contained herein are for convenience of reference only and
are not intended to define or limit the scope of any provisions of this lease.
22.02 COUNTERPARTS.
This Lease may be signed in one or more counterparts with the same effect
as if the signatures to each counterpart were upon a single instrument. All
counterparts shall be considered an original of this Lease.
22.03 GOVERNINGH LAW
THIS LEASE HAS BEEN DELIVERED IN THE STATE OF CALIFORNIA AND SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF CALIFORNIA, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. THIS LEASE
- 52 -
SHALL BE EFFECTIVE FOR ALL PURPOSES AS OF THE DATE FIRST ABOVE WRITTEN.
22.04 BENEFIT AND BINDING EFFECT
The terms and provisions of this Lease shall inure to the benefit of and be
binding on Lessor and Lessee and their respective successors and permitted
assigns.
22.05 FURTHER ASSURANCES.
Lessor and Lessee, from time to time, shall do and perform such other and
further acts and execute and deliver any and all such other and further
instruments as may be required by law or reasonably requested by notice
hereunder by the other party to establish, maintain and protect the respective
rights and remedies of the other party, to carry out the intent and purpose of
this Lease and the other Operative Documents to which either is a party.
22.06 SERVICE OF PROCESS; WAIVER OF JURY TRIAL AND IMMUNITY.
(a) LESSEE HEREBY IRREVOCABLY AGREES THAT ANY LEGAL ACTION OR PROCEEDING
AGAINST IT WITH RESPECT TO THE OPERATIVE DOCUMENTS MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT LOCATED IN SAN FRANCISCO, CALIFORNIA AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, LESSEE HEREBY IRREVOCABLY SUBMITS TO EACH SUCH
JURISDICTION AND HEREBY IRREVOCABLY WAIVES ANY AND ALL OBJECTIONS WHICH IT MAY
HAVE AS TO VENUE IN ANY OF THE ABOVE COURTS.
(b) Lessee hereby irrevocably appoints CT Corporation Systems (the "Process
Agent") as agent for service of process in California. Lessee hereby authorizes
and directs the Process Agent to accept service on its behalf. In the event that
Lessee does not maintain the Process Agent as its validly appointed agent for
service of process, Lessee hereby agrees that service of process may be made on
it by certified or registered mail, return receipt requested, at its address for
notices specified or determined in accordance with Section 15 hereof. Nothing
herein shall affect the right to serve process in any other manner permitted by
law. Any judicial proceeding by Lessee against the Lessor involving, directly or
indirectly, any matter in any way arising out of, related to, or connected with
any of the Operative Documents shall be brought only in a court located in the
State of California. THE LESSEE AND LESSOR HEREBY WAIVE TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING BROUGHT BY THE LESSEE OR BY THE LESSOR OR LENDER INVOLVING
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THE OPERATIVE DOCUMENTS.
22.07 USURY LAWS.
The parties intend to contract in strict compliance with the usury laws of
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the State of California and, to the extent applicable, the United States.
Notwithstanding anything to the contrary in the Operative Documents, Lessee will
not be obligated to pay interest at the Overdue Rate on overdue payments of
Rent or other interest in excess of the maximum non-usurious interest rate, as
in effect from time to time, which may by Applicable Law be charged, contracted
for, reserved, received or collected by Lessor in connection with the Operative
Documents. During any period of time in which the then-applicable highest lawful
rate is lower than the Overdue Rate, interest on overdue payments of Rent will
accrue and be payable at such highest lawful rate. However, if at later times
such highest lawful rate is greater than the Overdue Rate, then Lessee will pay
interest on overdue payments of Rent at the highest lawful rate until the
interest on overdue payments of Rent which is paid by Lessee equals the amount
of interest that would have been payable at the Overdue Rate.
22.08 ENTIRE AGREEMENT.
This Lease and the other Operative Documents embody the entire agreement
and understanding among the parties thereto and supersede all prior agreements
and understandings relating to the subject matter thereof.
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IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to be
duly executed by their authorized officers as of the day and year first above
written.
▇▇▇▇▇▇ ▇▇▇▇▇▇ LEASE FINANCE CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
__________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: EXECUTIVE VICE PRESIDENT
CHIEF FINANCIAL OFFICER
LESSEE ALOHA ISLANDAIR, INC.
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
Lease of de Havilland Dash 8-102 Aircraft
MSN 023
- 55 -
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to be
duly executed by their authorized officers as of the day and year first above
written.
▇▇▇▇▇▇ ▇▇▇▇▇▇ LEASE FINANCE CORPORATION
By: __________________________
Name:
Title:
LESSEE ALOHA ISLANDAIR, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
__________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
__________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: VICE PRESIDENT FINANCE
AND CONTROLLER
Lease of de Havilland Dash 8-102 Aircraft
MSN 023
- 56 -
EXHIBIT A
DESCRIPTION OF AIRCRAFT
Mfr./N# Model Manufacturer's Number and Type
Configuration Serial Number of Engines*
DeHavilland Dash- 102 023 Two (2) ▇▇▇▇▇ &
N811PH Aircraft Whitney Model
(described in the PW ▇▇▇, ▇▇▇ ▇▇▇▇▇▇
FAA records as a and MSN 120096
Model DHC-8-102)
Number and Type
OF PROPELLERS**
Two (2) ▇▇▇▇▇▇▇▇
Standard. 14 SF-7
Propellers
MSN 850910
MSN 850911
The Aircraft is to be delivered and redelivered without APU.
*Each of the engines is of 750 or more rated takeoff horsepower or the
equivalent of such horsepower.
