EXHIBIT 10.62
AIRCRAFT LEASE AGREEMENT
Dated as of October 15, 1999
Between
COMPASS CAPITAL CORPORATION
As Lessor
- and -
ALOHA AIRLINES, INC.
As Lessee
In respect of
Aircraft: Boeing 737-2T4
Serial No: 23445
F.A.A. Registration ▇▇▇▇: N808AL
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The rights of Lessor under this Aircraft Lease Agreement and in the Aircraft
covered hereby will be or have been assigned to, and are or will be subject to
a security interest in favor of The Provident Bank, as Lender and Secured Party
under that certain Loan and Security Agreement dated as of July 1, 1999, as
supplemented. To the extent, if any, that this Aircraft 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
Aircraft Lease Agreement may be created through this transfer of possession of
any counterpart other than the original counterpart which shall be identified
as the counterpart containing this receipt therefor executed by The Provident
Bank as Lender, on the signature page thereof.
FELTMAN, KARESH, MAJOR & ▇▇▇▇▇▇▇,
Limited Liability Partnership
Carnegie Hall Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
TABLE OF CONTENTS
CLAUSE PAGE
1. INTERPRETATION 1
1.1 DEFINITIONS 1
1.2 CONSTRUCTION 10
2. REPRESENTATIONS AND WARRANTIES 11
2.1 Lessee's Representations and Warranties 12
2.2 Lessee's Further Representations and Warranties 13
2.3 Repetition 13
2.4 Lessor's Representations and Warranties 13
3. CONDITIONS PRECEDENT 14
3.1 Lessor's Conditions Precedent 15
3.2 Further conditions precedent 17
3.3 Waiver 17
3.4 Lessee's Conditions Precedent 17
4. COMMENCEMENT; TERM 17
4.1 Leasing 17
4.2 [Intentionally Omitted] 17
4.3 [Intentionally Omitted] 17
4.4 Licenses 17
4.5 [Intentionally Omitted] 17
4.6 Indemnity 17
4.7 Early Termination Option 18
5. PAYMENTS 18
5.1 [Intentionally Omitted] 18
5.2 Rental Periods 18
5.3 Rent 18
5.4 [Intentionally Omitted] 19
5.5 Payments 19
5.6 Gross-up 19
5.7 Taxation 19
5.8 Value Added Tax 20
5.9 Information 20
5.10 Taxation of Indemnity Payments 20
5.11 Default Interest 21
5.12 Contest 21
5.13 Absolute 21
5.14 Security 21
6. MANUFACTURER'S WARRANTIES 22
6.1 Assignment 22
6.2 Proceeds 22
6.3 Parts 22
6.4 Agreement 22
7. LESSOR'S COVENANTS 23
7.1 Quiet Enjoyment 23
7.2 Lessor Obligations Following Expiry Date 23
7.3 Fixed Place of Business 23
8. LESSEE'S COVENANTS 23
8.1 Duration 23
8.2 Information 24
8.3 Lawful and Safe Operation 25
8.4 Taxes and other Outgoings 26
8.5 Sub-Leasing 26
8.6 Inspection 26
8.7 Ownership; Property Interests; Related Matters 27
8.8 General 27
8.9 Records 28
8.10 Protection 29
8.11 Maintenance and Repair 29
8.12 Removal of Engine and Parts 31
8.13 Installation of Engines and Parts 32
8.14 Non-Installed Engines and Parts 32
8.15 Pooling of Engines and Parts 33
8.16 Equipment Changes 34
8.17 Title 34
8.18 Third Party 34
9. INSURANCE 34
9.1 Insurances 35
9.2 Requirements 35
9.3 Change 36
9.4 Insurance Covenants 36
9.5 Failure to Insure 36
9.6 Continuing Indemnity 37
9.7 Application of Insurance Proceeds 37
10. INDEMNIFICATION 37
10.1 General 38
10.2 Duration 38
11. EVENTS OF LOSS 38
11.1 Events of Loss 39
11.2 Requisition 39
12. RETURN OF AIRCRAFT 39
12.1 Return 40
12.2 Final Inspection 40
12.3 Non-Compliance 40
12.4 Redelivery 40
12.5 Acknowledgement 40
12.6 Maintenance Program 40
12.7 Fuel 40
12.8 [Intentionally Omitted] 40
13. DEFAULT 41
13.1 Events 42
13.2 Rights 43
13.3 Deregistration 43
13.4 Default Payments 44
14. ASSIGNMENT 45
15. ILLEGALITY 45
16. MISCELLANEOUS 46
16.1 Waivers, Remedies Cumulative 46
16.2 Delegation 46
16.3 Certificates 46
16.4 Appropriation 46
16.5 Currency Indemnity 46
16.6 Set-off 47
16.7 Severability 47
16.8 Remedy 47
16.9 Expenses 47
16.10 Time of Essence 48
16.11 Notices 48
16.12 Law and Jurisdiction 48
16.13 Sole and Entire Agreement 48
16.14 Indemnification 50
16.15 Counterparts 50
16.16 Language 50
17. DISCLAIMERS AND WAIVERS 50
17.1 Exclusion 51
17.2 Waiver 51
17.3 Confirmation 51
18. SECTION 1110 51
SCHEDULE 1
PART I - DESCRIPTION OF AIRCRAFT
PART 2 - AIRCRAFT DOCUMENTS
SCHEDULE 2
[INTENTIONALLY OMITTED]
SCHEDULE 3
OPERATING CONDITION AT REDELIVERY
SCHEDULE 4
INSURANCE REQUIREMENTS
THIS
AIRCRAFT LEASE AGREEMENT is made as of this 15th day of October, 1999
between
COMPASS CAPITAL CORPORATION, a corporation incorporated under the laws of the
State of California whose chief executive office is ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ U.S.A. ("Lessor"); and
ALOHA AIRLINES, INC., a corporation incorporated under the laws of the State of
Delaware whose principal address is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
▇.▇.▇. ("Lessee").
WHEREAS: Lessor wishes to lease to Lessee and Lessee is willing to lease from
Lessor the Aircraft on the terms of this Agreement.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement the following terms shall have the following meanings:
Agreed Maintenance Performer Lessee or such other person as shall be
approved from time to time in writing by
Lessor (such approval not to be unreasonably
withheld).
Agreed Maintenance Program such Program as shall be approved by the FAA
and agreed to from time to time in writing
by Lessor.
Agreed Value the amount set forth in Appendix A.
Air Authority the FAA.
Aircraft the aircraft described in Part 1 of
Schedule 1, (which term includes where the
context admits a separate reference to all
Engines, Parts and Aircraft Documents).
Aircraft Documents the documents, data and records identified
in Part 2 of Schedule 1 and all additions,
renewals, revisions and replacements from
time to time made in accordance with this
Agreement.
Airframe the Aircraft, excluding the Engines and
Aircraft Documents.
APU the auxiliary power unit installed on the
Aircraft on the
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date on which the Aircraft was delivered
pursuant to the Prior Lease and any
replacement auxiliary power unit installed
in accordance with this Agreement.
Boeing The Boeing Company, a Delaware corporation
with its principal office in Seattle, State
of Washington, U.S.A.
Business Day a day (other than a Saturday or Sunday) on
which business of the nature required by
this Agreement is carried out in San
Francisco, California, Cincinnati, Ohio and
the State of Incorporation or where used in
relation to payments on which banks are open
for business in London, Hawaii, California
and Ohio.
Certificated Air Carrier shall mean any corporation (except the
United States Government) domiciled in
the United States of America and holding
a Certificate of Convenience and
Necessity issued under Section 401 of the
Federal Aviation Act by the Department of
Transportation or any predecessor or
successor agency thereto, or, in the
event such Certificates shall no longer
be issued, any corporation (except the
United States Government) domiciled in
the United States of America and legally
engaged in the business of transporting
for hire passengers or cargo by air
predominantly to, from or between points
within the United States of America, and,
in either event, operating commercial jet
aircraft, which also is certificated so
as to fall within the purview of Section
1110 of Title 11 of the United States
Code or any analogous statute.
Commencement Date October 15, 1999
Cycle one take-off and landing of the Aircraft.
Damage Notification Threshold the amount set forth in Appendix A.
Default any Event of Default and any event or
condition which with the giving of notice or
lapse of time would constitute an Event of
Default.
Dollars and $ the lawful currency of the United States of
America.
Engine whether or not installed on the Aircraft:
(a) each engine of the manufacture and model
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specified in Part 1 of Schedule 1 (each of
which has 750 or more rated takeoff
horsepower or the equivalent of such
horsepower), such engines being specified as
to serial numbers on the Part 1 of Schedule
1; or
(b) any engine which has replaced that
engine, title to which has or should have,
passed to Lessor in accordance with this
Agreement;
and in each case includes all modules and
Parts from time to time belonging to or
installed in that engine but excludes any
properly replaced engine title to which has,
or should have, passed to Lessee pursuant to
this Agreement.
Event of Default an event or condition specified in
Clause 13.1.
Event of Loss with respect to the Aircraft (including for
the purposes of this definition the
Airframe):
(a) the actual or constructive total loss of
the Aircraft (including any damage to the
Aircraft which results in an insurance
settlement on the basis of a total loss,
or requisition for use or hire which results
in an insurance settlement on the basis of a
total loss); or
(b) it being destroyed, damaged beyond
repair or permanently rendered unfit for
normal use for any reason whatsoever; or
(c) the requisition of title, or other
compulsory acquisition, capture, seizure,
deprivation, confiscation or detention for
any reason of the Aircraft by the government
of the State of Registration or other
competent authority (whether de jure or de
facto), but excluding requisition for use or
hire not involving requisition of title; or
(d) the hijacking, theft, condemnation,
confiscation, seizure or requisition for use
or hire of the Aircraft which deprives any
person permitted by this Agreement to have
possession and/or use of the Aircraft of its
possession and/or use for more than 15 days.
Excusable Delay with respect to delivery of the Aircraft,
delay or
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non-performance due to or arising out of
acts of God or public enemy, civil war,
insurrection or riot, fire, flood,
explosion, earthquake, accident, epidemic,
quarantine restriction, any act of
government, governmental priority,
allocation, regulation or order affecting
directly or indirectly, the Aircraft, any
manufacturer, Lessor or any materials or
facilities, strike or labor dispute
causing cessation, slowdown or interruption
of work, inability after due and timely
diligence to procure equipment, data or
materials from manufacturers, suppliers, any
existing owner, seller or lessee in a timely
manner, damage, destruction or loss, or any
other cause to the extent that such cause is
beyond the control of Lessor whether above
mentioned or not and whether or not similar
to the foregoing.
Expiry Date 29 September 2007 or if earlier the date
on which:
(a) the Aircraft has been redelivered in
accordance with this Agreement; or
(b) Lessor receives the Agreed Value
following an Event of Loss.
FAA the Federal Aviation Administration of the
United States of America and any successor
thereof.
Federal Aviation Act United States Federal Aviation Act of 1958,
as amended, or any similar legislation of
the United States of America enacted in
substitution or replacement thereof.
Financial Indebtedness any indebtedness in respect of:
(a) moneys borrowed or raised;
(b) any liability under any debenture, bond,
note, loan stock, acceptance, documentary
credit or other security;
(c) the acquisition cost of any asset to the
extent payable before or after the time of
acquisition or possession; or
(d) any guarantee, indemnity or similar
assurance
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against financial loss of any person in
respect of the above.
Financing Statements Uniform Commercial Code Financing Statements
in respect of this Agreement, the Mortgage
and the Security Agreement and the
collateral described therein prepared in a
form acceptable for filing with the
applicable Government Entities in the
Habitual Base, the State in which Lessee's
chief executive office is located and such
other jurisdictions as Lessor shall
reasonably require.
First Termination Amount the amount set forth in Appendix A.
Flight Hour each hour or part thereof (rounded up to two
decimal places) elapsing from the moment the
wheels of the Aircraft leave the ground on
take off until the wheels of the Aircraft
next touch the ground.
Governing Law the laws of the State of
New York.
Government Entity (a) any national government, political
subdivision thereof, or local jurisdiction
therein;
(b) any instrumentality, board, commission,
court, or agency of any thereof; however
constituted; and
(c) any association, organization, or
institution of which any of the above is a
member or to whose jurisdiction any thereof
is subject or in whose activities any of the
above is a participant.
Habitual Base the State of Hawaii or, subject to the prior
written consent of Lessor, any other state,
country or countries in which the Aircraft
is for the time being habitually based.
Indemnitees each of the Prior Interested Parties, Lessor
and Lender including any of their respective
successors and assigns, shareholders,
subsidiaries, affiliates, partners,
contractors, directors, officers, servants,
agents and employees.
Interim Period the period specified in Section 5.2.
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Landing Gear the landing gear assembly of the Aircraft
excluding any rotable components.
Lender The Provident Bank as Lender under the
Mortgage.
Lessee Installed Seats passenger seats with respect to which (a)
title to which is held by Lessee subject to
a Security Interest in favor of an unrelated
third party or (b) title to which is held by
an unrelated third party and such seats are
leased or conditionally sold to Lessee.
Lessor Assignment the assignment of Lessor's rights under
this Agreement to The Provident Bank
pursuant to the Mortgage.
Lessor Lien (a) the Mortgage, Lessor Assignment and any
security interest whatsoever from time to
time created by or through Lessor in
connection with the financing of the
Aircraft;
(b) any other security interest in respect
of the Aircraft which results from acts of
or claims against Lessor not related to the
transactions contemplated by or permitted
under this Agreement; and
(c) liens in respect of the Aircraft for
Lessor Taxes.
Lessor Taxes Taxes:
(a) imposed as a direct result of activities
of Lessor in the jurisdiction imposing the
liability unrelated to Lessor's dealings
with Lessee with respect to the Aircraft or
to the transactions contemplated by this
Agreement or the operation of the Aircraft
by Lessee; or
(b) imposed on the income, profits or gains
of Lessor by any Government Entity in the
State of California or the State of
New York
or by the Federal Government of the United
States of America; or
(c) imposed with respect to any period
commencing or event occurring (x) prior to
the Commencement Date; or (y) after the
Expiry Date and unrelated to Lessor's
dealings with Lessee with respect to the
Aircraft or to the transactions contemplated
by this Agreement; or
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(d) which otherwise would not be Lessor
Taxes which are imposed as a direct result
of (x) the failure by Lessor to timely and
properly file a tax return or to pay any
Taxes which are required to be filed or paid
by Lessor; or (y) the failure by Lessor to
timely and properly furnish to Lessee
(following a request by Lessee) any
information, document or signature required
by Lessee in order for Lessee to timely and
properly file a tax return or to pay any
Taxes on behalf of Lessor which Lessee is
obligated to do hereunder; or
(e) resulting from the gross negligence or
willful misconduct of Lessor; or
(f) imposed on Lessor as a direct result
of an assignment or disposition by Lessor
of the Aircraft, any interest in or with
respect to the Aircraft or any interest
in or with respect to the Rent.
Maintenance Program an Air Authority approved maintenance
program for the Aircraft encompassing
scheduled maintenance (including block
maintenance), condition monitored
maintenance, and/or on-condition maintenance
of Airframe, Engines and Parts, including
but not limited to, servicing, testing,
preventive maintenance, repairs, structural
inspections, system checks, overhauls,
approved modifications, service bulletins,
engineering orders, airworthiness
directives, corrosion control, inspections
and treatments.
Major Checks any C-Check, multiple C-Check, D-Check or
annual heavy maintenance visit or segment
thereof suggested for commercial aircraft of
the same model as the Aircraft by its
manufacturer (however denominated) as set
out in the Agreed Maintenance Program.
Manufacturer Boeing.
Minimum Liability Coverage $500,000,000 on each occurrence (provided
that, in the event that Lessee reduces its
general liability limit applicable to its
aircraft fleet to an amount which is less
than $500,000,000, the Minimum Liability
Coverage may, with prior written notice to
Lessor, be reduced by Lessee to an amount
equal to the greater of (x) such lesser
amount; and (y) $400,000,000 on each
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occurrence).
Mortgage the Loan and Security Agreement, dated as
of July 1, 1999 between Lessor as "Borrower"
and Lender as "Lender" and any supplements
and amendments thereto in respect of the
Aircraft.
Other Leases (x) the
Aircraft Lease Agreement made or to
be made between Lessor and Lessee with
respect to Boeing 737-200A Aircraft Serial
Number 23443; and (y) any other agreement
(other than this Agreement) made or to be
made between Lessor (or an affiliate or
associate of Lessor) and Lessee (or an
affiliate or associate of Lessee).
Part whether or not installed on the Aircraft:
(a) any component, furnishing or equipment
(other than a complete Engine) furnished or
delivered with the Aircraft pursuant to the
Prior Lease and any replacement component,
furnishing or equipment installed in
accordance with this Agreement; and
(b) any other component, furnishing or
equipment (other than a complete Engine)
title to which has, or should have passed to
Lessor pursuant to this Agreement but
excluding (i) any such items title to which
has, or should have, passed to Lessee
pursuant to this Agreement and (ii) any
Lessee Installed Seats.