**Each such propeller is capable of absorbing 750 or more rated takeoff shaft
horsepower or the equivalent thereto.
A-1
EXHIBIT B
RENT AND OTHER FINANCIAL MATTERS
1. STIPULATED LOSS VALUE
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]
2. PAYMENT ACCOUNT
All payments of Rent shall be paid to Lessors bank account at:
Union Bank of California
ABA#: 122 000 496
Acct#: 2380002084
Name: ▇▇▇▇▇▇ Lease Finance Corporation
until Lessee is advised by Lessor in writing to pay such amounts to another
account.
3. TERM.
The Term shall commence on the Delivery Date and expire sixty (60)
months and twenty-five (25) days thereafter on the thirtieth (30th) day
following the sixtieth Rent Payment Date unless earlier terminated in
accordance with the terms of the Lease.
4. BASIC RENT
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]
B-1
then the Rent Payment Date shall be the last date of such month
5. PUBLIC LIABILITY INSURANCE.
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]
6. LETTER OF CREDIT.
Lessee shall establish a Letter of Credit in favor of the Lessor in
compliance with Schedule 1 hereto.
7. EXTENSION OF TERM.
Provided no Event of Default shall have occurred and be continuing,
Lessee shall have the option, exercisable once, to extend the Term of the
Lease for an additional two years at the same Rent and on the same terms
and conditions as provided for in the Lease, exercisable by written notice
given to the Lessor no later than one year prior to the end of the Term.
Upon such notice of extension, the Term shall be deemed extended and such
extension shall be irrevocable once such notice shall have been given.
Failure to give such notice shall constitute an irrevocable undertaking on
the part of the Lessee to return the Aircraft pursuant to Section 10 of the
Lease at the end of the Term, without extension.
8. OVERDUE RATE.
As used in the Lease, "Overdue Rate" means the prime rate announced
from time to time by Citibank N.A. (or its successor) plus three (3%)
percent.
9. CONTRIBUTION AMOUNT
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]
B-2
SCHEDULE 1 TO EXHIBIT B
LETTER OF CREDIT
Lessee shall provide Lessor, on the Closing Date, with an irrevocable
transferable Letter of Credit in the amount of U.S. * in a form and drawn
on a U.S. bank acceptable to Lessor, which Letter of Credit shall be valid
during the Term of this Lease and the Other Lease and for ninety (90) days after
the later of the last day of the Term under this Lease and the last day of the
Term under the Other Lease, guaranteeing payment of Rent due and all other
obligations of Lessee to Lessor hereunder and under the Other Lease, which may
be drawn by Lessor upon demand in the event of Lessee's failure to fulfill any
of its obligations hereunder or under the Other Lease or receipt of notice by
Lessor that the Letter of Credit will not be renewed on a date prior to the last
date on which the Letter of Credit must be valid under this Agreement. Lessor
may, but shall not be obliged to, apply the proceeds of the Letter of Credit in
whole or in part, to the payment of any rent, indemnities, attorneys fees and
other expenses, insurance and other casualty payments and any other amount owing
from time to time by Lessee hereunder or under the Other Lease, or under any
other agreement between Lessor or its associate, subsidiary or affiliate
companies, and Lessee, for the payment of any loss or damage suffered by Lessor
as a result of any other Event of Default or utilize the proceeds of the Letter
of Credit in whole or in part to perform any of Lessee's obligations under this
Lease and the Other Lease or otherwise remedy any other Event of Default
hereunder or thereunder, including, without limitation, in the redelivery
condition for the Aircraft or the Other Aircraft, without prejudice to any
other remedy of Lessor.
In the event Lessor draws upon the Letter of Credit during the Term, then in
such event Lessee shall, upon demand, restore the amount of the Letter of Credit
to the full amount thereof. Failure to so restore promptly the amount of the
Letter of Credit to the full amount thereof shall constitute an Event of
Default.
Notwithstanding the foregoing, in the event that:
(i) the Letter of Credit provided for pursuant to this Lease shall not
have been drawn upon during the Term of this Lease; and
(ii) the Guarantor and its consolidated affiliates shall have a
combined net worth of not less than $* as of the last day of the
Term of this Lease as evidenced by the then most recent financial
statements required to be delivered to the Lessor pursuant to this Lease,
then the Lessor shall release the Letter of Credit provided pursuant to this
Lease on the later of:
B-3
(x) the date the Aircraft is redelivered to the Lessor and accepted by
the Lessor in full compliance with Section 10 of this Lease and Exhibit F
thereto, and
(y) the date on which Lessee shall have satisfied all of its
obligations under this Lease, including its obligations with respect to the
return condition of the Aircraft and the payment of any adjustments to the
Lessor in connection therewith.
For avoidance of doubt, if the condition specified in paragraph (ii) above is
not satisfied, the Letter of Credit shall remain in effect until the later of
the ninetieth day after the last day of the Term under this Lease or the Other
Lease and shall thereupon be returned to Lessee for cancellation.
B-4
EXHIBIT C
ACCEPTANCE CERTIFICATE
ALOHA ISLANDAIR, INC. ("LESSEE"), a corporation organized under the laws of
Delaware, hereby represents, acknowledges, warrants and agrees as follows:
1. Lessee has received this day of February, 2000 (Time: at , from ▇▇▇▇▇▇
LEASE FINANCE CORPORATION ("Lessor") possession of:
A. One (1) de Havilland Model Dash 8-102 Aircraft (described in the FAA
records as a Model DHC-8-102), bearing Manufacturers Serial Number
023, U.S. Registration No. N811PH, together with two (2) ▇▇▇▇▇ &
▇▇▇▇▇▇▇ ▇▇ 120 Engines, Manufacturers Serial Numbers 120077 and
120096, two (2) ▇▇▇▇▇▇▇▇ Standard 14 SF-7 Propellers, Manufacturer's
Serial Numbers 850910 and 850911 and all appliances, instruments,
accessories, equipment (not including an APU) and parts attached
thereto and thereon, in an airworthy condition;
B. Fuel on board the Aircraft, _ pounds;
C. All manuals, logbooks, flight records and historical information
regarding the Aircraft, the engines and the accessories and equipment,
including, without limitation, those listed on Exhibit D to the
Lease[, in the possession of Lessor]; and
D. the items listed on Schedule 1 hereto.
2. All of the foregoing were delivered and accepted to Lessee's full
satisfaction and pursuant to the terms and provisions of the Aircraft Lease
Agreement between Lessor and Lessee, dated as of February 4, 2000 (the
"Lease"), except as set forth on Schedule 2 hereto. For purposes of the Lease,
Lessor and Lessee agree that the installed hard time components have, as of the
Delivery Date, the time, Flight Hours and Cycles operating time remaining as set
forth on Schedule 3 hereto.
3. The Aircraft, Engines, Propellers and Parts as described in the Lease
have been fully examined by Lessee and have been received in a condition fully
satisfactory to Lessee and in full conformance with the Lease in every respect
except as set forth in Schedule 2 hereto.
C-1
4. The Lease and Operative Documents (as defined therein) are in full force
and effect; Lessor has fully, duly and timely performed all of its obligations
of every kind or nature under the Lease and other Operative Documents; and
Lessee has no claims; deductions, set-offs or defenses of any kind or nature in
connection with the Lease and other Operative Documents.
5. Prior to the Delivery Date, Lessee has obtained all required permits,
authorizations, and licenses required, and has paid all required fees and taxes
relating to the Lease imposed by the United States or any other government
and/or any political subdivision thereof and any agencies and departments
thereof to allow Lessee to operate the Aircraft as permitted by the terms of the
Lease.
6. Lessor and its successors and assigns shall be entitled to rely upon
this Acceptance Certificate.
7. The Delivery Date (as defined in the Lease) is the date written in
paragraph 1 herein.
ALOHA ISLANDAIR, INC. (LESSEE)
By: ____________________
Name:
Title:
By: ____________________
Name:
Title:
Lease Acceptance Certificate
Lease of de Havilland Dash 8-102
MSN
C-2
SCHEDULE 1
AIRCRAFT LOOSE EQUIPMENT
[This Schedule has been omitted as confidential information, and
is separately filed with the Commission.]
C-3
SCHEDULE 2
DESCREPANCIES
[This Schedule has been omitted as confidential information, and
is separately filed with the Commission.]
C-5
SCHEDULE 3
TIME CONTROLLED / LIFE LIMITED PARTS STATUS AT DELIVERY
[This Schedule has been omitted as confidential information, and
is separately filed with the Commission.]
C-6
EXHIBIT D
SCHEDULE OF MANUALS/MAINTENANCE RECORDS
[This Schedule has been omitted as confidential information, and
is separately filed with the Commission.]
D-1
EXHIBIT E
RETURN ACCEPTANCE CERTIFICATE
▇▇▇▇▇▇ LEASE FINANCE CORPORATION ("LESSOR"), a corporation organized under
the laws of California, hereby represents, acknowledges, warrants and agrees as
follows:
1. Lessor has received this ______ day of _______, 200_ (Time:___ at
[_____________], from ALOHA ISLANDAIR, INC. ("Lessee") possession of:
A. One (1) de Havilland Model Dash 8-102 Aircraft, bearing
Manufacturer's Serial Number 023 together with two (2) ▇▇▇▇▇ &
Whitney__ Engines, Manufacturers Serial Numbers _____ and _______,
two (2) ▇▇▇▇▇▇▇▇ Standard ______ propellers, Manufacturers Serial
Numbers _______ and _______ and all appliances, instruments,
accessories, equipment (not including an APU) and parts attached
thereto and thereon, in an airworthy condition;
B. Fuel on board the Aircraft, ____________________;and
C. All usual and customary manuals, logbooks, flight records and
historical information regarding the Aircraft, the engines and the
accessories and equipment, including, without limitation, those
listed on Exhibit D to the Lease.
2. All of the foregoing were delivered and accepted to Lessors full
satisfaction and pursuant to the terms and provisions of the Lease Agreement
between Lessor and Lessee dated as of February 4, 2000 (the "Lease") except as
set forth on Schedule 2 hereto.
3. The Aircraft, Engines, Propellers and Parts as described in the Lease
have been fully examined by Lessor and have been received in a condition fully
satisfactory to Lessor and in full conformance with the Lease except as set
forth on Schedule 2 hereto.
E-1
Dated this _______ day of _______, 200_
▇▇▇▇▇▇ LEASE FINANCE CORPORATION
(LESSOR)
By: ________________________
Name: ______________________
Title: _____________________
Lease Return Acceptance Certificate
Lease of de Havilland Dash 8-102
MSN_____
E-2
EXHIBIT F
GENERAL RETURN CONDITIONS OF THE AIRCRAFT
1. GENERAL RETURN CONDITIONS OF THE AIRCRAFT.
(a) OPERATING CONDITION. The Aircraft shall be in as good operating
condition as on the Delivery Date, ordinary wear and tear from normal airline
passenger operations excepted.
(b) CLEANLINESS STANDARDS. The Aircraft shall be clean by United States
commercial airline standards and shall have received an exterior and an interior
deep cleaning since its last commercial flight and shall be in the condition
required for immediate service in the commercial carriage of passengers.