Permitted Lien (a) any lien for Taxes not assessed or,
if assessed, not yet due and payable, or
being contested in good faith by appropriate
proceedings;
(b) any lien of a repairer, mechanic,
carrier, hangarkeeper or other similar lien
arising in the ordinary course of business
or by operation of law in respect of
obligations which are not overdue or are
being contested in good faith by appropriate
proceedings; but only if (in the case of
both (a) and (b) (i) adequate reserves have
been provided by Lessee for the payment of
the Taxes or obligations; and (ii) such
proceedings, or the continued existence of
the lien, do not give rise to any likelihood
of the sale, forfeiture or other loss of the
Aircraft or any interest therein or of
criminal liability on Lessor or
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Lender; and
(c) any Lessor Lien.
Person shall mean and include any individual
person, corporation, partnership, firm,
joint stock company, joint venture, trust,
estate, unincorporated organization,
association, Governmental Entity, or
organization or association of which any of
the above is a member or a participant.
Prior Interested Parties each of (i) AerFi Finance (Bermuda) No. 3
Limited (formerly known as GPA Finance
(Bermuda) No. 3 Limited), as prior, a prior
owner and, to the extent applicable, as
prior lessor, (ii) AerFi Group plc (formerly
known as GPA Group plc), as a prior owner
and, to the extent applicable, as prior
lessor, (iii) AerFi Corporation, as prior
lessor and a prior owner on the FAA Registry
(iv) Wilmington Trust Company, as prior
trustee, (v) GE Capital Aviation Services,
Inc. and (vi) GE Capital Aviation Services,
Limited.
Prior Lease the
Aircraft Lease Agreement, dated as of
May 27, 1994, between Lessor and Lessee, as
supplemented, amended and assigned.
Redelivery Location an airport within the United States of
America to be agreed between Lessor and
Lessee.
Reference Banks The Provident Bank.
Rent all amounts payable pursuant to Clause 5.3.
Rent Amount the amount set forth in Appendix A.
Rental Period each period ascertained in accordance with
Clause 5.2.
Rent Date the first day of each Rental Period.
Second Termination Amount the amount set forth in Appendix A.
Security Interest any mortgage, charge, pledge, lien,
assignment, hypothecation, right of set-off
or any agreement or arrangement having the
effect of creating a security interest other
than a Permitted Lien, or any agreement to
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create the foregoing other than a Permitted
Lien.
State of Incorporation the State of Delaware.
State of Registration the United States of America.
Subsidiary (a) in relation to any reference to
accounts, any company whose accounts are
consolidated with the accounts of Lessee in
accordance with accounting principles
generally accepted under accounting
standards of the State of Incorporation;
(b) for any other purpose an entity from
time to time:
(i) of which another has direct or indirect
control or owns directly or indirectly more
than 50 per cent of the voting share
capital; or
(ii) which is a direct or indirect
subsidiary of another under the laws of the
jurisdiction of its incorporation.
Taxes taxes, duties and the like of all kinds and
any other amount corresponding to any
taxation together with any penalties, fines,
surcharge or interest thereon.
Term the period commencing on the Commencement
Date and ending on the Expiry Date.
Termination Payment has the meaning assigned to such term in
Clause 4.7 of this Agreement.
1.2 CONSTRUCTION
(a) In this Agreement, unless the contrary intention is stated, a reference
to:
(i) each of "Lessor" or "Lessee" or any other person includes without
prejudice to the provisions of this Agreement any successor in title to it
and any permitted assignee;
(ii) words importing the plural shall include the singular and vice versa;
(iii) any document shall include that document as amended, novated or
supplemented;
(iv) a law (1) includes any statute, decree, constitution, regulation,
order, judgment or directive of any Government Entity; (2) includes any
treaty, pact, compact or other agreement to
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which any Government Entity is a signatory or party; (3) includes any
judicial or administrative interpretation or application thereof and (4)
is a reference to that provision as amended, substituted or re-enacted;
and
(v) a Clause or a Schedule is a reference to a clause of or a schedule to
this Agreement, and
(b) The headings in this Agreement are to be ignored in construing this
Agreement.
2. REPRESENTATIONS AND WARRANTIES
2.1 Lessee's Representations and Warranties : Lessee represents and warrants
to Lessor that:
(a) Status: Lessee is a corporation duly incorporated and validly existing
in good standing under the laws of the State of Incorporation and has
the corporate power to own its assets and carry on its business as it
is being conducted and is the holder of all necessary air
transportation licenses required in connection therewith and with the
use and operation of the Aircraft;
(b) Power and Authority: Lessee has the corporate power to enter into and
perform, and has taken all necessary corporate action to authorize the
entry into, performance and delivery of, this Agreement and the
transactions contemplated by this Agreement;
(c) Legal Validity: This Agreement constitutes Lessee's legal, valid and
binding obligations;
(d) Non-conflict: The entry into and performance by Lessee of, and the
transactions contemplated by, this Agreement do not and will not:
(i) conflict with any laws binding on Lessee; or
(ii) conflict with the constitutional documents of Lessee; or
(iii) conflict with or result in default under any indenture, mortgage,
chattel mortgage, deed of trust,conditional sales contract, lease, bank
loan or credit agreement or other agreement which is binding upon Lessee
or any of its assets nor result in the creation of any Security Interest
over any of its assets;
(e) Authorization: All authorizations, consents, registrations and
notifications required in connection with the entry into, performance,
validity and enforceability of, this Agreement and the transactions
contemplated by this Agreement, have been (or will on or before the
Commencement Date have been) obtained or effected (as appropriate) and are
(or will on their being obtained or effected be) in full force and effect;
(f) No Immunity:
(i) Lessee is subject to civil commercial law with respect to its
obligations under this Agreement; and
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(ii) neither Lessee nor any of its assets is entitled to any right of
immunity and the entry into and performance of this Agreement by Lessee
constitute private and commercial acts;
(g) Accounts: the audited consolidated accounts of Aloha Airgroup, Inc.
(Lessee's parent company) and its Subsidiaries most recently delivered to
Lessor:-
(i) have been prepared in accordance with accounting principles and
practices generally accepted and consistently applied in the State of
Incorporation; and
(ii) fairly represent the consolidated financial condition of Aloha
Airgroup, Inc., and its Subsidiaries as at the date to which they were
drawn up;
(h) Chief Executive Office: Lessee's chief executive office is located at the
address stated in the Recitals to this Agreement;
(i) Certificated Air Carrier: Lessee is a Certificated Air Carrier and Lessor,
as lessor of the Aircraft to Lessee, is entitled to the benefits of
Section 1110 of Title 11 of the United States Code with respect to the
Aircraft; and
(j) Citizen of the United States: Lessee is a "citizen of the United States"
as defined in Section 40102(a)(1 5) of Title 49 of the United States Code.
2.2 Lessee's Further Representations and warranties : Lessee further
represents and warrants to Lessor that:
(a) No Default:
(i) no Default has occurred and is continuing or might result from the
entry into or performance of this Agreement; and
(ii) no other event or condition has occurred and is continuing which
constitutes (or with the giving of notice, lapse of time, determination of
materiality or the fulfillment of any other applicable condition or any
combination of the foregoing, might constitute) a material default under
any material indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, lease, bank loan or credit agreement or other
agreement which is binding on Lessee or any assets of Lessee;
(b) Registration:
(i) except for the filing of this Agreement with the FAA and the filing of
the Financing Statements and related documents, it is not necessary or
advisable under the laws of the State of Incorporation, the State of
Registration or the Habitual Base in order to ensure the validity,
effectiveness and enforceability of this Agreement or to establish,
perfect or protect the property rights of Lessor in the Aircraft or any
Engine or Part that this Agreement or any other instrument
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relating thereto be filed, registered or recorded or that any other action
be taken or if any such filings, registrations, recordings or other
actions are necessary or advisable, the same have been effected or will
have been effected on or before the Commencement Date; and
(ii) except for the filing of this Agreement with the FAA and the filing
of the Financing Statements and related documents, under the laws of the
State of Incorporation, the State of Registration and the Habitual Base
the property rights of Lessor in the Aircraft, have been fully
established, perfected and protected and this Agreement will have priority
in all respects over the claims of all creditors of Lessee;
(c) Litigation: no litigation, arbitration or administrative proceedings are
pending or to Lessee's knowledge threatened against Lessee which, if
adversely determined, would have a material adverse effect upon its
financial condition or business or its ability to perform its obligations
under this Agreement;
(d) Pari Passu: the obligations of Lessee under this Agreement rank at least
pari passu with all other present and contingent unsecured and
unsubordinated obligations of Lessee, with the exception of such
obligations as are mandatorily preferred by law and not by virtue of any
contract;
(e) Material Adverse Change: there has been no material adverse change in the
consolidated financial condition of Aloha Airgroup, Inc. and its
Subsidiaries or the financial condition of Lessee since the date to
which the accounts most recently provided to Lessor on or prior to the
Commencement Date were drawn up;
(f) Taxes: Lessee has delivered all necessary returns and payments due to the
tax authorities in the State of Incorporation, the State of Registration
and the Habitual Base and all other jurisdictions in which Lessee is
required to pay taxes and/or file tax returns or reports and Lessee is not
required by law to deduct any Taxes from any payments under this
Agreement; and
(g) Information: the financial and other information furnished by Lessee in
connection with this Agreement does not contain any untrue statement or
omit to state facts, the omission of which makes the statements therein,
in the light of the circumstances under which they were made, misleading,
nor omits to disclose any material matter to Lessor and all forecasts and
opinions contained therein were honestly made on reasonable grounds after
due and careful enquiry by Lessee.
2.3 Repetition: The representations and warranties in Clause 2.1 and Clause
2.2 will survive the execution of this Agreement. The representations and
warranties contained in Clause 2.1 and Clause 2.2 will be deemed to be
repeated by Lessee on the Commencement Date with reference to the facts
and circumstances then existing. The representations and warranties
contained in Clause 2.1 will be deemed to be repeated by Lessee on each
Rent Date as if made with reference to the facts and circumstances then
existing.
2.4 Lessor's Representations and Warranties : Lessor represents and warrants
to Lessee that:
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(a) Status: Lessor is a corporation duly incorporated and validly existing in
good standing under the laws of the State of California and has the
corporate power to own its assets and carry on its business as it is now
being conducted;
(b) Power and authority: Lessor has the corporate power to enter into and
perform, and has taken all necessary corporate action to authorize the
entry into, performance and delivery of, this Agreement and the
transactions contemplated by this Agreement;
(c) Legal validity: This Agreement constitutes Lessor's legal, valid and
binding obligation;
(d) Non-conflict: The entry into and performance by Lessor of, and the
transactions contemplated by, this Agreement do not and will not:
(i) conflict with any laws binding on Lessor; or
(ii) conflict with the constitutional documents of Lessor; or
(iii) conflict with any document which is binding upon Lessor or any of
its assets;
(e) Authorization: So far as concerns the obligations of Lessor, all
authorizations, consents, registrations and notifications required in
connection with the entry into, performance, validity and enforceability
of, and the transactions contemplated by, this Agreement by Lessor have
been (or will on or before the Commencement Date have been) obtained or
effected (as appropriate) and are (or will on their being obtained or
effected be) in full force and effect;
(f) No Immunity:
(i) Lessor is subject to civil commercial law with respect to its
obligations under this Agreement; and
(ii) neither Lessor nor any of its assets is entitled to any right of
immunity and the entry into and performance of this Agreement by Lessor
constitute private and commercial acts; and
(g) No Lessor Liens: Notwithstanding anything herein to the contrary, on the
Commencement Date, there shall be no Lessor Liens on the Aircraft or facts
and circumstances of which Lessor is aware and which might give rise to a
Lessor Lien the existence of which would interfere with Lessee's rights
under Clause 7.1.
3. CONDITIONS PRECEDENT
3.1 Lessor's Conditions Precedent : Lessor's obligation to lease the Aircraft
under this Agreement is subject to satisfaction of each of the following
conditions:
(a) receipt by Lessor from Lessee on or before the Commencement Date of the
following satisfactory in form and substance to Lessor:
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(i) Constitutional Documents: a copy of the constitutional documents of
Lessee;
(ii) Resolutions: a copy of a resolution of the board of directors of
Lessee approving the terms of, and the transactions contemplated by, this
Agreement, resolving that it enter into this Agreement, and authorizing a
specified person or persons to execute this Agreement and accept delivery
of the Aircraft on its behalf;
(iii) Opinion: an opinion in the form of Schedule 6 by independent legal
counsel acceptable to Lessor in the State of Registration, the Habitual
Base and the State of Incorporation;
(iv) FAA Opinion: an opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ or other counsel
acceptable to Lessor who are recognized specialists with regard to FAA
registration matters in a form acceptable to Lessor as to the due filing
for recordation of this Agreement;
(v) Approvals: each approval, license and consent which may be required in
relation to, or in connection with, the remittance to Lessor in Dollars of
all amounts payable under this Agreement or the performance by Lessee of
any of its obligations hereunder;
(vi) Import: evidence that any required import license, and all customs
formalities, relating to the import of the Aircraft into the Habitual Base
have been obtained or complied with, and that the import of the Aircraft
into the Habitual Base is exempt from;
(vii) Licenses: copies of Lessee's Certificate of Convenience and
Necessity, Radio License, FAR 121 Operator's Certificate and the U.S.
Certificate of Airworthiness for the Aircraft;
(viii) [Intentionally Omitted];
(ix) Certificate: a certificate of a duly authorized officer of Lessee:
(a) setting out a specimen of each signature referred to in Clause
3.1 (a)(ii); and
(b) certifying that each copy document specified in this Clause is
correct, complete and in full force and effect;
(x) Deregistration Power: an irrevocable power of attorney authorizing
Lessor by or through its duly authorized officers or agents or such other
person as Lessor may from time to time specify to do any thing or act or
to give any consent or approval which may be required to obtain
deregistration of the Aircraft and to export the Aircraft from the
Habitual Base upon termination of the leasing of the Aircraft under this
Agreement, duly notarized and legalized; and
(xi) General: such other documents as Lessor may reasonably request;
(b) the receipt by Lessor on or before the Commencement Date of
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(i) Opinions: a signed original of each of the opinions referred to in
Clauses 3.1(a)(iii) and (iv);
(ii) Payments: subject to Clause 5.1, all sums due to Lessor under this
Agreement on or before the Commencement Date;
(iii) Insurance: certificates of insurance, an undertaking from Lessee's
insurance broker and other evidence satisfactory to Lessor that Lessee is
taking the required steps to ensure due compliance with the provisions of
this Agreement as to Insurances with effect on and after the Commencement
Date;
(iv) Acknowledgement and Consent: an acknowledgement of and consent to the
assignment of this Lease by Lessor to Lender as collateral security in
form and substance satisfactory to Lender;
(v) Accounts: the latest available accounts of Aloha Airgroup, Inc. as
described in Clause 8.2(b)(i) and (ii);
(vi) Documents: a list of the Aircraft Documents delivered with the
Aircraft on the Commencement Date; and
(vii) General: such other documents as Lessor may reasonably request;
(c) receipt by Lessor of such information and documents relating to the
proposed Maintenance Program as Lessor may require and Lessor having
agreed the proposed Maintenance Program on or prior to the Commencement
Date; and
(d) evidence that on the Commencement Date the Aircraft and the Mortgage have
been validly registered under the laws of the State of Registration, that
the Financing Statements have been duly filed and that all filings,
registrations, recordings and other actions have been or will be taken
which are necessary or advisable to ensure the validity, effectiveness and
enforceability of this Agreement and the Lease Assignment and to protect
the property rights of Lessor and Lender in the Aircraft or any Part.
3.2 Further conditions precedent : The obligations of Lessor to deliver and
lease the Aircraft under this Agreement are subject to the further
conditions precedent that:
(a) the representations and warranties of Lessee under Clauses 2.1 and 2.2 are
correct and would be correct if repeated on delivery of the Aircraft under
this Agreement; and
(b) no Default has occurred and is continuing or might result from the leasing
of the Aircraft to Lessee under this Agreement.
3.3 Waiver: The conditions specified in Clauses 3.1 and 3.2 are for the sole
benefit of Lessor and may be waived or deferreed in whole or in part and
with or without conditions by Lessor. If any of
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those conditions are not satisfied or have not been waived on the
Commencement Date and Lessor (in its absolute discretion) nonetheless
agrees to deliver the Aircraft to Lessee, Lessee will ensure that those
conditions are fulfilled within 15 days after the Commencement Date and
Lessor may treat as an Event of Default the failure of Lessee to do so.