(c) CERTIFICATE OF AIRWORTHINESS. The Aircraft shall have, and be in
compliance with, a current valid Standard Certificate of Airworthiness issued by
the FAA without any corrections, repairs, modifications, alterations or
overhauls having to be performed by Lessor to meet such standards and rules. If
required by Lessor, Lessee shall assist Lessor to do the necessary paperwork to
request in the name of Lessor or such other Person designated by the Lessor a
Certificate of Airworthiness for Export so as to allow Lessor to place the
Aircraft on a different aircraft registry. If any work, including engineering,
is required on the Aircraft to obtain such Certificate of Airworthiness for
Export, Lessee will cooperate with Lessor to do or cause to be done such work at
Lessors expense.
(d) COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. The Aircraft shall be in
compliance with all Airworthiness Directives affecting the Aircraft. In the
event Lessee has obtained a waiver or applicable deviation from the Aeronautical
Authority from having to comply with any such Airworthiness Directives, Lessee
at its expense shall, irrespective of such waiver or deviation, fully comply
with all such Airworthiness Directives covered by such waiver or deviation prior
to the return of the Aircraft to Lessor as if such waiver or deviation did not
exist. It is expressly understood that with respect to Airworthiness Directives
with respect to which compliance is required during the Term Section 9.06 shall
apply.
(e) DEFERRED MAINTENANCE. The Aircraft shall have had accomplished thereon
all outstanding deferred maintenance items and flight discrepancies. Items
deferred because of maintenance concessions (i.e., an exemption to operate
beyond the normal limits by monitoring) shall be brought upto-date as if such
maintenance concessions or exemptions did not exist.
(f) CORROSION TREATMENT. The Aircraft shall have been maintained by
cleaning and treating of all mild corrosion and correcting of all moderate and
F-1
severe or exfoliated corrosion in accordance with the Maintenance Program.
(g) CONFIGURATION AND CONDITION. The Aircraft shall be returned in the same
configuration as on the Delivery Date and in the same condition with all Parts
installed therein as on the Delivery Date, excepting only Modifications,
additions, replacements and substitution of Parts as may have been properly made
by Lessee pursuant to Section 9 of the Lease and as specifically otherwise set
forth in this Exhibit F. Lessee shall, prior to such return of the Aircraft,
furnish Lessor with a list of all such Modifications made during the Term.
Lessee shall provide Lessor with the last twelve (12) reliability reports for
the Aircraft as provided to the Aeronautical Authority and a list of all rotable
Parts installed on the Aircraft during the last twelve (12) months of the Term
and of all rotable Parts replaced during said last twelve (12) months. Lessee
shall not replace Parts with parts having an operating record indicating a
higher failure rate than the average for the same type of parts placed by Lessee
in other aircraft or engines or propellers of the same respective model and
manufacturer during the last twelve (12) months of the Term.
(h) PART 121 OPERATION. The Aircraft shall be in a condition as to be
immediately capable of being operated as a Part 121 Aircraft.
(i) INTERIOR CONDITION. The interior of the Aircraft will be in
substantially the same condition as it was on the Delivery Date, ordinary wear
and tear excepted. Cabin windows shall be clear and without major crazing or
scratches.
II. CONDITION OF AIRFRAME AND ENGINES.
The Airframe at the time of its return to Lessor shall meet the
requirements set forth below, all at Lessee's expense, except as otherwise
provided herein:
(a) Lessee shall have performed or caused to be performed prior to
redelivery to the Lessor the following: (i) a segment of the de Havilland
Equalized Maintenance Program (without changing the sequence thereof), (ii) any
maintenance or inspections, including structural inspections, required by the
Maintenance Program and not included in the Equalized Maintenance Program or,
any replacement Maintenance Program for the de Havilland Equalized Maintenance
Program, in effect on the Redelivery Date, (the "Out of Phase Items") due within
3,500 Flight Hours or Cycles or 12 months (whichever is the more limiting) after
the end of the Term, and (iii) either the Aircraft shall be redelivered to the
Lessor with not less than the number of Cycles remaining until the next 40,000
cycle structural inspection required under the de Havilland Maintenance Program
as it had remaining on the Delivery Date, or Lessee shall compensate Lessor in
respect of the deficiency as provided in Section III hereof. In the event,
during the Term, the Lessee adopts a Maintenance Program other than the de
Havilland Equalized Maintenance Program the requirement in (i) above shall be
changed to, an "A" and "C" check or their equivalent under the Maintenance
Program. The
F-2
Aircraft shall not have been operated since the completion of the
maintenance required in this section except for flights pursuant to Section
10.07 and 10.08. For purposes of clause II (a) (ii) above, in the event any
maintenance or inspection is required within the period after the end of the
Term set forth therein, Lessee shall be deemed to have satisfied such
requirement if it performs the next such maintenance or inspection due after the
end of the Term (it not being intended that Lessee be required to perform any
terminating action due after the later of the end of the Term or the return of
the Aircraft to the Lessor pursuant to Section 9.06).
(b) Lessee will correct any deficiencies revealed during such check, if
any, and all deferred maintenance items;
(c) The cockpit shall be cleaned and placards replaced if required by the
Maintenance Program. Those items which are reasonably found by Lessor to be
defective items in the Aircrafts interior will be replaced or repaired in
accordance with the Maintenance Program. All cockpit windshields and windows
shall be free of delamination, bubbles or signs of overheat;
(d) Lessee will permanently repair impact damage to the Aircraft not within
the limits of the structural repair manual caused by ground handling equipment
or impact damage caused by foreign objects if required by and shall be repaired
in accordance with the structural repair manual or other FAA approved data;
(e) Except as otherwise provided in this Exhibit F, all Parts shall be
serviceable in accordance with Aeronautical Authority standards and have a
value, modification status and condition equivalent to the Parts originally
installed in the Aircraft, ordinary wear and tear excepted. All installed
life-limited and time controlled components, including the landing gear, shall
either (i) have not less than the number of Flight Hours and Cycles or days as
its respective then authorized life remaining to the next scheduled maintenance
as it did on the Delivery Date or (ii) Lessee shall compensate Lessor in respect
of the deficiency as provided in Section III hereof. Notwithstanding the
foregoing and Section III, below, in no event shall any single component have
less than 3,500 Flight Hours or Cycles or 12 months (whichever is the most
limiting) of its then authorized life remaining to the next scheduled
maintenance,
The Propellers shall either (i) have not less than the number of Flight
Hours and Cycles remaining to their next scheduled removal as each did on the
Delivery Date or (ii) Lessee shall compensate Lessor in respect of the
deficiency as provided in Section III hereof. Notwithstanding the foregoing and
Section III, below, in no event shall any Propeller have fewer than 3,500 Flight
Hours or Cycles (whichever is more limiting) until its next scheduled removal;
(g) The Engines shall be returned zero time from a major refurbishment
except for flights pursuant to Section 10.07. and 10.08. Engine Life Limited
Parts (LLP) and time controlled Parts shall either (i) have not less than the
F-3
number of Flight Hours or Cycles (whichever is more limiting) remaining to
their next scheduled removal as each had on the Delivery Date, or, with respect
to any Life Limited Part or time controlled component that is replaced in the
refurbishment performed at Lessor's expense pursuant to Section 9.03, had at the
time of installation, or (ii) Lessee shall compensate Lessor in respect of the
deficiency as provided in Section III hereof. Notwithstanding the foregoing and
Section III, below, in no event shall any LLP or time controlled Part have less
than 3,500 Flight Hours or Cycles (whichever is more limiting) until its next
scheduled removal, and
(h) The Aircraft shall be returned with the same amount of fuel on board as
when delivered. All engine oil tanks, hydraulic reservoirs and oxygen cylinders
shall be serviced full.
Ill. ADJUSTMENTS.
In the event the Airframe, Engines, Propellers, Parts or other components
(each a "Component") do not meet the return conditions in Part II above, and the
relevant provision permits Lessee to either meet such condition or compensate
Lessor (herein, a "Compensation Item"), the Lessee shall pay the Lessor a dollar
amount computed by multiplying (i) the cost to Lessee of having an outside
supplier or contractor perform checks, scheduled removal, scheduled maintenance
or replacement of the Component, whichever is the appropriate measure for such
return condition (the "Periodic Service"), by (ii) a fraction of which (x) the
numerator shall be the difference between the required number of Flight Hours or
Cycles (whichever is more limiting) for such Component to the next Periodic
Service specified in Part II above and the actual number of Flight Hours or
Cycles (whichever is more limiting) remaining for such Component to the next
Periodic Service and (y) the denominator shall be the number of Flight Hours or
Cycles (whichever is more limiting) allowable between each instance of Periodic
Service for such Component. To the extent that the remaining life of any
Component (excluding for this purpose any LLP or time controlled component that
is replaced in the refurbishment performed at Lessor's expense pursuant to
Section 9.03) exceeds the Flight Hours or Cycles (whichever is more limiting) to
the next Periodic Service required in a Compensation Item in Part II above and
no Default or Event of Default shall then exist, the Lessee shall be entitled to
a credit against amounts due to Lessor by operation of the preceding sentence.
Such credit shall equal a dollar amount calculated by multiplying (i) the cost
to Lessee of having an outside supplier or contractor perform the appropriate
Periodic Service for the Component by (ii) a fraction of which (x) the numerator
shall be the difference between the actual number of Flight Hours or Cycles
(whichever is more limiting) remaining for such Component to the next Periodic
Service and the required number of hours of operation or Cycles for such
Component to the next Periodic Service specified in Part II above, and (y) the
denominator shall be the number of Flight Hours or Cycles (whichever is more
limiting) allowable between each instance of Periodic Service for such
Component, provided that (1) the credit shall only be used to offset the
Lessee's obligation to pay a dollar adjustment to Lessor pursuant to this Part
Ill and in no event shall Lessor be required to pay any amount
F-4
to Lessee by reason of the condition of any Component and (2) no credit
provided herein shall be used to offset a dollar adjustment caused by the
Component having less than the minimum hours of Flight Hours or Cycles
(whichever is more limiting) to the next Periodic Service provided for in Part
II above.
F-5
ALOHA AIRGROUP, INC.
Dated as of February 4, 2000
TO: ▇▇▇▇▇▇ Lease Finance Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: One (1) de Havilland Dash 8-102 Aircraft
Manufacturer's Serial No. 023
U.S. Registration No. N811PH
Ladies and Gentlemen:
Reference is hereby made to the Lease Agreement dated as of the date hereof
(as amended, modified or supplemented from time to time, the "Lease Agreement"),
between ▇▇▇▇▇▇ Lease Finance Corporation ("Lessor"), a Delaware corporation, as
lessor, and Aloha IslandAir, Inc. ("Lessee"), a Delaware corporation, as lessee,
covering the Aircraft. Capitalized terms used herein without definition which
are defined in the Lease Agreement are used herein with the respective meanings
given such terms in the Lease Agreement.