3.4 Lessee's Conditions Precedent : Lessee's obligation to lease the Aircraft
under this Agreement is subject to receipt by Lessee from Lessor on or
prior to the Commencement Date (unless waived) of:
(a) Constitutional Documents: a copy of Lessor's constitutional documents;
(b) Resolutions: a copy of a resolution of the Board of Directors of Lessor
approving the terms of, and the transactions contemplated by, this
Agreement, resolving that it enter into this Agreement and authorizing a
specified person or persons to execute this Agreement; and
(c) Letter of Quiet Enjoyment: provided that Lessee shall have delivered to
Lessor the Acknowledgement and Consent specified under 3.1 (b)(iv)
hereof, a letter of quiet enjoyment from Lessor and the Lender.
In addition to the foregoing, on the Commencement Date, the representations and
warranties of Lessor under Clause 2.4 shall be correct.
4. COMMENCEMENT; TERM
4.1 Leasing: Lessor will lease the Aircraft to Lessee and Lessee will take
the Aircraft on lease in accordance with this Agreement for the duration
of the Term. Lessee acknowledges that the Aircraft has been delivered to
and accepted by Lessee as in conformance with all requirements of this
Lease. Effective upon the Commencement Date, the Aircraft and every Part
will be in every respect at the sole risk of Lessee, who will bear all
risk of loss, theft, damage or destruction to the Aircraft from any cause
whatsoever.
4.2 [Intentionally Omitted].
4.3 [Intentionally Omitted].
4.4 Licenses : Lessee will at its expense obtain all licenses, permits and
approvals which may be necessary to export and/or transport the Aircraft
from the Delivery Location. Lessor will furnish such data and information
as may be reasonably requested by Lessee in connection with obtaining any
such license, permit or approval.
4.5 [Intentionally Omitted].
4.6 Indenmity : Lessee will indemnify and hold harmless the Indemnitees from
and against all Claims (as defined in Clause 10) arising from death or
injury to any observer of Lessee or any employee of Lessee in connection
with any demonstration flight or inspection of the Aircraft by
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Lessee (except to the extent that such Claim arises out of the gross
negligence or willful misconduct of Lessor).
4.7 Early Termination Option: Provided no Event of Default shall have occurred
and be continuing, and subject as hereinafter provided, Lessee shall have
the option (the "Early Termination Option") to terminate the Term on
either 29 September 2005 or 29 September 2006 (an "Early Termination
Date"). The Early Termination Option may only be exercised by Lessee if
(i) Lessee shall have given Lessor written irrevocable notice of Lessee's
intention to exercise the Early Termination Option not later than 360 days
before the Early Termination Date selected by Lessee and (ii) on or before
the Early Termination Date selected by Lessee, Lessee pays to Lessor an
amount equal to the First Termination Amount if the Early Termination Date
is 29 September 2005 or the Second Termination Amount if the Early
Termination Date is 29 September 2006. Upon the exercise by Lessee of the
Early Termination Option, the definition of "Expiry Date" currently stated
in this Agreement shall be deemed to have been amended so as to refer to
the Early Termination Date, and the Aircraft shall be redelivered to
Lessor on that date in accordance with the terms and conditions of this
Agreement (including without limitation Part B of Schedule 3 hereto).
5. PAYMENTS
5.1 [Intentionally Omitted].
5.2 Rental Periods : The Term will be divided into Rental Periods. The first
Rental Period (the "Interim Period") will commence on the Commencement
Date and end on October 28, 1999, and each subsequent Rental Period will
commence on the date succeeding the last day of the previous Rental
Period. Each Rental Period will end on the date immediately preceding the
numerically corresponding day in the next month except that:
(a) if there is no such numerically corresponding day in that month, it will
end on the last day of that month;
(b) if a Rental Period would otherwise end after the Expiry Date, it will end
on the Expiry Date.
In addition to the foregoing, if a Rental Period begins on a non-Business
Day, the Rent payable in respect of that Rental Period will be paid on the
Business Day immediately succeeding the date on which that Rental Period
commences.
5.3 Rent:
(a) Time of Payment: Lessee will pay to Lessor or its order Rent in advance on
each Rent Date. Payment must be initiated adequately in advance of the
Rent Date to ensure that Lessor receives credit for the payment on the
Rent Date.
(b) Amount: The Rent payable in respect of all Rental Periods commencing on or
after the Commencement Date will be equal to the Rent Amount, except that
no Rent shall be due with
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respect to the Interim Period, which has been paid prior to the
Commencement Date.
(c) [Intentionally Omitted].
5.4 [Intentionally Omitted].
5.5 Payments : All payments by Lessee to Lessor under this Agreement will be
made for value on the due date in Dollars and in immediately available
funds by wire transfer to The Provident Bank, Cincinnati, Ohio, ABA No.
▇▇▇▇▇▇▇▇▇, Account No. 215-16510, Reference: Aloha Airlines N808AL, or to
such other account in the United States as Lessor may advise Lessee in
writing.
5.6 Gross-up :
(a) All payments by Lessor under or in connection with this Agreement will be
made without set-off counterclaim, free and clear of and without deduction
for or on account of all Taxes (other than Lessor Taxes);
(b) All Taxes (other than Lessor Taxes) in respect of payments under this
Agreement shall be for the account of and will be paid by Lessee for its
own account prior to the date on which penalties apply; if requested by
Lessee, Lessor shall prepare and timely file all necessary tax returns and
Lessee shall either furnish the funds to Lessor for Lessor to pay such
Taxes or Lessee shall pay such Taxes for the account of Lessor;
(c) If Lessee is compelled by law to make payment subject to any Tax (other
than Lessor Taxes) and Lessor does not actually receive for its own
benefit on the due date a net amount equal to the full amount provided for
under this Agreement, Lessee will pay all necessary additional amounts to
ensure receipt by Lessor of the full amount so provided for.
5.7 Taxation : Lessee will on demand pay and indemnify Lessor against all
Taxes (other than Lessor Taxes) levied or imposed against or upon Lessor
or Lessee and relating to or attributable to Lessee, this Agreement or the
Aircraft directly or indirectly in connection with the importation,
exportation, registration, ownership, leasing, sub-leasing, delivery,
possession, use, operation, repair, maintenance, overhaul, transportation,
landing, storage, presence or redelivery of the Aircraft or any part
thereof or any rent, receipts, insurance proceeds, income or other amounts
arising therefrom.
If Lessor shall realize any Tax savings (by way of refund, deduction,
credit or otherwise) in respect of any amount with respect to which Lessee
has made an indemnity payment under this Agreement, and such Tax savings
shall not have been taken into account previously in calculating any
indemnity payment by Lessee, then Lessor shall, within 30 days after
realizing such Tax savings, pay to Lessee the amount of such Tax savings
(together with, in the case of a refund, any interest received thereon)
plus the amount of any Tax savings realized by Lessor as a result of any
such payment pursuant to this sentence, provided, however, that Lessor
shall not be obligated to make any payment pursuant to this sentence to
the extent that the amount of any Tax savings for which such payment is to
be made (other than Tax savings realized as a result of such
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payment) would exceed the aggregate amount of all prior payments made by
Lessee to, on behalf of, or as indemnification of Lessor under this
Agreement for Taxes less the amount of all prior payments pursuant to this
sentence for such Tax savings. It is intended that Lessor shall retain a
net tax benefit in respect of any amount with respect to which Lessee has
made an indemnity payment under this Agreement only if Lessee shall first
have been reimbursed for all payments made or withheld by it for Taxes
under this Agreement.
5.8 Value Added Tax:
(a) For the purposes of this sub-clause:
(i) "VAT" means value added tax and any sales or turnover tax, imposition
or levy of a like nature (other than Lessor Taxes);
(ii) "supply" includes anything on which VAT is chargeable;
(b) Lessee will pay to Lessor the amount of any VAT chargeable in respect of
any supply for VAT purposes under this Agreement;
(c) Each amount stated as payable by Lessee under this Agreement is exclusive
of VAT (if any) and is accordingly to be construed as a reference to that
amount plus any VAT in respect of it.
5.9 Information : If Lessee is required by any applicable law, or by any third
party, to deliver any report or return in connection with any Taxes,
Lessee will complete the same in a manner satisfactory to Lessor and in
particular will state therein that Lessee is exclusively responsible for
the use and operation of the Aircraft and for any Taxes arising therefrom,
and Lessee will, on request supply a copy of the report or return to
Lessor.
5.10 Taxation of Indemnity Payments :
(a) If and to the extent that any sums payable to Lessor by Lessee under this
Agreement by way of indemnity are insufficient, by reason of any Taxes
(other than Lessor Taxes) payable in respect to those sums, for Lessor,
except with respect to Lessor Taxes, to discharge the corresponding
liability to the relevant third party (including any taxation authority),
or to reimburse Lessor for the cost incurred by it to a third party
(including any taxation authority) Lessee will pay to Lessor such sum as
will after the tax liability has been fully satisfied leave Lessor with
the same amount as it would have been entitled to receive in the absence
of that liability together with interest on the amount of the deficit at
the rate of interest stated in Clause 5.11 in respect of the period
commencing on the date on which the payment of taxation is finally due
until payment by Lessee (both before and after judgment);
(b) If and to the extent that any sums constituting (directly or indirectly)
an indemnity to Lessor but paid by Lessee to any person other than Lessor
are treated as taxable in the hands of Lessor, Lessee will pay to Lessor
such sum as will after the tax liability (except tax liability for Lessor
Taxes) has been fully satisfied indemnify Lessor to the same extent as it
would have been
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indemnified in the absence of such liability together with interest on the
amount payable by Lessee under this sub-clause at the rate of interest
stated in Clause 5.11 in respect of the period commencing on the date on
which the payment of taxation is finally due until payment by Lessee (both
before and after judgment).
5.11 Default Interest : If Lessee fails to pay any amount payable under this
Agreement on the due date, Lessee will pay on demand from time to time to
Lessor interest (both before and after judgment) on that amount, from the
due date to the date of payment in full by Lessee to Lessor, at the rate
calculated by Lessor to be one month Dollar LIBOR plus 300 basis points.
All such interest will be compounded monthly and calculated on the basis
of the actual number of days elapsed and a 360 day year.
5.12 Contest : If Lessee disputes the payment of any Taxes payable by Lessor
for which Lessee is responsible under this Agreement, Lessor will take
such action as Lessee may reasonably request at Lessee's expenses to
contest that payment but will not be obliged to take any such action:
(a) which Lessor considers in its reasonable discretion may prejudice it,
unless Lessee shall have provided security reasonably satisfactory to
Lessor to cover the liability for Taxes and the expense of the contest; or
(b) which Lessor reasonably considers does not have a reasonable prospect of
success; or
(c) for which Lessee has not made adequate provision to the reasonable
satisfaction of Lessor in respect of the expense concerned.
5.13 Absolute : Lessee's obligations under this Agreement are absolute and
unconditional irrespective of any contingency whatsoever including (but
not limited to):
(a) any right of set-off, counterclaim, recoupment, defense or other right
which either party to this Agreement may have against the other;
(b) any unavailability of the Aircraft for any reason, including, but not
limited to, a requisition of the Aircraft or any prohibition or
interruption of or interference with or other restriction against Lessee's
use, operation or possession of the Aircraft;
(c) any lack or invalidity of title or any other defect in title,
airworthiness, merchantability, fitness for any purpose, condition,
design, or operation of any kind or nature of the Aircraft for any
particular use or trade, or for registration or documentation under the
laws of any relevant jurisdiction, or any Event of Loss in respect of or
any damage to the Aircraft;
(d) any insolvency, bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution, liquidation or similar proceedings by or against Lessor
or Lessee;
(e) any invalidity or unenforceability or lack of due authorization of, or
other defect in, this Agreement;
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(f) any other cause which but for this provision would or might otherwise have
the effect of terminating or in any way affecting any obligation of Lessee
under this Agreement.
The provisions of this Clause 5.13 shall not limit Lessee's right to take
such legal action as Lessee shall deem appropriate as a consequence of the
breach by Lessor of its obligations to Lessee under this Agreement.
5.14 [Intentionally Omitted].
6. MANUFACTURER'S WARRANTIES
6.1 Assignment : Notwithstanding this Agreement, Lessor will remain entitled
to the benefit of each warranty, express or implied, with respect to the
Aircraft, any Engine or Part so far as concerns any manufacturer, vendor,
subcontractor or supplier. Except to the extent Lessor otherwise directs,
Lessor hereby authorizes Lessee to pursue any claim thereunder in relation
to defects affecting the Aircraft, any Engine or Part and, if Lessee
decides to pursue such claim, Lessee agrees diligently to pursue any such
claim which arises at its own cost. Lessee will use reasonable efforts to
notify Lessor promptly upon becoming aware of any such claim.
6.2 Proceeds: Except to the extent Lessor otherwise agrees in a particular
case, all proceeds of any such claim will be paid directly to Lessor but
if and to the extent that such proceeds relate:
(a) to defects affecting the Aircraft which Lessee has rectified; or
(b) to compensation for loss of use of the Aircraft, an Engine or any Part
during the Term; or
(c) the costs incurred by Lessee in pursuing such claim; and
provided no Default has occurred and is continuing the proceeds will be
paid to Lessee by Lessor but in the case of (a) only on receipt of
evidence satisfactory to Lessor that Lessee has rectified the relevant
defect.
6.3 Parts: Except to the extent Lessor otherwise agrees in a particular
case, Lessee will ensure that all engines, components, furnishings or
equipment provided by the manufacturer, vendor, subcontractor or supplier
in replacement of a defective Engine or Part pursuant to the terms of any
warranty will be installed promptly by Lessee and that title thereto free
of Security Interests vests in Lessor. On installation those items will be
deemed to be an Engine or part as applicable.
6.4 Agreement: To the extent any warranties relating to the Aircraft are made
available under an agreement between any manufacturer, vendor,
subcontractor or supplier and Lessee, this Clause 6 is subject to that
agreement. However Lessee will:
(a) pay the proceeds of any claim thereunder to Lessor to be applied pursuant
to Clause 6.2 and pending such payment will hold the claim and the
proceeds in trust for Lessor;
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(b) take all such steps as are necessary at the end of the Term to ensure the
benefit of any of those warranties which have vested in Lessee (to the
extent that they are assignable) which have not expired are vested in
Lessor.
7. LESSOR'S COVENANTS
7.1 Quiet Enjoyment: Provided that no Default shall have occurred and be
continuing, Lessee shall quietly possess, use and enjoy the Aircraft and
the rents, revenues, profits and income derived through Lessee's use and
operation thereof without interference, hindrance or interruption by
Lessor or any person or entity validly claiming by or through Lessor;
provided that the exercise by Lessor of its rights under or in connection
with this Agreement shall not constitute such an interference, hindrance
or interruption.
7.2 Lessor Obligations Following Expiry Date : Within 5 Business Days of:
(a) redelivery of the Aircraft to Lessor in accordance with and in the
condition required by this Agreement; or
(b) payment to Lessor of the Agreed Value following an Event of Loss after the
Commencement Date;
or in each case such later time as Lessor is satisfied Lessee has
irrevocably paid to Lessor all amounts which may then be outstanding and
payable under this Agreement, the Other Leases or under any other
agreement between Lessor (or any affiliate or associate of Lessor) and
Lessee, Lessor will pay to Lessee the amount of any Rent received in
respect of any period falling after the date of redelivery of the Aircraft
or payment of the Agreed Value, as the case may be.
7.3 Fixed Place of Business : During the Term, Lessor shall not establish a
fixed place of business in the State of Hawaii without the prior written
consent of Lessee (such consent not to be unreasonably withheld or delayed
if such establishment will not have the effect of increasing Lessee's
obligations under this Agreement or, if such establishment does so
increase Lessee's obligations under this Agreement, if Lessor and Lessee
shall have entered into alternative substitute arrangements having the
same substantial effect as this Agreement but which avoid such increase in
such obligations).
8. LESSEE'S COVENANTS
8.1 Duration : The undertakings in this Clause and in Clause 12 will:
(a) except as otherwise stated, be performed at the expense of Lessee; and
(b) remain in force until redelivery of the Aircraft to Lessor in accordance
with this Agreement and thereafter to the extent of any accrued rights of
Lessor in relation to those undertakings.