In order to induce you to enter into the Lease Agreement and the
transactions contemplated thereby with the Lessee, Aloha Airgroup, Inc., a
Hawaii corporation (together with any successor, the "Guarantor") hereby
represents, warrants and covenants to you as follows:
1. REPRESENTATIONS AND WARRANTIES.
(a) All of the representations and warranties with respect to the Guarantor
contained in the Lease Agreement are true, complete and correct and are
incorporated herein by reference for the benefit of the Lessor with the same
force and effect as if set forth herein in full.
(b) The Guarantor acknowledges receipt of executed counterparts or copies
of the Operative Documents and consents to all the terms and conditions thereof,
such consent not to be construed as requiring the consent of the Guarantor to
any amendments thereof.
(c) The Guarantor has requested that the Lessee enter into the transactions
contemplated by the Operative Documents for valid business purposes of the
Guarantor, and acknowledges receipt of good and sufficient consideration for the
guaranties given herein.
(d) The obligations of the Guarantor under this Guaranty shall rank at
least PARI PASSU with all other unsecured indebtedness of the Guarantor now or
hereafter existing.
1
(e) It shall not be necessary for the Lessor to inquire into the capacity,
power or authority of the officers, directors, or agents acting or purporting to
act on behalf of the Lessee, and any obligations incurred or created in reliance
upon the professed exercise of such powers shall be guarantied hereunder.
2. GUARANTY.
(a) The Guarantor does hereby unconditionally and irrevocably guarantee to
the Lessor, as a primary obligor and not merely as surety, (i) the due,
punctual, and full payment (when due, by acceleration or otherwise) of each
amount which the Lessee is or may become obligated to pay under the Operative
Documents, (ii) the due and punctual performance and observance by Lessee of
each term, provision, condition, agreement and covenant for which it is liable
contained in each Operative Document to which it is a party, and (iii) the
accuracy of each of the representations and warranties of the Lessee set forth
in the Operative Documents.
(b) This is a continuing guaranty of payment and performance, not of
collection. The Guarantor hereby expressly waives notice, promptness,
presentment and diligence as to the obligations guarantied hereby and acceptance
of this guaranty or any requirement that the Lessor proceed against Lessee or
any security for or any other guarantor of any of the obligations guarantied
hereunder (and without having to join any other Person in any such action). The
Guarantor agrees that it shall not be required to consent to, or receive any
notice of, any amendment or modification of, or waiver, consent or extension
with respect to, any Operative Document to which it is not a party that may be
made or given as provided therein. Guarantor hereby waives any and all benefits
and defenses under California Civil Code Section 2810 and hereby agrees that by
doing so Guarantor is liable hereunder even if Lessee had no liability at the
time of execution of any of the Operative Documents, or thereafter ceases to be
liable. Guarantor hereby waives any and all benefits and defenses under
California Civil Code Section 2809 and agrees that by doing so Guarantor's
liability may be larger in amount and more burdensome than that of Lessee.
(c) The obligations of the Guarantor hereunder are absolute, unconditional,
and irrevocable irrespective of the legality, validity or binding effect of any
of the Operative Documents and, without limiting the foregoing, will not be
discharged or otherwise affected by: (i) any extension, increase or renewal with
respect to any obligation of the Lessee under any Operative Document; (ii) any
modification of, or amendment or supplement to, any Operative Document or any
other agreement or instrument referred to therein; (iii) any furnishings or
acceptance of additional security for any obligation of the Lessee or any
release of any such security; (iv) any waiver, consent or other action or
inaction or any exercise or non-exercise of any right, remedy or power with
respect to the Lessee; (v) any change in the structure or organization of the
Lessee or the Guarantor or any determination that the Lessee or the Guarantor
lacks capacity or authority to contract; (vi) any insolvency, bankruptcy,
reorganization, arrangement, composition, liquidation, dissolution, or similar
proceedings with respect to the Lessee or the Guarantor; (vii) any legal
prohibition against the exercise of any remedies against the Lessee or the
Guarantor under any of the Operative Documents which in either case might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor; (viii) the unenforceability of any terms of the Operative Documents,
including without limitation any of the remedies for an Event of Default set
2
forth in Section 15 of the Lease, the Guarantor hereby expressly acknowledging
that it participated in the negotiation of such remedies, that it is fully
familiar with the terms of such remedies, that it consents to such terms, and
that for the Lessor such remedies are essential to the transactions contemplated
by the Operative Documents; (ix) any limitation, discharge, or cessation which
may now or hereafter be imposed by any statute, regulation or rule of law, of
the liability or obligations of the Lessee or the Guarantor or any other Person
under the terms of the Operative Documents or any discharge, termination,
cancellation, frustration, irregularity, or impossibility of performance, in
whole or in part, of the Operative Documents or any term thereof; (x) any defect
in the title, condition, design, operation or fitness for use of, or damage to
or loss or destruction of or interruption of use of the Aircraft or any part
thereof for any reason whatsoever regardless of the duration thereof, whether or
not resulting from accident and whether or not without fault of the Lessee, the
Guarantor, or any other Person; (xi) any defense, setoff, counterclaim, or claim
of recoupment, discharge or exoneration, that the Lessee or the Guarantor may
have or assert; (xii) any failure, omission or delay on the part of the Lessee
to conform or comply with any term of the Operative Documents; and (xiii) any
other occurrence or circumstance whatsoever which might otherwise constitute a
legal or equitable discharge or defense of a surety or guaranty, except (A)
payment in full of all amounts payable by the Lessee under the Operative
Documents and performance in full of all obligations of the Lessee, in each case
in accordance with the terms and conditions of the Operative Documents and (B)
payment and performance in full of the obligations of the Guarantor hereunder.
Without limiting the generality of the foregoing, Guarantor hereby waives the
rights and benefits under California Civil Code Section 2819, and agrees that by
doing so Guarantor's liability shall continue even if Lessor alters any
obligations guaranteed hereunder in any respect or if Lessor's remedies or
rights against Lessee are in any way impaired or suspended without Guarantor's
consent.
3. RELATED PROVISIONS.
(a) The obligations of the Guarantor hereunder shall continue to be
effective, or shall be reinstated, if any payment by the Lessee under any
Operative Document is rescinded or must otherwise be restored for any reason,
all as though such payment had not been made.
(b) Any and all payments to be made by the Guarantor hereunder shall be
made in full in U.S. dollars without setoff or counterclaim and free and clear
of and without deduction for or on account of any present or future taxes,
levies, imposts, duties, stamp tax, turnover tax, charges, currency surcharges,
fees, assessments, restrictions, conditions, deductions or withholdings of any
nature (collectively, together with any interest and/or penalties thereon,
hereinafter called "taxes") unless Guarantor is compelled by law to make payment
subject to any of such taxes in which event the Guarantor shall pay to the
Lessor or its assignee such additional amounts as may be necessary to ensure
that the Lessee or such assignee receives an amount in U.S. dollars equal to the
full amount that the Lessee or such assignee would have received if payment had
not been made subject to any of such taxes.
(c) The Guarantor shall not be subrogated to any rights against the Lessee
as a result of any payment hereunder until all amounts and performance owing by
the Lessee under the Operative Documents are paid and performed in full.
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(d) The obligations of the Guarantor shall continue unimpaired, even if the
beneficial interest of the Lessee is no longer wholly owned by the Guarantor.
(e) This Guaranty shall be binding upon the successors and permitted
assigns of the Guarantor and be enforceable by the Lessor and its successors and
assigns. The Guarantor shall have no right to assign or transfer its obligations
hereunder except with the prior written consent of the Lessor. This Guaranty
shall be governed, construed, applied and enforced in accordance with the laws
of the State of California.
(f) The Guarantor agrees to pay all reasonable costs, expenses, and damages
(including reasonable legal fees and expenses) incurred in connection with any
action or appeal to enforce the obligations of the Lessee under the Operative
Documents to the extent that such costs, expenses and damages are not paid by
the Lessee pursuant to the terms of the Operative Documents or otherwise and in
connection with the Lessor enforcing this Guaranty.
(g) The Guarantor shall not voluntarily take (A) any action to subject the
Lessee, as debtor to the provisions of any applicable bankruptcy or insolvency
law (as now or hereafter in effect), or (B) any other action not permitted by
the terms of the Operative Documents to threaten the existence or integrity of
the Lessee.
4. SUBORDINATION. Any right of the Guarantor to reimbursement from the
Lessee of any amount paid hereunder or to receive payment for any debt,
obligation or liability of the Lessee to the Guarantor shall be subordinate in
right and time of payment to the full payment or performance of the obligations
guarantied hereby and the Guarantor will hold in trust and immediately pay to
the Lessor any payment in respect of such reimbursement, debt, obligation or
liability of the Lessee to the Guarantor received from the Lessee without
affecting, reducing or impairing in any manner from the liability (determined
after application of such payment) of the Guarantor under the other provisions
of this Guaranty. Except with the prior written consent of the Lessor, the
Guarantor will not commence, prosecute or take a position in any bankruptcy or
insolvency proceeding or any administrative, legal or equitable action involving
the Lessee that might adversely affect the Lessor or their interests or that is
inconsistent with the provisions of this Guaranty. In the event any case is
commenced by or against the Lessee under any bankruptcy act or code, the Lessor
may, in its sole discretion, enforce this subordination paragraph by receiving
any distribution that would otherwise go to the Guarantor in or pursuant to such
case and by filing any claim that the Lessee would be entitled to file in their
own name. Unless and until all obligations guarantied hereby have been
discharged by payment or performance in full, the Guarantor shall not assign or
otherwise transfer any claim against the Lessee to any other Person unless the
assignee or transferee of such claim accepts such assignment or transfer subject
to the provisions of this Guaranty.
5. INDEPENDENT OBLIGATIONS. The obligations of the Guarantor hereunder are
independent of the obligations of the Lessee and a separate action may be
brought against the Guarantor regardless of whether the Lessee is joined in such
action or a separate action is brought against Lessee.