8.2 Information : Lessee will:
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(a) notify Lessor forthwith of the occurrence of any Default or any other
event which might adversely affect Lessee's ability to perform any of its
obligations under this Agreement;
(b) furnish to Lessor:
(i) as soon as available but in any event not later than 60 days after the
last day of each financial quarter of Aloha Airgroup, Inc. (Lessee's
parent company), the consolidated management accounts of Aloha Airgroup,
Inc. (comprising a balance sheet and profit and loss statement) prepared
for the most recent previous financial quarter certified by Lessee's chief
financial officer as being true and correct;
(ii) as soon as available but not in any event later than 120 days after
the last day of each financial year of Aloha Airgroup, Inc., its audited
consolidated balance sheet as of such day and its audited consolidated
profit and loss statement for the year ending on such day;
(iii) at the same time as it is issued to the creditors of Lessee, a copy
of each notice or circular issued to Lessee's creditors as a group; and
(iv) on request from time to time such other information regarding Lessee
and its business and affairs as Lessor may reasonably request;
(c) upon request, keep Lessor informed as to current serial numbers of the
Engines and any engine installed on the Aircraft;
(d) promptly furnish to Lessor all information Lessor from time to time
reasonably requests regarding the Aircraft, any Engine or any Part, its
use, location and condition including, without limitation, the hours
available on the Aircraft and any Engine until the next scheduled check,
inspection, overhaul or shop visit, as the case may be;
(e) on request, within 10 days after the end of any Rental Period furnish to
Lessor, evidence satisfactory to Lessor of payment of all Taxes (other
than Lessor Taxes) due during that or any previous Rental Period the
non-payment of which could give rise to the imposition of a Security
Interest on the Aircraft;
(f) on request, furnish to Lessor evidence satisfactory to Lessor that all
Taxes (other than Lessor Taxes) and charges incurred by Lessee with
respect to the Aircraft, including without limitation all payments due to
the relevant air traffic control authorities the non-payment of which
could give rise to the imposition of a Security Interest on the Aircraft,
have been paid and discharged in full;
(g) provide Lessor with a monthly report on the Aircraft and each Engine in
the form required from time to time by Lessor;
(h) upon request, give Lessor written notice as to the time and location of
all Major Checks; and
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(i) promptly notify Lessor of
(i) any loss, theft, damage or destruction to the Aircraft, any Engine or
any Part, or any modification to the Aircraft if the potential cost may
exceed the Damage Notification Threshold; and
(ii) any claim or other occurrence likely to give rise to a claim under
the insurances in excess of the Damage Notification Threshold and details
of any negotiations with the insurance brokers over any such claim.
8.3 Lawful and Safe Operation: Lessee will:
(a) comply with the law for the time being in force in any country or
jurisdiction which may for the time being be applicable to the Aircraft
(including, without limitation, FAR91.851 et seq (which FARs include the
"non-addition rule")) or, so far as concerns the use and operation of the
Aircraft, an owner or operator thereof;
(b) not use the Aircraft in any manner contrary to any recommendation of the
manufacturers of the Aircraft, any Engine or any Part or any
recommendation or regulation of the Air Authority or for any purpose for
which the Aircraft is not designed or reasonably suitable;
(c) ensure that the crew and engineers employed by it in connection with the
operation and maintenance of the Aircraft have the qualifications and hold
the licenses required by the Air Authority and applicable law;
(d) use the Aircraft solely in commercial or other operations for which Lessee
is duly authorized by the Air Authority and applicable law;
(e) not use the Aircraft for the carriage of:
(i) whole animals living or dead except in the cargo compartments
according to I.A.T.A. regulations, and except domestic, pet animals
carried in a suitable container to prevent the escape of any liquid and to
ensure the welfare of the animal;
(ii) acids, toxic chemicals, other corrosive materials, explosives,
nuclear fuels, nuclear wastes, or any nuclear assembles or components,
except as permitted for passenger aircraft under the "Restriction of
Goods" schedule issued by I.A.T.A. from time to time and provided that all
the requirements for packaging or otherwise contained therein are
fulfilled; or
(iii) any other goods, materials or items of cargo which could reasonably
be expected to cause damage to the Aircraft and which would not be
adequately covered by the Insurances;
(f) not utilize the Aircraft for purposes of training, qualifying or
re-confirming the status of cockpit personnel except for the benefit of
Lessee's cockpit personnel, and then only if the use of the
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Aircraft for such purpose is not disproportionate to the use for such
purpose of other aircraft of the same type operated by Lessee;
(g) not cause or permit the Aircraft to proceed to, or remain at, any location
which is for the time being the subject of a prohibition order (or any
similar order or directive) by:
(i) any Government Entity of the State of Registration or the Habitual
Base; or
(ii) any Government Entity of the country in which such location is
situated; or
(iii) any Government Entity having jurisdiction over Lessor, Lender or the
Aircraft; and
(h) obtain and maintain in full force all certificates, licenses, permits and
authorizations required for the use and operation of the Aircraft for the
time being, and for the making of payments required by, and the compliance
by Lessee with its other obligations under, This Agreement.
8.4 Taxes and other Outgoings : Lessee will promptly pay:
(a) all license and registration fees, Taxes (other than Lessor Taxes) and
other amounts (other than Lessor Taxes) of any nature imposed by any
Government Entity with respect to the Aircraft, including without
limitation the ownership, delivery, leasing, possession, use, operation,
return, sale or other disposition of the Aircraft; and
(b) all rent, fees, charges, Taxes (other than Lessor Taxes) and other amounts
(other than Lessor Taxes) in respect of any premises where the Aircraft or
any Part thereof is located from time to time;
except to the extent that in the reasonable opinion of Lessor (which
opinion shall not be unreasonably withheld) such payment is being
contested in good faith by appropriate proceedings, in respect of which
adequate reserves have been provided by Lessee and non-payment of which
does not give rise to any material likelihood of the Aircraft or any
interest therein being sold, forfeited or otherwise lost or of criminal
liability on the part of Lessor or any of the Indemnitees.
8.5 Sub-Leasing: LESSEE WILL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR,
SUB-LEASE OR PART WITH POSSESSION OF THE AIRCRAFT, THE ENGINES OR ANY PART
EXCEPT THAT LESSEE MAY PART WITH POSSESSION (A) WITH RESPECT TO THE
AIRCRAFT, THE ENGINES OR ANY PART TO THE RELEVANT MANUFACTURERS FOR
TESTING OR SIMILAR PURPOSES OR TO THE AGREED MAINTENANCE PERFORMER FOR
SERVICE, REPAIR, MAINTENANCE OR OVERHAUL, WORK, OR ALTERATIONS,
MODIFICATIONS OR ADDITIONS TO THE EXTENT REQUIRED OR PERMITTED BY THIS
AGREEMENT, AND (B) WITH RESPECT TO AN ENGINE OR PART, AS EXPRESSLY
PERMITTED BY THIS AGREEMENT.
Lessor shall not seek to charge Lessee any fee which is in addition to the
actual cost incurred by
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Lessor in connection with the granting of such consent or in connection
with the fulfillment of any conditions which might be attached thereto as
a condition precedent to the grant thereof.
8.6 Inspection:
(a) Lessor, the Lender and any Person designated by Lessor or the Lender may
at any time visit, inspect and survey the Aircraft, any Engine or any Part
and for such purpose may, subject to any applicable Aviation Authority
regulation, travel on the flight deck as observer. Lessee shall give
Lessor and the Lender at least 15 days prior written notice of the date
and location of each Major Check. At each Major Check, including the "C"
check performed immediately before the redelivery of the Aircraft, Lessor,
the Lender and any Person designated by Lessor or the Lender shall be
entitled to be present at and to observe any areas of the Aircraft opened
during such Major Check; and
(b) Lessor will:
(i) have no duty or liability to make, or arising out of any such visit,
inspection or survey; and
(ii) so long as no Default has occurred and is continuing, not exercise
such right other than on reasonable notice and so as not to disrupt
unreasonably the commercial operations of Lessee.
8.7 Ownership; Property Interests; Related Matters : Lessee will:
(a) not do or knowingly permit to be done or omit or knowingly permit to be
omitted to be done or any act or thing which might reasonably be expected
to jeopardize the rights of Lessor as lessor and holder of title to the
Aircraft or the rights of the Lender as mortgagee, secured party and
assignee of this Agreement and as assignee of the insurances or the
validity, enforceability or priority of the Mortgage;
(b) on all occasions when the ownership of the Aircraft, any Engine or any
Part is relevant, make clear to third parties that title is held by
Lessor;
(c) not at any time (i) represent or hold out Lessor or Lender as carrying
goods or passengers on the Aircraft or as being in any way connected or
associated with any operation or carriage (whether for hire or reward or
gratuitously) which may be undertaken by Lessee or (ii) pledge the credit
of Lessor or Lender;
(d) ensure that there is always affixed, and not removed or in any way
obscured, a fireproof plate (having dimensions of not less than 10 cm. x 7
cm.) in a reasonably prominent position in the cockpit of the Aircraft
adjacent to the certificate of airworthiness and on each Engine stating:
"Title to this Aircraft/Engine is held by Compass Capital Corporation and
is subject to a security interest held by The Provident Bank. The Aircraft
is leased to Aloha Airlines, Inc. and may not be operated by any other
person without the prior written consent of Compass Capital
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Corporation and the Provident Bank.";
(e) not create or permit to exist any Security Interest upon the Aircraft, any
Engine or any Part;
(f) not do or permit to be done anything which may reasonably be expected to
expose the Aircraft, any Engine or any Part to penalty, forfeiture,
impounding, detention, appropriation, damage or destruction and without
prejudice to the foregoing, if any such penalty forfeiture, impounding,
detention or appropriation, damage or destruction occurs, give Lessor
notice and use best endeavors to procure the immediate release of the
Aircraft, any Engine or the Part, as the case may be;
(g) not abandon the Aircraft, the Engine or any Part;
(h) pay and discharge or cause to be paid and discharged when due and payable
or make adequate provision by way of security or otherwise for all debts,
damages, claims and liabilities which have given or might give rise to a
Security Interest over or affecting the Aircraft, any Engine or any Part;
and
(i) not attempt, or hold itself out as having any power, to sell, lease or
otherwise dispose of the Aircraft, any Engine or any Part.
8.8 General: Lessee will:
(a) not make any substantial change in the nature of the business in which it
is engaged, will preserve its corporate existence, and will conduct its
business in an orderly and efficient manner and will maintain its rights,
privileges, licenses and franchises material thereto or material to
performing its obligations under this Agreement;
(b) ensure that no change will occur in the Habitual Base of the Aircraft
without the prior written consent of the Lessor;
(c) not, without giving Lessor 30 days prior notice (in accordance with this
Agreement), change its chief executive office from the address stated in
the Recitals to this Agreement;
(d) remain a Certificated Air Carrier and maintain, without limitation, its
status so as to fall within the purview of Section 1110 of Title 11 of
the United States Code or any analogous Statute; and
(e) remain a "citizen of the United States" as defined in Section 40102(a)(15)
of Title 49 of the United States Code:
8.9 Records: Lessee will:
(a) cause accurate, complete and current records of all flights made by, and
all maintenance carried out on, the Aircraft (including in relation to
each Engine and Part subsequently installed, before the installation) to
be kept; keep the records in such manner as the Air Authority may from
time
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to time require. During the Term, all records must be maintained in
English. The records will form part of the Aircraft Documents; and
(b) procure access to a revision service in respect of, and will maintain with
appropriate revisions in English, all Aircraft Documents, records, logs,
and other materials required by applicable laws and best practice of major
international air transport operators in respect of the Aircraft.
8.10 Protection: Lessee will:
(a) cooperate with Lessor in connection with the maintenance of the
registration of the Aircraft with the Air Authority in the name of Lessor
and reflecting the respective interests of Lender and not do or suffer to
be done anything which might adversely affect that registration;
(b) do all acts and things (including, without limitation, making any filing
or registration with the Air Authority or any other Government Entity) and
execute and deliver, notarize, file, register and record all documents
(including, without limitation, any amendment of this Agreement) as may be
required by Lessor:
(i) following any change or proposed change in the ownership, lien in
favor of Lender or financing of the Aircraft; or
(ii) following any modification of the Aircraft, any Engine or any Part or
the permanent replacement of any Engine or Part in accordance with this
Agreement, so as to ensure that the rights of Lessor as lessor of and
holder of title to the Aircraft and under this Agreement and the rights of
Lender under the Mortgage and the Lease Assignment in respect thereof
apply with the same effect as before; or
(iii) to establish, maintain, preserve, perfect and protect the rights of
Lessor as lessor of and holder of title to the Aircraft and under this
Agreement and the interest of Lender under the Mortgage and under the
Lease Assignment.
8.11 Maintenance and Repair: Lessee will:
(a) keep the Aircraft airworthy in all respects and in good repair and
condition in accordance with normal airline practice;
(b) not change the intervals of the Agreed Maintenance Program, or the
schedule of the Agreed Maintenance Program without the written consent of
Lessor (such consent not to be unreasonably withheld);
(c) maintain the Aircraft in accordance with the Agreed Maintenance Program
through the Agreed Maintenance Performer and perform (at the respective
intervals provided in the Agreed Maintenance Program) all Major Checks;
(d) maintain the Aircraft in accordance with FAA Federal Air Regulations Part
121 and any other
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rules and regulations of the FAA as may be applicable to passenger
category aircraft and in at least the same manner and with at least the
same care, including, without limitation, maintenance scheduling,
modification status and technical condition, as is the case with respect
to similar aircraft owned or otherwise operated by Lessee and as if Lessee
were to retain the Aircraft in its fleet and continue to operate the
Aircraft after the Expiry Date and including, without limitation, all
maintenance to the Airframe, any Engine or any Part required to maintain
all warranties, performance guarantees or service life policies in full
force and effect;
(e) comply with all mandatory inspection and modification requirements,
airworthiness directives and similar requirements applicable to the
Aircraft, any Engine or Part having a compliance date during the Term or
within 180 days after the Expiry Date and which are required by the FAA;
If any of the foregoing (each a "Relevant Item") is issued by the FAA,
Lessor shall, if Lessee shall have performed modification or terminating
action with regard to the same or shall have caused such modification or
terminating action with regard to the same to be performed, in respect of
any individual item of the same, on receipt by Lessor of evidence of
payment and completion of the Relevant Item, reimburse Lessee with an
amount equal to the solution to the following formulas:
(C-$50,000) X (I- (RT/60))
Where:
C = the total cost of the Relevant Item;
RT = the number of months remaining in the Tenn when the Relevant Item is
completed; and
60 = the assumed 5 year useful life of the Relevant Item;
provided, however, Lessor's obligation to reimburse Lessee pursuant
to this Clause 8.11 (e) shall not exceed $100,000 in the aggregate.
(f) comply with all applicable laws and the regulations of the Air Authority
and other aviation authorities with jurisdiction over Lessee or the
Aircraft, any Engine or Part regardless of upon whom such requirements are
imposed and which related to the maintenance, condition, use or operation
of the Aircraft or require any modification or alteration to the Aircraft,
any Engine or Part;
(g) maintain in good standing a current certificate of airworthiness (in the
appropriate category for the nature of the operations of the Aircraft) for
the Aircraft issued by the Air Authority except where the Aircraft is
undergoing maintenance, modification or repair required or permitted by
this Agreement and will from time to time provide to Lessor a copy on
request;
(h) if required by the Air Authority, maintain a current certification as to
maintenance issued by or on behalf of the Air Authority in respect of the
Aircraft and will from time to time provide to
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Lessor a copy on request; and
(i) procure promptly the replacement of any Engine or Part which has become
time, cycle or calendar expired, lost, stolen, seized, confiscated,
destroyed, damaged beyond repair, unserviceable or permanently rendered
unfit for use, with an engine or part complying with the conditions set
out in Clause 8.13(a).
8.12 Removal of Engine and Parts : Lessee will ensure that no Engine or Part
installed on the Aircraft is at any time removed from the Aircraft other
than:
(a) if replaced as expressly permitted by this Agreement; or
(b) if the removal is of an obsolete item and is in accordance with the Agreed
Maintenance Program; or
(c) (i) during the course of maintaining, servicing, repairing, overhauling or
testing that Engine or the Aircraft, as the case may be; or
(ii) as part of a normal engine or part rotation Program; or
(iii) for the purpose of making such modifications to the Engine or the
Aircraft, as the case may be, as are permitted under this Agreement; and
then in each case only if it is reinstalled or replaced by an engine or
part complying with Clause 8.13(a) as soon as practicable and in any event
no later than the Expiry Date.
8.13 Installation of Engines and Parts : Lessee will:
(a) ensure that, except as permitted by this Agreement, no engine or part is
installed on the Aircraft unless:
(i) in the case of an engine, it (x) is an engine of the same model as, or
an improved or advanced version of the Engine it replaces; (y) is in the
same or better operating condition, has substantially similar hours
available until the next scheduled checks, inspections, overhauls and shop
visits (provided, however, that, on the Expiry Date, Lessee may make the
financial adjustments referred to in Clause 12.8 in lieu of complying with
this sub-paragraph (y)); and (z) has the same or greater value and utility
as the replaced Engine;
(ii) in the case of a part, it is in as good operating condition, has
substantially similar hours available until the next scheduled checks,
inspections, overhauls and shop visits, is of the same or a more advanced
make and model and is of the same interchangeable modification status as
the replaced Part;
(iii) in each case, it has become and remains the property of Lessor free
from Security interests and on installation of the Aircraft will without
further act be subject to this Agreement
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and the Mortgage;
(iv) in each case, Lessee has full details as to its source and
maintenance records; and
(v) Lessee complies with all applicable provisions of the Mortgage;
(b) If no Default has occurred which is continuing, be entitled to install any
engine or part on the Aircraft by way of replacement notwithstanding
Clause 8.13(a) if
(i) there is not available to Lessee at the time and in the place that
that engine or part is required to be installed on the Aircraft, a
replacement engine or, as the case may be, part complying with the
requirements of Clause 8.13(a);
(ii) it would result in an unreasonable disruption of the operation of the
Aircraft and/or the business of Lessee to ground the Aircraft until an
engine or part, as the case may be, complying with Clause 8.13 (a) becomes
available for installation on the Aircraft; and
(iii) as soon as practicable after installation of the same on the
Aircraft but, in any event, no later than the Expiry Date, Lessee removes
any such engine or part and replaces it with the Engine or Part replaced
by it or by an engine or part, as the case may be, complying with Clause
8.13(a).
Where, pursuant to this sub-clause (b), an engine or part is
installed on the Aircraft, Lessor shall not be entitled to any ownership
or Security Interest in such engine or part.
(c) If no Default has occurred which is continuing, the Lessee will be
entitled to install Lessee Installed Seats on the Airframe by way of
replacement notwithstanding Clause 8.13(a)(iii) so long as:
(i) the terms of any lease, conditional sale agreement or security agreement,
as the case may be, covering such Lessee Installed Seats will not have the
effect of prejudicing the title and interest of the Lessor in and to the
Aircraft (including its Engines and Parts) or the interest of the Lender
in respect thereof under the Mortgage;
(ii) the secured party, lessor or conditional vendor, as the case may be, of
such Lessee Installed Seats has confirmed and acknowledged in writing
(which such confirmation and acknowledgment may be contained in the lease,
conditional sale agreement or security agreement) to the Lessor and the
Lender, in form and substance satisfactory to the Lessor, that it will
recognize the respective rights, title and interest of the Lessor and the
Lender in and to the Aircraft (including its Engines and Parts) and that
it will not seek to exercise any rights whatever in relation thereto; and
(iii) before the Expiry Date the Lessee removes the Lessee Installed Seats and
replaces them with the seats owned by them or by other seats, in either
case complying with Clause 8.13(a).
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8.14 Non-Installed Engines and Parts: Lessee will:
(a) ensure that any Engine or Part which is not installed on the Aircraft (or
any other aircraft as permitted by this Agreement) is, except as expressly
permitted by this Agreement, properly and safely stored, and kept free
from Security Interests;
(b) on request notify Lessor if any Engine has been removed from the Aircraft
and, from time to time, on request procure that any person to whom
possession of an Engine is given acknowledges in writing to Lessor, in
form and substance satisfactory to Lessor, that it will respect the
interests of Lessor as lessor and Lender as mortgagee and secured party
and will not seek to exercise any rights whatsoever in relation to it;
(c) (notwithstanding the foregoing provisions of this sub-clause), be
permitted, if no Default has occurred and is continuing, to install any
Engine or Part on an aircraft, or in the case of a Part, an engine:
(i) owned and operated by Lessee free from Security Interests; or
(ii) leased or hired to Lessee pursuant to a lease or conditional sale
agreement on a long-term basis and on terms whereby Lessee has full
operational control of that aircraft or engine; or
(iii) acquired by Lessee and/or financed or refinanced, and operated by
Lessee, on terms that ownership of that aircraft or engine, as the case
may be, pursuant to a lease or conditional sale agreement, or a
Security Interest therein, is vested in or held by any other person;
provided that in the case of (ii) and (iii):
(1) the terms of any such lease, conditional sale agreement or Security
Interest will not have the effect of prejudicing the interests of Lender
as mortgagee and secured party or Lessor as holder of title and lessor of
that Engine or Part and lessor of that Engine or Part or the interests of
Lender in respect thereof under the Lease Assignment; and
(2) if requested by Lessor, the lessor under such lease, the seller under
such conditional sale agreement or the holder of such Security Interest,
as the case may be, has confirmed and acknowledged in writing to Lessor,
in form and substance satisfactory to Lessor, that it will respect the
interest of Lessor as owner and lessor and Lender as mortgagee and secured
party of that Engine or Part and that it will not seek to exercise any
rights whatsoever in relation thereto.
8.15 Pooling of Engines and Parts : Lessee will not enter into nor permit
any pooling agreement or arrangement in respect of an Engine or Part
without the prior written consent of Lessor.
8.16 Equipment Changes :
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(a) Lessee will not make any modification or addition to the Aircraft (each an
"Equipment Change"), except for an Equipment Change which:
(i) is expressly permitted by this Agreement, or
(ii) which does not diminish the value, utility, condition, or
airworthiness of the Aircraft;
(b) So long as a Default has not occurred and is continuing, Lessee may remove
any Equipment Change if it can be removed from the Aircraft without
diminishing or impairing the value, utility, condition or airworthiness of
the Aircraft.
8.17 Title :
(a) Except as provided in Part 1 of Schedule 1 with respect to Windshear, TCAS
and 11 Parameter FDR equipment, title to all Engines and Parts installed
on the Aircraft whether by way of replacement, as the result of an
Equipment Change or otherwise (except those installed pursuant to Clause
8.13(b) or 8.13(c)) will on installation, without further act, vest in
Lessor subject to this Agreement and the Mortgage free and clear of all
Security Interests. Lessee will at its own expense take all such steps and
execute, and procure the execution of, all such instruments as Lessor may
require and which are necessary to ensure that title so passes to Lessor
according to all applicable laws. At any time when requested by Lessor,
Lessee will provide evidence to Lessor's satisfaction (including the
provision, if required, to Lessor of one or more legal opinions) that
title has so passed to Lessor;
(b) Lessor may require Lessee to remove any Equipment Change and to restore
the Aircraft to its condition prior to that Equipment Change;
(c) Except as referred to in Clause 8.17(b) any Engine or Part (other than the
Windshear, TCAS and 11 Parameter FDR equipment referred to in Part 1 of
Schedule 1) at any time removed from the Aircraft will remain the property
of Lessor until replacement has been made in accordance with this
Agreement and until title in that replacement has passed, according to
applicable laws, to Lessor subject to this Agreement and the Mortgage free
of all Security Interests whereupon title to the Engine or Part will,
provided no Default has occurred and is continuing, pass to Lessee (in
connection with which Lessor shall execute such documents as Lessee shall
reasonably request and at Lessee's cost which are necessary to convey such
title to Lessee).
8.18 Third Party : Lessee will procure that no person (other than Lessor or
Lender) will act in any manner inconsistent with its obligations under
this Agreement and that all persons will comply with those obligations as
if references to "Lessee" included a separate reference to those persons.
9. INSURANCE
9.1 Insurances : Lessee will maintain in full force during the Term insurances
in respect of the Aircraft in form and substance satisfactory to Lessor
(the "Insurances" which expression includes, where the context so admits,
any relevant re-insurance(s)) through such brokers and
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with such insurers and having such deductibles and being subject to such
exclusions as may be approved by Lessor. The Insurances will be effected
either:
(a) on a direct basis with insurers of recognized standing who normally
participate in aviation insurances in the leading international insurance
markets and led by reputable underwriter(s) approved by Lessor; or
(b) with a single insurer or group of insurers approved by Lessor who does not
retain the risk but effects substantial reinsurance with reinsurers in the
leading international insurance markets and through brokers each of
recognized standing and acceptable to Lessor for a percentage acceptable
to Lessor of all risks insured (the "Reinsurances").
9.2 Requirements : Lessor's current requirements as to required Insurances are
as specified in this Clause and in Schedule 4. Lessor may from time to
time stipulate other requirements for the Insurances so that the scope and
level of cover is maintained in line with best industry practice and the
interests of Lessor and each of the Indemnitees are protected; provided,
however, that this Clause of itself will not permit Lessor to increase the
levels of coverage required under this Agreement (but without prejudice to
any other provisions of this Agreement).
9.3 Change : If at any time and on reasonable grounds Lessor wishes to
revoke its approval of any insurer, reinsurer, insurance or
reinsurance, Lessor and/or its brokers will consult with Lessee and
Lessee's brokers (as for the time being approved by Lessor) regarding
whether that approval should be revoked to protect the interests of the
parties insured. If, following the consultation, Lessor considers that
any change should be made, Lessee will then arrange or procure the
arrangement of alternative cover satisfactory to Lessor.
9.4 Insurance Covenants: Lessee will:
(a) ensure that all legal requirements as to insurance of the Aircraft, any
Engine or any Part which may from time to time be imposed by the laws of
the State of Registration or any state to, from or over which the Aircraft
may be flown, in so far as they affect or concern the operation of the
Aircraft, are complied with and in particular those requirements
compliance with which is necessary to ensure that (i) the Aircraft is not
in danger of detention or forfeiture, (ii) the insurances remain valid and
in full force and effect, and (iii) the interests of the Indemnitees in
the Insurances and the Aircraft or any Part are not thereby prejudiced;
(b) not use, cause or permit the Aircraft, any Engine or any Part to be used
for any purpose or in any manner not covered by the Insurances or outside
any geographical limit imposed by the Insurances;
(c) comply with the terms and conditions of each policy of the Insurances and
not do, consent or agree to any act or omission which:
(i) invalidates or may invalidate the Insurances; or
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(ii) renders or may render void or voidable the whole or any part of any
of the Insurances; or
(iii) brings any particular liability within the scope of an exclusion or
exception to the Insurances;
(d) not take out without the prior written approval of Lessor any insurance or
reinsurance in respect of the Aircraft other than those required under
this Agreement unless relating solely to hull total loss, business
interruption, profit commission and deductible risk. Notwithstanding the
foregoing, Lessee may, at its own cost, increase the Agreed Value over the
value currently provided for in this Agreement;
(e) commence renewal procedures at least 30 days prior to expiry of any of the
Insurances and provide to Lessor:
(i) if requested by Lessor, a written statement status report of renewal
negotiation 14 days prior to each expiry date.
(ii) confirmation of completion of renewal prior to each expiry date;
(iii) certificates of insurance (and whether appropriate certificates of
reinsurance), and broker's (and any reinsurance brokers') letter of
undertaking in a form acceptable to Lessor in English, detailing the
coverage and confirming the insurers' (and any reinsurers') agreement to
the specified insurance requirements of this Agreement within 7 days after
each renewal date;
(f) on request, and if a Default shall have occurred, provide to Lessor copies
of documents evidencing the Insurances;
(g) on request, and if a Default shall have occurred, provide to Lessor
evidence that the Insurance premiums have been paid;
(h) not make any modification or alteration to the insurances material and
adverse to the interests of any of the Indemnitees;
(i) be responsible for any deductible under the Insurances; and
(j) provide any other insurance and reinsurance related information, or
assistance, in respect of the Insurances as Lessor may reasonably
require.
9.5 Failure to Insure : If Lessee fails to maintain the Insurances in
compliance with this Agreement, each of the Indemnitees will be entitled
but not bound, (without prejudice to any other rights of Lessor under this
Agreement):
(a) to pay the premiums due or to effect and maintain insurances satisfactory
to it or otherwise remedy Lessee's failure in such manner (including,
without limitation to effect and maintain an "owner's interest" policy) as
it considers appropriate. Any sums so expended by it will become
-36-
immediately due and payable by Lessee to Lessor together with interest
thereon at the rate specified in Clause 5.11, from the date of expenditure
by it up to the date of reimbursement by Lessee;
(b) At any time while such failure is continuing to require the Aircraft to
remain at any airport or to proceed to and remain at any airport
designated by it until the failure is remedied to its satisfaction.
9.6 Continuing Indemnity : Lessor may require Lessee to effect and to maintain
product liability insurance after the Expiry Date with respect to its
liability under the Indemnification in Clause 10 for such period as Lessor
may reasonably require (but in any event not more than 3 years) which
provides for each Indemnitee to be named as additional insured. Lessee's
obligation in this Clause shall not be affected by Lessee ceasing to be
lessee of the Aircraft and/or any of the Indemnitees ceasing to have any
interest in respect of the Aircraft.
9.7 Application of Insurance Proceeds:
As between Lessor and Lessee:
(a) all insurance payments received as a result of an Event of Loss occurring
during the Term will be paid to Lessor or as it may direct and Lessor or
its designee who received such payment will pay the balance of those
amounts to Lessee after deduction of all amounts which may be or are
payable by Lessee to Lessor under this Agreement (including under Clause
11.1(b));
(b) all insurance proceeds of any property, damage or loss to the Aircraft,
any Engine or any Part occurring during the Term not constituting an Event
of Loss and in excess of the Damage Notification Threshold will be paid to
Lessor or as it may direct and applied to payment (or to reimburse Lessee)
for repairs or replacement property upon Lessor being satisfied that the
repairs or replacement have been effected in accordance with this
Agreement. Insurance proceeds in amounts below the Damage Notification
Threshold may be paid by the insurer directly to Lessee;
(c) all insurance proceeds in respect of third party liability will, except to
the extent paid by the Insurers to the relevant third party, be paid to
Lessor or as it may direct to be paid directly in satisfaction of the
relevant liability or to Lessee in reimbursement of any payment so made;
(d) notwithstanding Clauses 9.7(a), (b) or (c), if at the time of the payment
of any such insurance proceeds a Default has occurred and is continuing
all such proceeds will be paid to or retained by Lessor or Lessor's
designee to be applied toward payment of any amounts which may be or are
payable by Lessee in such order as Lessor or Lessor's designee sees fit or
as Lessor may elect.
10. INDEMNIFICATION
10.1 General : Lessee agrees to assume liability for, defend, indemnify and
hold harmless the Indemnitees on an after tax basis from and against any
and all claims, proceedings, losses, liabilities, damages (whether direct,
indirect, special, incidental or consequential), suits,
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judgments, costs, expenses (including, without limitation, legal fees and
expenses), penalties (whether civil or criminal) or fines (each a "Claim")
(regardless of when the same is made or incurred, whether on or after July
1, 1999, during or after the Term):
(a) which may at any time be suffered or incurred directly or indirectly as
a result of or in any manner connected with the possession, delivery,
performance, management, ownership, registration, control, maintenance,
condition, service, repair, overhaul, leasing, use, operation or return
of the Aircraft, any Engine or Part (either in the air or on the
ground) whether or not the Claim may be attributable to any defect in
the Aircraft, any Engine or any Part or to its design, testing or use
or otherwise, and regardless of when the same arises or whether it
arises out of or is attributable to any act or omission, negligent or
otherwise, of any Indemnitee;
(b) which arise out of any act or omission which invalidates or which renders
voidable any of the Insurances;
(c) which may at any time be suffered or incurred as a consequence of any
design, article or material in the Aircraft, any Engine or any Part or its
operation or use constituting an infringement of patent, copyright,
trademark, design or other proprietary right or a breach of any obligation
of confidentiality owed to any person;
(d) which results from Lessee's breach of any of its representations or
warranties or any other event of Default under this Agreement;
but excluding any Claim in relation in a particular Indemnitee (x) to the
extent that that Claim is covered pursuant to another indemnity provision
of this Agreement or (y) to the extent it arises as a result of the gross
negligence or willful misconduct of that Indemnitee, Lessor Taxes or a
Lessor Lien or (z) to the extent it arises out of facts and circumstances
occurring prior to July 1, 1999 or after the expiry of the Term where such
facts and circumstances do not result from acts or omissions of Lessee.
10.2 Duration : the Indemnification contained in this Agreement will continue
in full force after the Expiry Date.
11. EVENTS OF LOSS
11.1 Events of Loss :
(a) Pre-delivery: If an Event of Loss occurs prior to delivery of the Aircraft
to Lessee this Agreement will immediately terminate and except as
expressly stated in this Agreement neither party will have any further
obligation or liability under this Agreement other than pursuant to Clause
16.9 except that Lessor will rebate to Lessee the amount of any aircraft
commitment fee paid under this Agreement.
(b) Post-delivery: If an Event of Loss occurs after delivery of the Aircraft
to Lessee, Lessee will pay the Agreed Value to Lessor or as it may direct
on or prior to the earlier of (i) 21 Business Days
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after the Event of Loss and (ii) the date of receipt of insurance proceeds
in respect of that Event of Loss. Subject to the rights of any insurers
and reinsurers or other third party, upon irrevocable payment in full to
Lessor or its designee of that amount and all other amounts which may be
or become payable to Lessor under this Agreement, Lessor will without
recourse or warranty (except as to Lessor's Liens) and without further
act, cause to have transferred to Lessee all of Lessor's rights to any
Engines and Parts not installed when the Event of Loss occurred, all on an
AS-IS-WHERE-IS basis, and will at Lessee's expense, cause Lessor to
execute and deliver such bills of sale and other documents and instruments
as Lessee may reasonably request to evidence (on the public record or
otherwise) the transfer and the vesting of Lessor's rights in such Engines
and Parts in Lessee, free and clear of all rights of Lessor and Lessor
Liens.