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6. SPECIAL CALIFORNIA LAW WAIVERS. Guarantor understands and acknowledges
that if Lessor exercises remedies judicially or nonjudicially against the
Aircraft or other property described in the Lease, such exercises of remedies
could impair or destroy any ability that Guarantor may have to seek
reimbursement, contribution or indemnification from Lessee or others based on
any right Guarantor may have of subrogation, reimbursement, contribution or
indemnification for any amounts paid by Guarantor under this Guaranty. In
addition to all the other waivers agreed to and made by Guarantor as set forth
in this Guaranty, by executing this Guaranty, Guarantor freely, irrevocably and
unconditionally:
(i) waives and relinquishes any defense to liability under this Guaranty
and agrees that Guarantor will be fully liable under this Guaranty even though
Lessor may exercise remedies judicially or nonjudicially against the Aircraft or
other property described in the Lease Agreement;
(ii) agrees that Guarantor will not assert any defense in any action or
proceeding which Lessor may commence to enforce this Guaranty, other than the
indefeasible payment in full of the obligations guaranteed hereby;
(iii) acknowledges and agrees that the rights and defenses waived by
Guarantor in this Guaranty include any right or defense that Guarantor may have
or be entitled to assert based upon or arising out of Section 2848 of the
California Civil Code;
(iv) waives any defenses resulting from any provisions of the Lease
which contractually limit or negate Lessor's right to obtain a deficiency
judgment or other recourse against Lessee;
(v) waives presentment, demand, protest, notice of protest, notice of
dishonor and notice of non-payment and notice of acceptance of this Guaranty;
(vi) waives the right, if any, to the benefit of, or to direct the
application of, any security held by Lessor; and, until all the obligations,
payment and performance of which are hereby guaranteed have been paid and
performed in full, any right to enforce any remedy which Lessor now has or
hereafter may have against Lessee, and any right to participate in any security
now or hereafter held by Lessor;
(vii) waives the right to require Lessor to proceed against Lessee, to
proceed against or exhaust any property held as security for the obligations, or
to proceed against or exhaust any other security now or hereafter held by Lessor
or to pursue any other remedy in Lessor's power;
(viii) waives any other defenses arising out of the absence, impairment
or loss of any right of reimbursement, contribution, indemnification or
subrogation or other right or remedy of Guarantor against Lessee or against any
security resulting from the exercise or election of any remedy or remedies by
Lessor, and any defense arising by reason of any disability or other defense of
Lessee or by reason of the cessation, from any cause, of the liability of
Lessee;
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(ix) waives the benefit of or right to assert any statute of limitations
affecting the liability of Guarantor hereunder or the enforcement hereof to the
extent permitted by law; any part payment by Lessee or other circumstances which
operates to toll any statute of limitations as to Lessee shall also operate to
toll the statute of limitations as to Guarantor;
(x) waives the suretyship and other rights, benefits and defenses, if
any, otherwise available to Guarantor pursuant to California law, including,
without limitation, the rights, benefits or defenses set forth in California
Civil Code Sections 2809, 2810, 2819, 2839, 2845, 2849, 2850, 2855, 2899 or 3433
and any rights, benefits or defenses resulting from alteration, impairment or
suspension in any respect or by any means of any of Lessee's obligations under
the Operative Documents or any of Lessor's rights or remedies under the Lease
without Guarantor's prior consent;
(xi) acknowledges and agrees that Lessor is relying on the above waivers
in leasing the Aircraft and other property under the Lease, and that these
waivers are a material part of the consideration which Lessor is receiving for
entering into the Lease; and
(xii) pursuant to the provisions of California Civil Code Section 2856,
"waives all rights and defenses arising out of an election of remedies by the
creditor, even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a guaranteed obligation, has destroyed
the guarantor's rights of subrogation and reimbursement against the principal by
the operation of Section 580d of the Code of Civil Procedure or otherwise."
7. FULL KNOWLEDGE. Guarantor agrees that each waiver set forth in this
Guaranty is made with full knowledge of its significance and consequences and
is, under the circumstances reasonable and not contrary to public policy or law.
If a court of competent jurisdiction shall determine that any such waiver is in
any respect contrary to public policy or applicable law, such waiver shall
nevertheless remain effective to the extent not so contrary.
8. JURISDICTION, SERVICE OF PROCESS AND WAIVER OF IMMUNITY WITH RESPECT TO
THE GUARANTOR. The provisions of Section 22.06 of the Lease Agreement are
incorporated herein by reference as though fully set out herein.
9. WAIVER OF JURY TRIAL. GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS
GUARANTY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL
OR WRITTEN), OR ACTION OF GUARANTOR OR LESSEE. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR LESSOR ENTERING INTO THE LEASE.
10. NOTICES. All notices, demands, requests, consents, approvals and other
communications required under the terms and provisions hereof shall be given as
provided in Section 19 of the Lease Agreement with respect to the Lessee.
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11. CUMULATIVE REMEDIES; NO WAIVER, ETC. The rights, powers and remedies of
Lessor hereunder are cumulative and not exclusive of any other right, power or
remedy. No failure on the part of the Lessor to exercise, no delay in
exercising, and no course of dealing with respect to, any right or remedy
hereunder will operate as a waiver thereof; nor will any single or partial
exercise of any right or remedy hereunder preclude any exercise of any other
right or remedy. This Guaranty may not be amended or modified except by written
agreement of the Guarantor and each of the Lessor.
12. ASSIGNMENT. The Guarantor acknowledges that the Lessor may assign its
right, title and interest in and to this Guaranty and all moneys due or to
become due hereunder as contemplated by Section 18 of the Lease Agreement, and
the Guarantor consents to any such assignment and agrees to make all payments
hereunder in the same manner as would be required of the Lessee under the
Operative Documents. The Guarantor hereby waives the right to assert against any
lender, as assignee of the Lessor, any claim, defense, counterclaim or setoff
that it could assert against the Lessor in an action brought by the Lessor upon
this Guaranty. Unless any Lender shall otherwise direct in writing, the
Guarantor hereby agrees that it will make payment of all moneys due or to become
due to the Lessor hereunder to such Lender for application pursuant to any
applicable loan agreement or other facility.
13. PARTIAL UNENFORCEABILITY. If any term of this Guaranty and any other
application thereof shall be invalid or unenforceable, the remainder of this
Guaranty and any other application of such terms shall not be affected thereby.
Very truly yours,
ALOHA AIRGROUP, INC.
By: /s/ ▇. ▇. ▇▇▇▇▇▇
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Name:
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Title:
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By: /s/ [ILLEGIBLE]
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Name:
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Title:
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Guaranty
MSN 023
7