11.2 Requisition : During any requisition for use or hire of the Aircraft, any
Engine or Part which does not constitute an Event of Loss:
(a) the Rent and other charges payable under this Agreement will not be
suspended or abated either in whole or in part, and Lessee will not be
released from any of its other obligations under the Agreement (other than
operational obligations with which Lessee is unable to comply solely by
virtue of the requisition);
(b) so long as no Default has occurred and is continuing, Lessee will be
entitled to any hire paid by the requisitioning authority in respect of
the Term. Lessee will, as soon as practicable after the end of any such
requisition, cause the Aircraft to be put into the condition required by
this Agreement. Lessor will be entitled to all compensation payable by the
requisitioning authority in respect of any change in the structure, state
or condition of the Aircraft arising during the period of requisition, and
Lessor will apply such compensation in reimbursing Lessee for the cost of
complying with its obligations under this Agreement in respect of any such
change, but so that, if any Default has occurred and is continuing, Lessor
may apply the compensation or hire in or towards settlement of any amounts
owing by Lessee under this Agreement.
12. RETURN OF AIRCRAFT
12.1 Return : On the Expiry Date or termination of the leasing of the Aircraft
under this Agreement Lessee will unless an Event of Loss has occurred, at
its expense, redeliver the Aircraft and Aircraft Documents to Lessor at
the Redelivery Location or such other airport as is mutually acceptable to
the parties hereto, in a condition complying with Schedule 3, free and
clear of all Security interests and Permitted Liens (other than Lessor
Liens) and in a condition qualifying for immediate certification of
airworthiness by the FAA or as otherwise agreed by Lessor and Lessee, and
thereupon cause the Aircraft to be deregistered by the Air Authority.
12.2 Final Inspection : immediately prior to redelivery of the Aircraft, Lessee
will make the Aircraft available to Lessor and Lender for inspection
("Final Inspection") in order to verify that the condition of the Aircraft
complies with this Agreement. The Final Inspection will be long enough to
permit Lessor to:
(a) inspect the Aircraft Documents;
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(b) inspect the Aircraft and uninstalled Parts;
(c) inspect the Engines, including without limitation (i) a borescope
inspection of (A) the low pressure and high pressure compressors and (B)
turbine area and (ii) engine condition runs; and
(d) observe a 2 hour demonstration flight (with Lessor's representatives as
on-board observers).
Lessor will indemnify and hold harmless Lessee from and against all
Claims (as defined in Clause 10) arising from death or injury to any
observer of Lessor or any employee of Lessor in connection with any
demonstration flight or inspection of the Aircraft by Lessor (except to
the extent that such Claim arises out of the gross negligence or
willful misconduct of Lessee).
12.3 Non-Compliance : To the extent that, at the time of Final Inspection, the
condition of the Aircraft does not comply with this Agreement, Lessee will
at Lessor's option:
(a) immediately rectify the non-compliance and to the extent the
non-compliance extends beyond the Expiry Date, the Term will be
automatically extended and this Agreement will remain in force until the
non-compliance has been rectified; or
(b) redeliver the Aircraft to Lessor and indemnify Lessor, and provide to
Lessor's satisfaction cash as security for that indemnity, against the
cost of putting the Aircraft into the condition required by this
Agreement.
12.4 Redelivery : Upon redelivery Lessee will provide to Lessor all documents
necessary to export the Aircraft from the Habitual Base (including,
without limitation, a valid and subsisting export license for the
Aircraft) and required in relation to the deregistration of the Aircraft
with the Air Authority.
12.5 Acknowledgement: Provided Lessee has complied with its obligations under
this Agreement, following redelivery of the Aircraft by Lessee to Lessor
at the Redelivery Location, Lessor will deliver to Lessee an
acknowledgement confirming that Lessee has redelivered the Aircraft to
Lessor in accordance with this Agreement.
12.6 Maintenance Program:
(a) Prior to the Expiry Date and upon Lessor's request, Lessee will provide
Lessor or its agent reasonable access to the Agreed Maintenance Program
and the Aircraft Documents in order to facilitate the Aircraft's
integration into any subsequent operator's fleet;
(b) Lessee will, if requested by Lessor to do so, upon return of the Aircraft
deliver to Lessor a certified true current and complete copy of the Agreed
Maintenance Program. Lessor agrees that it will not disclose the contents
of the Agreed Maintenance Program to any person or entity except to the
extent necessary to monitor Lessee's compliance with this Agreement and/or
to bridge the maintenance Program for the Aircraft from the Agreed
Maintenance Program to
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another Program after the Expiry Date.
12.7 Fuel : Upon redelivery of the Aircraft to Lessor, an adjustment will be
made in respect of fuel on board on delivery of the Aircraft pursuant to
the Prior Lease and fuel on board at redelivery at the price then
prevailing at the Redelivery Location.
12.8 [Intentionally Omitted].
13. DEFAULT
13.1 Events : Each of the following events or conditions will constitute an
Event of Default and a repudiation of this Agreement by Lessee (whether
any such event or condition is voluntary or involuntary or occurs by
operation of law or pursuant to or in compliance with any judgment, decree
or other of any court or any order, rule or regulation of any Government
Entity):
(a) Non-payment: Lessee fails to make any payment under this Agreement on the
due date and such failure continues for 5 days; or
(b) Insurance: Lessee fails to comply with any provision of Clause 9 or any
insurance required to be maintained under this Agreement is cancelled or
terminated or notice of cancellation is given in respect of any such
insurance; or
(c) Breach: Lessee fails to comply with any other material provision of this
Agreement and, if such failure is in the reasonable opinion of Lessor
capable of remedy, the failure continues for 15 days after notice from
Lessor to Lessee; or
(d) Representation: any material representation or warranty made (or deemed to
be repeated) by Lessee in or pursuant to this Agreement or in any document
or certificate or statement is or proves to have been incorrect in any
material respect when made or deemed to be repeated; or
(e) Cross Default:
(i) any Financial Indebtedness of Lessee or any of its Subsidiaries which
is in excess of $500,000 is not paid when due (but such amounts will not
be considered to be due if they are being contested in good faith by
Lessee and the circumstances contemplated in (i) and (ii) in the
definition of Permitted Lien exist in respect of such amounts); or
(ii) any such Financial Indebtedness becomes due or capable of being
declared due prior to the date when it would otherwise have become due; or
(iii) the security for any such Financial Indebtedness becomes
enforceable; or
(iv) any event of default or termination event, howsoever described,
occurs under the Other Leases or any lease, hire purchase, conditional
sale or credit sale agreement of Lessee or any of its Subsidiaries; or
-41-
(f) Approvals: any consent, authorization, license, certificate or approval of
or registration with or declaration to any Government Entity in connection
with this Agreement (including, without limitation):
(i) any authorization required by Lessee to obtain and transfer freely
Dollars (or any other relevant currency) out of any relevant country; or
(ii) required by Lessee to authorize, or in connection with, the
execution, delivery, validity, enforceability or admissibility in evidence
of this Agreement or the performance by Lessee of its obligations under
this Agreement; or
(iii) the registration of the Aircraft (to the extent that the events
listed below are caused by acts or omissions of Lessee); or
(iv) any airline license or air transport license including, without
limitation, authority to operate the Aircraft under Part 121 of the
Federal Aviation Regulations and a Certificate of Convenience and
Necessity issued under Section 401 of the Federal Aviation Act;
is modified in a manner unacceptable to Lessor or is withheld, or is
revoked, suspended, cancelled, withdrawn, terminated or not renewed, or
otherwise ceases to be in full force; or
(g) Bankruptcy, etc:
(i) Lessee or any Subsidiary consents to the appointment of a custodian,
receiver, or liquidator of itself or all or any material part of Lessee's
property or Lessee's consolidated property, or Lessee or any Subsidiary
admits in writing its inability to, or is unable to, or does not, pay its
debts generally as they come due, or makes a general assignment for the
benefit of creditors, or Lessee or any Subsidiary files a voluntary
petition in bankruptcy or a voluntary petition seeking reorganization in a
proceeding under bankruptcy or insolvency laws (as now or hereafter in
effect), or an answer admitting the material allegations of a petition
filed against Lessee or any Subsidiary in any such proceeding, or Lessee
or any Subsidiary by voluntary petition, answer or consent seeks relief
under the provisions of any other bankruptcy, insolvency or other similar
law providing for the reorganization or winding-up of corporations, or
provides for an agreement, composition, extension or adjustment with its
creditors, or any corporate action (including, without limitation, any
board of directors or shareholder action) is taken by Lessee or any
Subsidiary in furtherance of any of the foregoing, whether or not the same
is fully effected or accomplished; or
(ii) An order, judgment or decree is entered by any court appointing,
without the consent of Lessee or any Subsidiary, a custodian, receiver, or
liquidator of Lessee or any Subsidiary, or of all or any material part of
Lessee's property or Lessee's consolidated property is sequestered, and
any such order, judgment or decree of appointment or sequestration remains
in effect, undismissed, unstayed or unvacated for a period of 30 days
after the date of entry thereof or at any time an order for relief is
granted; or
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(iii) An involuntary petition against Lessee or any Subsidiary in a
proceeding under the United States Federal Bankruptcy laws or other
insolvency laws (as now or hereafter in effect) is filed and is not
withdrawn or dismissed within 30 days thereafter or at any time an order
for relief is granted in such proceeding, or if, under the provisions of
any law providing for reorganization or winding-up of corporations which
may apply to Lessee or any Subsidiary, any court of competent jurisdiction
assumes jurisdiction over, or custody or control of, Lessee or any
Subsidiary or of all or any material part of Lessee's property, or
Lessee's consolidated property and such jurisdiction, custody or control
remains in effect, unrelinquished, unstayed or unterminated for a period
of 30 days or at any time an order for relief is granted in such
proceeding; or
(h) Unlawful: it becomes unlawful for Lessee to perform any of its obligations
under this Agreement or this Agreement becomes wholly or partly invalid or
unenforceable; or
(i) Suspension of Business: Lessee or any of its Subsidiaries suspends or
ceases or threatens to suspend or cease to carry on all or a substantial
part of its business as a Certificated Air Carrier; or
(j) Disposal: Lessee or any of its Subsidiaries disposes, conveys or transfers
or threatens to dispose, convey or transfer of all or a material part of
its assets, liquidates or dissolves or consolidates or merges with any
other Person whether by one or a series of transactions, related or not,
other than for the purpose of a reorganization the terms of which have
received the previous consent in writing of Lessor (provided that such
consent shall not be required where the resulting entity has a net worth
equal to or greater than that of Lessee prior to such reorganization); or
(k) Rights: the existence, validity, enforceability or priority of the rights
of Lessor as lessor in respect of the Aircraft, or the rights of Lender as
mortgagee and secured party or as assignee of this Agreement are
challenged by Lessee or any other person claiming by or through Lessee; or
(l) Change of Ownership: any single person, or group of persons acquire
control of Lessee without the previous consent in writing of Lessor; or
(m) Delivery: Lessee fails to accept delivery of the Aircraft when validly
tendered pursuant to this Agreement by Lessor; or
(n) Adverse Change: any event or series of events occurs which, in the
reasonable opinion of Lessor might have a material adverse effect on the
ability of Lessee to comply with its obligations under this Agreement.
13.2 Rights : If an Event of Default occurs, Lessor may at its option (and
without prejudice to any of its other rights under this Agreement), at any
time thereafter (without notice to Lessee except as required under
applicable law):
(a) accept such repudiation and by notice to Lessee and with immediate effect
terminate the letting
-43-
of the Aircraft (but without prejudice to the continuing obligations of
Lessee under this Agreement), whereupon all rights of Lessee under this
Agreement shall cease; and/or
(b) proceed by appropriate court action or actions to enforce performance of
this Agreement or to recover damages for the breach of this Agreement;
and/or
(c) either:
(i) take possession of the Aircraft, for which purpose Lessor may enter
any premises belonging to or in the occupation of or under the control of
Lessee where the Aircraft may be located, or cause the Aircraft to be
redelivered to Lessor at ▇▇▇▇▇▇▇ International Airport, Co. Clare, Ireland
(or such other location as Lessor may require), and Lessor is hereby
irrevocably by way of security for Lessee's obligations under this
Agreement appointed attorney for Lessee in causing the redelivery or in
directing the pilots of Lessee or other pilots to fly the Aircraft to that
airport and will have all the powers and authorizations necessary for
taking that action; or
(ii) by serving notice require Lessee to redeliver the Aircraft to Lessor
at ▇▇▇▇▇▇▇ International Airport, Ireland (or such other location as
Lessor may require).
13.3 Deregistration : If an Event of Default occurs, Lessor may sell or
otherwise deal with the Aircraft free and clear of any leasehold or other
interest of Lessee as if this Agreement had never been made and Lessee
will at the request of Lessor take all steps necessary to effect (if
applicable) deregistration of the Aircraft and its export from the country
where the Aircraft is for the time being situated and any other steps
necessary to enable the Aircraft to be redelivered to Lessor in accordance
with this Agreement; Lessee hereby irrevocably and by way of security for
its obligations under this Agreement appoints (which appointment is
coupled with an interest) Lessor as its attorney to execute and deliver
any documentation and to do any act or thing required in connection with
the foregoing.
13.4 Default Payments : If
(a) Default occurs; or
(b) the Aircraft is not delivered on the proposed Commencement Date by reason
of failure of Lessee to satisfy any conditions to that delivery;
at Lessor's election, the present value of all Rent due and payable under
this Agreement after the date of the Default shall immediately become due
and payable (such amounts to be discounted to the then present value at
the rate of 8.5% per annum) as liquidated damages for the loss of a
bargain and not as a penalty. In addition, Lessee will indemnify Lessor on
demand against any loss (including loss of profit), damages, expense, cost
or liability which Lessor may sustain or incur directly or indirectly as a
result including but not limited to:
(i) any loss of profit suffered by Lessor because of Lessor's inability to
place the Aircraft on lease with another lessee on terms as favorable to
Lessor as this Agreement or because whatever
-44-
use, if any, to which Lessor is able to put the Aircraft upon its return
to Lessor, or the funds arising upon a sale or other disposal of the
Aircraft, is not as profitable to Lessor as this Agreement;
(ii) any amount of principal, interest, fees or other sums whatsoever paid
or payable on account of funds borrowed in order to carry any unpaid
amount;
(iii) any loss, premium, penalty or expense which may be incurred in
repaying funds raised to finance the Aircraft or in unwinding any swap,
forward interest rate agreement or other financial instrument relating in
whole or in part to Lessor's financing of the Aircraft; and
(iv) any loss, cost, expense or liability sustained or incurred by Lessor
owing to Lessee's failure to redeliver the Aircraft on the date, at the
place and in the condition required by this Agreement.
14. ASSIGNMENT
14.1 LESSEE WILL NOT ASSIGN, TRANSFER (VOLUNTARILY OR INVOLUNTARILY BY
OPERATION OF LAW OR OTHERWISE) OR CREATE OR PERMIT TO EXIST ANY SECURITY
INTEREST OVER, ANY OF ITS RIGHTS UNDER THIS AGREEMENT.
14.2 Subject to Clause 14.4 Lessor may assign, novate or transfer all or any of
its rights under this Agreement and in the Aircraft provided that Lessor
will in the case of an assignment, novation or transfer other than by way
of security have no further obligation under this Agreement following the
assignment, novation or transfer of all its rights under this Agreement
but notwithstanding that assignment, novation or transfer will remain
entitled to the benefit of each indemnity and the liability insurances
effected under this Agreement. Lessee will comply with all reasonable
requests of Lessor, its successors and assigns in respect of any such
assignment. Lessor will promptly notify Lessee of any assignment, novation
or transfer.
14.3 If Lessor desires to effect any assignment, novation or transfer of its
rights and obligations under this Agreement, Lessee agrees to cooperate
and take all such steps as Lessor may reasonably request to give the
assignee, novatee or transferee the benefit of this Agreement (including
as to the execution of novation agreements, lease amendment agreements and
acknowledgements of assignment).
14.4 Any assignment, novation or transfer by Lessor shall be at Lessor's cost
and shall not result in any increase in Lessee's obligations hereunder in
excess of those which would exist in the absence of such assignment,
novation or transfer. In addition, such assignment, novation or transfer
shall be to a Person having a net worth of at least $6,400,000.
15. ILLEGALITY
If it is or becomes unlawful in any jurisdiction for Lessor to give effect
to any of Lessor's obligations as contemplated by this Agreement or to
continue this Agreement Lessor may by
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notice in writing to Lessee terminate the leasing of the Aircraft under
this Agreement and Lessee will forthwith redeliver the Aircraft to Lessor
in accordance with Clause 12. Without prejudice to the foregoing Lessor
will consult in good faith with Lessee as to any steps which may be taken
to restructure the transaction to avoid that unlawfulness but will be
under no obligation to take any such steps.
16. MISCELLANEOUS
16.1 Waivers, Remedies Cumulative : The rights of Lessor under this Agreement:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under any law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver of that
right.
16.2 Delegation : Lessor may delegate to any person or persons all or any of
the trusts, powers or discretions vested in it by these presents and any
such delegation may be made upon such terms and conditions and subject to
such regulations (including power to sub-delegate) as Lessor in its
absolute discretion thinks fit.
16.3 Certificates : Save where expressly provided in this Agreement, any
certificate or determination by Lessor as to any rate of interest or as to
any other amount payable under this Agreement will, in the absence of
manifest error, be conclusive and binding on Lessee.
16.4 Appropriation : If any sum paid or recovered in respect of the liabilities
of Lessee under this Agreement is less than the amount then due, Lessor
may apply that sum to amounts due under this Agreement in such proportions
and order and generally in such manner as Lessor may determine at its sole
discretion.
16.5 Currency Indemnity:
(a) If Lessor receives an amount in respect of Lessee's liability under this
Agreement or if such liability is converted into a claim, proof, judgment
or order in a currency other than the currency (the "contractual
currency") in which the amount is expressed to be payable under this
Agreement:
(i) Lessee will indemnify Lessor as an independent obligation against any
loss arising out of or as a result of such conversion;
(ii) If the amount received by Lessor, when converted into the contractual
currency (at the market rate at which Lessor is able on the date of
receipt by Lessor (or on the next date thereafter on which under normal
banking practice Lessor is able to convert the amount received into the
-46-
contractual currency) to purchase the contractual currency in London or at
its option
New York with that other currency) is less than the amount owed
in the contractual currency, Lessee will, forthwith on demand, pay to
Lessor an amount in the contractual currency equal to the deficit; and
(iii) Lessee will pay to Lessor on demand any exchange costs and Taxes
payable in connection with the conversion;
(b) Lessee waives any right it may have in any jurisdiction to pay any amount
under this Agreement in a currency other than that in which it is
expressed to be payable.
16.6 Set-off : Lessor may set off any matured obligation owed by Lessee under
this Agreement, the Other Leases or under any other agreement between
Lessor (or any affiliate or associate of Lessor) and Lessee (to the extent
beneficially owned by Lessor) against any obligation (whether or not
matured) owed by Lessor to Lessee, regardless of the place of payment or
currency. If the obligations are in different currencies, Lessor may
convert either obligation at the market rate of exchange available in
London or at its option
New York for the purpose of the set-off. If an
obligation is unascertained or unliquidated, Lessor may in good faith
estimate that obligation and set off in respect of the estimate, subject
to the relevant party accounting to the other when the obligation is
ascertained or liquidated. Lessor will not be obliged to pay any amounts
to Lessee under this Agreement so long as any sums which are then due from
Lessee under this Agreement, the Other Leases or under any other agreement
between Lessor (or any affiliate or associate of Lessor) and Lessee remain
unpaid and any such amounts which would otherwise be due will fall due
only if and when Lessee has paid all such sums except to the extent Lessor
otherwise agrees or sets off such amounts against such payment pursuant to
the foregoing.
16.7 Severability : If a provision of this Agreement is or becomes illegal,
invalid or unenforceable in any jurisdiction, that will not affect:
(a) the legality, validity or enforceability in that jurisdiction of any other
provision of this Agreement; or
(b) the legality, validity or enforceability in any other jurisdiction of that
or any other provision of this Agreement.
16.8 Remedy : If Lessee fails to comply with any provision of this Agreement,
Lessor may, without being in any way obliged to do so or responsible for
so doing and without prejudice to the ability of Lessor to treat the
non-compliance as a Default or an Event of Default, effect compliance on
behalf of Lessee, whereupon Lessee shall become liable to pay immediately
any sums expended by Lessor together with all costs and expenses
(including legal costs) in connection therewith.
In the event that Lessee obtains a judgment against Lessor, Lessee shall
be entitled to receive all costs and expenses (including legal costs) in
connection therewith.
16.9 Expenses : Whether or not the Aircraft is accepted by Lessee pursuant to
this Agreement, if
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Lessor shall have tendered the Aircraft to Lessee pursuant to this
Agreement, Lessee will pay to Lessor on demand:
(a) all expenses associated with perfecting this Agreement in the State of
Registration, the Habitual Base and other states having regard to the
operation of the Aircraft (including, but not limited to the provision of
legal opinions (unless otherwise agreed between Lessor and Lessee) stamp
duties, translations and registrations, whether required by Lessor or
Lessee); and
(b) upon the occurrence of a Default, all expenses (including legal, survey
and other costs) payable or incurred by Lessor in contemplation of, or
otherwise in connection with, the enforcement of or preservation of any of
Lessor's rights under this Agreement, or in respect of the repossession of
the Aircraft.
Lessor shall bear the cost of importing the Aircraft into the United
States of America.
All expenses payable pursuant to this Clause 16.9 will be paid in the
currency in which they are incurred by Lessor.
16.10 Time of Essence : The time stipulated in this Agreement for all payments
payable by Lessee to Lessor and for the performance of Lessee's other
obligations under this Agreement will be of the essence of this Agreement.
16.11 Notices : All notices under, or in connection with, this Agreement will,
unless otherwise stated, be given in writing by letter, telex, facsimile
or SITA. Any such notice is deemed effectively to be given as follows:
(i) if by letter, when delivered;
(ii) if by telex, when dispatched, but only if, at the time of
transmission, the correct answerback appears at the start and at the end
of the sender's copy of the notice; and
(iii) if by facsimile or SITA, when transmitted and full transmission has
been separately notified by telephone by the transmitting party. The
address, telex numbers, SITA, facsimile and telephone numbers of Lessee
and Lessor are as follows:
Lessee: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇,
▇.▇.▇.
Attn: Chief Financial Officer
SITA: HNLGOAQ
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Lessor: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-▇▇-
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
Facsimile: 415-392-9142
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
16.12 Law and Jurisdiction:
(a) THIS AGREEMENT IN ALL RESPECTS IS GOVERNED BY THE GOVERNING LAW;
(b) For the benefit of Lessor, Lessee agrees that the courts of the State of
New York are to have nonexclusive jurisdiction to settle any disputes in
connection with this Agreement and submits itself and its property to the
nonexclusive jurisdiction of the courts of the State of
New York in
connection with this Agreement;
(c) Without prejudice to any other mode of service, Lessee:
(i) appoints CT Corporation,
New York as its agent for service of process
relating to any proceedings before the
New York courts in connection with
this Agreement and agrees to maintain the process agent in
New York
notified to Lessor;
(ii) agrees that failure by a process agent to notify Lessee of the
process shall not invalidate the proceedings concerned; and
(iii) consents to the service of process relating to any such proceedings
by prepaid posting of a copy of the process to Lessee's agent at the
address identified in sub-paragraph (i) above;
(d) Lessee:
(i) waives objection to the courts of the State of
New York on grounds of
inconvenient forum or otherwise as regards proceedings in connection with
this Agreement;
(ii) agrees that a judgment or order of a court of the State of New York
in connection with this Agreement is conclusive and binding on it and may
be enforced against it in the courts of any other jurisdiction;
(e) Nothing in this Clause limits the right of Lessor to bring proceedings
against Lessee in connection with this Agreement:
(i) in any other court of competent jurisdiction; or
(ii) concurrently in more than one jurisdiction;
(f) Lessee irrevocably and unconditionally:
-49-
(i) agrees that if Lessor brings legal proceedings against it or its
assets in relation to this Agreement no immunity from such legal
proceedings (which will be deemed to include without limitation, suit,
attachment prior to judgment, other attachment, the obtaining of judgment,
execution or other enforcement) will be claimed by or on behalf of itself
or with respect to its assets;
(ii) waives any such right of immunity which it or its assets now has or
may in the future acquire;
(iii) consents generally in respect of any such proceedings to the giving
of any relief or the issue of any process in connection with such
proceedings including, without limitation, the making, enforcement or
execution against any property whatsoever (irrespective of its use or
intended use) of any order or judgment which may be made or given in such
proceedings.
16.13 Sole and Entire Agreement : This Agreement is the sole and entire
agreement between Lessor and Lessee in relation to the leasing of the
Aircraft, and supersedes all previous agreements in relation to that
leasing.
16.14 Indemnification : All rights expressed to be granted to each Indemnitee
under this Agreement (other than Lessor) are given to Lessor on behalf of
that Indemnitee.
16.15 Counterparts : This Agreement may be executed in counterparts each of
which will constitute one and the same document.
16.16 Language : All notices to be given under this Agreement will be in
English. All documents delivered to Lessor pursuant to this Agreement will
be in English, or if not in English, will be accompanied by a certified
English translation. If there is any inconsistency between the English
version of this Agreement and any version in any other language, the
English version will prevail.
17. DISCLAIMERS AND WAIVERS
17.1 Exclusion: THE AIRCRAFT IS DELIVERED "AS IS, WHERE IS" AND LESSEE AGREES
AND ACKNOWLEDGES THAT, SAVE AS EXPRESSLY STATED IN THIS AGREEMENT, LESSOR
WILL HAVE NO LIABILITY IN RELATION TO, AND LESSOR HAS NOT AND WILL NOT BE
DEEMED TO HAVE MADE OR GIVEN, ANY WARRANTIES OR REPRESENTATIONS, EXPRESS
OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING BUT NOT LIMITED TO:
(a) THE DESCRIPTION, AIRWORTHINESS, MERCHANTABILITY, FITNESS FOR ANY
PARTICULAR USE OR PURPOSE, VALUE, CONDITION, OR DESIGN, OF THE AIRCRAFT OR
ANY PART; OR
(b) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR
-50-
NOT ARISING FROM LESSOR'S NEGLIGENCE, ACTUAL OR IMPUTED; OR
(c) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR DAMAGE TO
THE AIRCRAFT, FOR ANY LIABILITY OF LESSEE TO ANY THIRD PARTY, OR FOR ANY
OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.
17.2 Waiver: LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND THE LESSOR, ALL ITS
RIGHTS IN RESPECT OF ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED,
ON THE PART OF LESSOR AND ALL CLAIMS AGAINST LESSOR HOWSOEVER AND WHENEVER
ARISING AT ANY TIME IN RESPECT OF OR OUT OF THE OPERATION OR PERFORMANCE
OF THE AIRCRAFT OR THIS AGREEMENT EXCEPT TO THE EXTENT ARISING UNDER
CLAUSE 2.4.
17.3 Confirmation: LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF
THIS CLAUSE AND ACKNOWLEDGES THAT RENT AND OTHER AMOUNTS HAVE BEEN
CALCULATED BASED ON ITS PROVISIONS.
18. SECTION 1110
18.1 Section 1110: Lessee acknowledges that Lessor would not have entered
into this Agreement unless it had available to it the benefits of a
lessor under Section 1110 of Title 11 of the United States code. Lessee
covenants and agrees with Lessor that to better ensure the availability
of such benefits, Lessee shall support any motion, petition or
application filed by Lessor with any bankruptcy court having
jurisdiction over Lessee, whereby Lessor seeks recovery of possession
of the Aircraft under said Section 1110 and shall not in any way oppose
such action by Lessor unless Lessee shall have complied with the
requirements of said Section 1110 to be fulfilled in order to entitle
Lessee to continued use and possession of the Aircraft hereunder. In
the event said Section 1110 is amended, or if it is repealed and
another statute is enacted in lieu thereof, Lessor and Lessee agree to
amend this Agreement and take such other action not inconsistent with
this Agreement as Lessor reasonably deems necessary so as to afford to
Lessor the rights and benefits as such amended or substituted statute
confers upon owners and lessors of aircraft similarly situated to
Lessor.
18.2 The Lessor and the Lessee intend that this Agreement constitute a "true
lease" and a lease for all United States federal income tax purposes. The
Lessor and the Lessee further intend and agree that the Lessor shall be
entitled to the full benefits afforded lessors of aircraft under 11 U.S.C.
Section 1110, as amended.
-51-
[Missing page 52]
[Missing page 53]
IN WITNESS WHEREOF Lessor and Lessee have executed this
Aircraft Lease
Agreement as of the date shown at the beginning of this Agreement.
WITNESS SIGNED on behalf of:
COMPASS CAPITAL CORPORATION
By:
---------------------------------- -----------------------------------
Name:
Title:
WITNESS SIGNED on behalf of:
ALOHA AIRLINES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------- -----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: SR. VICE PRESIDENT FINANCE &
PLANNING AND CFO
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: VICE PRESIDENT PLANNING &
DEVELOPMENT
The undersigned acknowledges receipt of this original counterpart of the
foregoing
Aircraft Lease Agreement on this _____ day of _______________ 1999
and consents to the terms hereof.
THE PROVIDENT BANK
By:
-----------------------------------
Name:
Title:
-54-
IN WITNESS WHEREOF Lessor and Lessee have executed this
Aircraft Lease Agreement
as of the date shown at the beginning of this Agreement.
WITNESS SIGNED on behalf of:
COMPASS CAPITAL CORPORATION
By: [Illegible]
---------------------------------- -----------------------------------
Name: [Illegible]
Title: F.V.P.
WITNESS SIGNED on behalf of:
ALOHA AIRLINES, INC.
By:
---------------------------------- -----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
The undersigned acknowledges receipt of this original counterpart of the
foregoing Aircraft Lease Agreement on this _____ day of _______________ 1999
and consents to the terms hereof.
THE PROVIDENT BANK
By:
-----------------------------------
Name:
Title:
Appendix A to Lease Agreement
ADDITIONAL DEFINITIONS
In addition to the definitions set forth in Clause 1.1, the following
expressions shall, unless the context otherwise requires, have the following
respective meanings in this Agreement:
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]
SCHEDULE 1
PART I
DESCRIPTION OF AIRCRAFT
AIRCRAFT
MANUFACTURER: Boeing
MODEL: 737-2T4
SERIAL NUMBER: 23445
DATE OF MANUFACTURE: September, 1985
U.S. REGISTRATION NO.: N808AL
ENGINES
ENGINE TYPE AND NUMBER: ▇▇▇▇▇ & ▇▇▇▇▇▇▇ JT8D-17A
SERIAL NOS.: 665650 and 665603
(Each of which has 750 or more rated takeoff horsepower or the equivalent of
such horsepower)
DELIVERY CONDITION OF AIRCRAFT
On the Commencement Date, the Aircraft shall be deemed to be delivered to
Lessee in the same condition as redelivered pursuant to the Prior Lease and,
consequently, for the purposes of delivery under this Agreement Lessee
acknowledges its satisfaction with the condition of the Aircraft. Except as
provided in Part B of Schedule 3, TCAS, Windshear and 11 Parameter FDR
equipment installed on the Aircraft shall remain property of the Lessee.
SCHEDULE 1
PART 2
AIRCRAFT DOCUMENTS
Such documents as shall be agreed between Lessor and Lessee prior to the
Commencement Date.
SCHEDULE 2
[Intentionally Omitted]
SCHEDULE 3
OPERATING CONDITION AT REDELIVERY
PART A. CONDITIONS APPLICABLE TO ANY REDELIVERY
On the Expiry Date the Aircraft, subject to fair wear and tear generally
(notwithstanding anything contained in this Agreement to the contrary), will
be in the condition set out below.
1. General Conditions
The Aircraft will:
(a) be clean by airline standards;
(b) have installed the full complement of engines and other equipment, parts
and accessories and loose equipment as is normally installed in the
Aircraft, be in Lessee's standard configuration with respect to LOPA and
the installed seats and be in a condition suitable for immediate operation
in commercial service by any other Certificated Air Carrier, subject to
the special exemptions permitted Lessee regarding compliance with the
Airport Noise and Capacity Act of 1990, as amended, and the regulations
promulgated by the FAA thereunder;
(c) have in existence a valid certificate of airworthiness issued by the FAA
in accordance with FAR part 21 (or if required by the Lessor, a valid
export certificate of airworthiness) with respect to the Aircraft issued
by the Aviation Authority;
(d) comply with the manufacturer's original specification and be in either the
same configuration as at delivery or in the configuration operated by
Lessee immediately prior to redelivery, as Lessor may elect by written
notice to Lessee given 120 days before the Expiry Date; provided that if
Lessor fails to give such written notice to Lessee 120 days before the
Expiry Date, Lessee shall be permitted to redeliver the Aircraft in the
configuration operated by Lessee immediately prior to redelivery;
(e) have undergone, immediately prior to redelivery, the next "C" check due in
accordance with the Agreed Maintenance Program, including all structural
inspections and sampling to be performed under the Agreed Maintenance
Program at the time of such "C" check, including corresponding lower
checks ("A" and "B" or equivalent) and any other maintenance and
inspections tasks that are a part of such checks, all in accordance with
the Boeing MPD;
(f) have had accomplished all outstanding airworthiness directives and
mandatory orders affecting that model of Aircraft issued by the FAA which,
if the Aircraft were registered with the FAA, would have to be complied
with during the Term or within 180 days after the Expiry Date;
(g) have installed all applicable vendor's and manufacturer's service bulletin
kits received free of charge by the Lessee that are appropriate for the
Aircraft and to the extent not installed, those kits will be furnished
free of charge to Lessor;
(h) be painted in Lessee's external colors but with logos removed; and
(i) have all signs and decals clean, secure and legible.
2. COMPONENTS
(a) Each life-limited component (other than the APU) shall have not less than
the number of Flight Hours of life as were remaining thereon to the next
scheduled removal as on the date on which the Aircraft was delivered
pursuant to the Prior Lease, in accordance with the Agreed Maintenance
Program;
(b) Each calendar-Limited component will have not less than 12 months life
remaining to the next scheduled removal in accordance with the Agreed
Maintenance Program (provided that, if the calendar limit for any such
component is less than 12 months, such component shall have such less
number of months so remaining);
(c) Each "on-condition" and "condition monitored" component will be
serviceable; and
(c) The APU will be in serviceable condition such condition to be verified
by a borescope inspection and "health check" under full load conditions.
3. ENGINES
Each engine will be installed on the Aircraft and if not the engines
installed on the date on which the Aircraft was delivered pursuant to the
Prior Lease the will be accompanied by all documentation Lessor may
require to evidence that title thereto is properly vested in Lessor and
will:
(a) be serviceable with not less than 3,000 Cycles remaining to the next
limiter; and
(b) be in a condition which can operate at required take off power at sea
level at a temperature of 34 degrees C.
4. FUSELAGE, WINDOWS AND DOORS
(a) The fuselage will be free of major dents and abrasions, scab patches and
loose or pulled or missing rivets;
(b) Windows will be free of delamination, blemishes, crazing and will be
properly sealed; and
(c) Doors will be free moving, correctly rigged and fitted with serviceable
seals.
5. WINGS AND EMPENNAGE
(a) Leading edges will be free from damage;
(b) Control surfaces will be waxed and polished;
(c) Unpainted cowlings and fairings will be polished; and
(d) Wings will be free of fuel leaks.
6. INTERIOR
(a) Ceilings, sidewalls and bulk panels will be clean and free of stains
(b) Carpets and seat covers will be in good condition, clean and free of
stains and meet FAR fire resistance regulations;
(c) Seats will be serviceable, in good condition and repaired as necessary;
and
(d) Emergency equipment having a calendar life will have a minimum of 1 year
or 100% of its total approved life, whichever is less, remaining.
7. COCKPIT
(a) Fairing panels shall be free of stains and cracks, will be clean, secure
and repainted as necessary;
(b) Floor coverings will be clean and effectively sealed.
(c) Seat covers will be in good condition, clean and free of stains and will
conform to FAR fire resistance regulations; and
(d) Seats will be serviceable, in good condition and will be repainted as
necessary.
8. CARGO COMPARTMENTS
(a) Panels will be in good condition; and
(b) Nets will be in good condition.
9. LANDING GEAR
The landing gear and wheel ▇▇▇▇▇ will be clean, free of leaks and repaired
as necessary.
10. CORROSION
(a) The Aircraft will have been inspected and treated with respect to
corrosion as defined in the Agreed Maintenance Program;
(b) The entire fuselage will be substantially free from corrosion and will be
adequately treated and an approved corrosion prevention Program will be in
operation; and
(c) Fuel tanks will be free from contamination and corrosion and a tank
treatment Program will be in operation.
PART B. ADDITIONAL CONDITIONS APPLICABLE UPON EARLY TERMINATION
Upon redelivery of the Aircraft upon early termination of the Lease in
accordance with Section 4.7 thereof, the Aircraft will be returned (1) in
accordance with Part A of this Schedule 3 and (2) all TCAS, Windshear and 11
Parameter FDR equipment shall be installed and functional subject to fair wear
and tear generally and shall become property of the Lessor.
SCHEDULE 4
INSURANCE REQUIREMENTS
The Insurances required to be maintained are as follows:
(a) HULL ALL RISKS of Loss or Damage whilst flying and on the ground with
respect to the Aircraft on an "agreed value basis" for the Agreed Value
and with a deductible not exceeding $500,000 or such other amount agreed
by Lessor and Lender from time to time (provided that, in the event that
Lessee increases its general deductible amount applicable to its aircraft
fleet to an amount which is greater than $500,000, the deductible amount
under this Agreement may, with prior written notice to Lessor, be
increased by Lessee to an amount equal to the lesser of (x) such greater
amount; and (y) $750,000;
(b) HULL WAR AND ALLIED PERILS, being such war risks excluded from the Hull
All Risks Policy to the fullest extent available from the leading
international insurance markets, including confiscation and requisition by
the State of Registration, for the Agreed Value;
(c) ALL RISKS (INCLUDING WAR AND ALLIED RISK except when on the ground or in
transit other than by air) property insurance on all Engines and Parts
when not installed on the Aircraft on an "agreed value" basis for their
full replacement value including engine test and running risks;
(d) AIRCRAFT THIRD PARTY, PROPERTY DAMAGE, PASSENGER, BAGGAGE, CARGO AND MAIL
AND AIRLINE GENERAL THIRD PARTY (INCLUDING PRODUCTS) LEGAL LIABILITY for a
Combined Single Limit (Bodily Injury/Property Damage) of an amount not
less than the Minimum Liability Coverage for the time being any one
occurrence (but, in respect of products and personal injury liability,
this limit may be an aggregate limit for any and all losses occurring
during the currency of the policy); War and Allied Risks are also to be
covered under the Policy to the fullest extent available from the leading
international insurance markets;
(e) All required hull and spares insurance (as specified above), so far as it
relates to the Aircraft will:-
(i) name Lessor, Lender (so long as the Mortgage remains in effect with
respect to the Aircraft), their respective successors and assigns as
additional assureds for their respective rights and interests, warranted,
each as to itself only, no operational interest;
(ii) provide that any loss will be settled with Lessor and Lessee, subject
to final prior approval of Lender (so long as the Mortgage remains in
effect with respect to the Aircraft) and will be payable in Dollars to
Lender (so long as the Mortgage remains in effect with respect to the
Aircraft) or Lessor if the Mortgage is no longer in effect with respect to
the Aircraft), for the account of all interests except where such loss
does not exceed the Damage Notification Threshold, and Lender (so long as
the Mortgage remains in effect with respect to the Aircraft) has not
notified the insurers to the contrary, in which case the loss will be
settled with and paid to Lessee;
(iii) include a notice and/or acknowledgement of assignment (relating to
the assignment of Lessor's interest in the insurances to Lender) in a form
acceptable to Lessor and Lender;
(iv) if separate Hull "all risks" and "war risks" insurances are arranged,
include a 50/50 provision in accordance with market practice (AVS103 is
the current market language); and
(v) confirm that the insurers are not entitled to replace the Aircraft in
the event of an insured Event of Loss.
(f) All required liability insurances specified in Clause 1(d) above will:
(i) name Lessor and each of the Indemnitees and their respective
successors and assigns and their respective shareholders, subsidiaries,
directors, officers, agents, employees and indemnitees as additional
insureds for their respective rights and interests, warranted, each as to
itself only, no operational interest;
(ii) include a Severability of Interest Clause which provides that the
insurance, except for limits of liability, will operate to give each
assured the same protection as if there was a separate policy to be issued
to each assured;
(iii) contain a provision confirming that the policy is primary without
right of contribution and the liability of the insurers will not be
affected by any other insurance of which Lessor or any of the Indemnitees
or Lessee have the benefit so as to reduce the amount payable to the
additional insureds under such policies;
(g) All Insurances will:
(i) be in accordance with normal industry practice of persons operating
similar aircraft in similar circumstances;
(ii) provide cover denominated in Dollars and any other currencies which
Lessor may reasonably require in relation to liability insurance;
(iii) operate on a worldwide basis subject to such limitations and
exclusions as Lessor may agree;
(iv) acknowledge the insurer is aware (and has seen a copy) of this
Agreement and that the Aircraft is owned by the Lessor and is subject to
Mortgage (so long as the Mortgage remains in effect with respect to the
Aircraft);
(v) provide that, in relation to the interests of each of the additional
assureds, the Insurances will not be invalidated by any act or omission by
Lessee, or any other person other than the respective additional assured
seeking protection and shall insure the interests of each of the
additional assureds regardless of any breach or violation by Lessee, or
any other person other than the respective additional assured seeking
protection of any warranty, declaration or condition, contained in such
Insurances;
(vi) provide that the insurers will hold harmless and waive any rights of
recourse and/or
subrogation against the additional assureds;
(vii) provide that the additional assureds will have no obligation or
responsibility for the payment of any premiums due (but reserve the right
to pay the same should any of them elect so to do) and that the insurers
will not exercise any right of offset or counter-claim in respect of any
premium due against the respective interests of the additional assureds
other than outstanding premiums relating to the Aircraft, any Engine or
Part the subject of the relevant claim;
(viii) provide that the Insurances will continue unaltered for the benefit
of the additional assureds for at least 30 days after written notice by
registered mail or facsimile of any cancellation, change, event of
non-payment of premium or installment thereof has been sent to Lessor and
to each Indemnitee, except in the case of war risks for which 7 days (or
such lesser period as is or may be customarily available in respect of war
risks or allied perils) will be given, or in the case of war between the 5
great powers or nuclear peril for which termination is automatic;
(ix) if reinsurance is a requirement of this Agreement such reinsurance
will (i) be on the same terms as the original insurances and will include
the provisions of this Schedule, (ii) provide that notwithstanding any
bankruptcy, insolvency, liquidation, dissolution or similar proceedings of
or affecting the reinsured that the reinsurers' liability will be to make
such payments as would have fallen due under the relevant policy of
reinsurance if the reinsured had (immediately before such bankruptcy,
insolvency, liquidation, dissolution or similar proceedings) discharged
its obligations in full under the original insurance policies in respect
of which the then relevant policy of reinsurance has been effected; and
(iii) contain a "cut-through" clause in the following form (or otherwise,
satisfactory to Lessor): "The Reinsurer and the Reinsured hereby mutually
agree that in the event of any claim arising under the reinsurances in
respect of a total loss or other claim where as provided by the Aircraft
Lease Agreement dated October 15, 1999 and made between Compass Capital
Corporation and Aloha Airlines, Inc. such claim is to be paid to the
person named as sole loss payee under the primary insurances, the
Reinsurers will in lieu of payment to the Reinsured, its successors in
interest and assigns pay to the person named as sole loss payee under the
primary insurances effected by the Reinsured that portion of any loss due
for which the Reinsurers would have otherwise be liable to pay the
Reinsured (subject to proof of loss), it being understood and agreed that
any such payment by the Reinsurers will (to the extent of such payment)
fully discharge and release the Reinsurers from any and all further
liability in connection therewith"; subject to such provisions not
contravening any of the State of Incorporation;
(x) contain a provision entitling Lessor, Lender (so long as the Mortgage
remains in effect with respect to the Aircraft) or any insured party to
initiate a claim under any policy in the event of the refusal or failure
of Lessee to do so;
(xi) accept and insure the indemnity provisions of this Agreement.
AMENDMENT NO. I (N808AL)
to
Aircraft Lease Agreement
- relating to -
Boeing 737-2T4 Aircraft
Manufacturers Serial No: 23445
U.S. Registration ▇▇▇▇ N808AL
---------------------------
DATED as of May 1, 2000
---------------------------
COMPASS CAPITAL CORPORATION
(Lessor)
- and -
ALOHA AIRLINES, INC.
(Lessee)
THIS AMENDMENT No. I HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO THE EXTENT,
IF ANY, THAT THE AIRCRAFT 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 THE AIRCRAFT LEASE AGREEMENT MAY BE
CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPARTS OTHER THAN THE
ORIGINAL COUNTERPART OF THE AIRCRAFT LEASE AGREEMENT AND OF ALL AMENDMENTS
THERETO AND OF COUNTERPART No. 1 OF THIS AMENDMENT No. 1. THIS is COUNTERPART
No. 2.
RECORDED
FEDERAL AVIATION ADMINISTRATION
Date 7-21-00 Time 10:53 ??
Conveyance Number JJ33659
By [ILLEGIBLE]
AMENDMENT NO. 1 (N808AL)
This AMENDMENT NO. 1 (N808AL), dated as of May 1, 2000 (this
"Amendment"), is between COMPASS CAPITAL CORPORATION, a California
corporation (the "Lessor"), and ALOHA AIRLINES, INC., a Delaware corporation,
as lessee ("Lessee").
RECITALS:
(1) Lessor and Lessee have entered into an Aircraft Lease Agreement
dated October 15, 1999 (as supplemented and assigned and as fully described
on the attached Schedule 1 (the "Lease Agreement")). The Lease Agreement has
been filed with the FAA as set forth on the attached Schedule 1.
(2) The Lease Agreement relates to one Boeing Model 737-2T4 aircraft
bearing manufacturer's serial no. 23445 and U.S. registration ▇▇▇▇ N808AL,
including two ▇▇▇▇▇ & ▇▇▇▇▇▇▇ Model JT8D-9A engines bearing manufacturer's
serial nos. 665650 and 665603, each having 750 or more rated takeoff
horsepower or the equivalent thereof (the "Aircraft").
(3) NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration whose receipt and sufficiency are
acknowledged, Lessor and Lessee agree as follows:
1. DEFINITIONS. Capitalized terms used and not defined in this
Amendment have the meanings ascribed to such terms in the Lease Agreement.
2. AMENDMENTS TO THE LEASE AGREEMENT Lessor and Lessee agree that
the Lease Agreement shall be amended as follows: On Schedule 1 to the Lease,
the reference to "JT8D-17A" is amended to be "JT8D-9A."
3. ASSIGNMENT. This Amendment shall be binding upon and inure to the
benefit of each of the Lessee and Lessor and their respective successors and
permitted assigns.
4. MISCELLANEOUS
(a) Except as specifically amended by this Amendment, the Lease
Agreement shall remain in full force and effect in accordance with its terms.
(b) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
EXECUTED IN AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK BY
RESIDENTS OF SUCH STATE.
(c) The provisions of this Amendment are severable, and if any
clause or provision shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause, provision or part in such jurisdiction and shall not
in any manner affect such clause, provision or part in any other jurisdiction
or any other clause or provision in this Amendment in any jurisdiction.
(d) This Amendment may be signed in any number of
counterparts with the same effect as if all parties to this Amendment
signed the same counterpart.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Lessor and Lessee have caused this Amendment
to be duly executed by their duly authorized officers as of the day and year
first above written
COMPASS CAPITAL CORPORATION, as
Lessor
By: [ILLEGIBLE]
--------------------------------
Name: [ILLEGIBLE]
Title: [ILLEGIBLE]
ALOHA AIRLINES, INC., as Lessee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: VICE PRESIDENT PLANNING &
DEVELOPMENT
Schedule 1
DESCRIPTION OF LEASE AGREEMENT
Aircraft Lease Agreement dated as of October 15, 1999, between
Compass Capital Corporation as lessor and Aloha Airlines, Inc. as lessee,
recorded by the Federal Aviation Administration on November 17, 1999, as
Conveyance No. ZZ021143.
AMENDMENT NO. 2 (N808AL)
This AMENDMENT NO. 2 (N808AL), dated as of September 29,
2001 (this "Amendment"), is between COMPASS CAPITAL CORPORATION, a California
corporation (the "Lessor"), and ALOHA AIRLINES, INC., a Delaware corporation,
as lessee ("Lessee").
RECITALS:
(1) Lessor and Lessee have entered into an Aircraft Lease Agreement dated
October 15, 1999 (as supplemented and assigned and amended and as fully
described on the attached Schedule 1 (the "Lease Agreement")). The Lease
Agreement has been filed with the FAA as set forth on the attached Schedule 1.
(2) The Lease Agreement relates to one Boeing Model 737-2T4 aircraft bearing
manufacturer's serial no. 23445 and U.S. registration ▇▇▇▇ N808AL, including
two ▇▇▇▇▇ & Whitney Model JT8D-9A engines bearing manufacturer's serial nos.
665650 and 665603, each having 750 or more rated takeoff horsepower or the
equivalent thereof (the "Aircraft").
(3) NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration whose receipt and sufficiency are acknowledged, Lessor
and Lessee agree as follows:
1. DEFINITIONS. Capitalized terms used and not defined in this Amendment
have the meanings ascribed to such terms in the Lease Agreement.
2. AMENDMENTS TO THE LEASE AGREEMENT. Lessor and Lessee agree that the Lease
Agreement is hereby amended as follows:
(a) In the definition of "Expiry Date" in Clause 1.1 of the Lease
Agreement, the reference to "29 September 2007" is amended to be "29 November
2007".
(b) Appendix A to the Lease Agreement is deleted in its entirety and a
new Appendix A in the form of Attachment 1 to this Amendment is substituted
therefor.
3. ASSIGNMENT. This Amendment shall be binding upon and inure to the
benefit of each of the Lessee and Lessor and their respective successors and
permitted assigns.
4. MISCELLANEOUS.
(a) Except as specifically amended by this Amendment, the Lease
Agreement shall remain in full force and effect in accordance with its terms.
(b) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED IN
AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK BY RESIDENTS OF
SUCH STATE.
(c) The provisions of this Amendment are severable, and if any clause
or provision shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause, provision or part in such jurisdiction and shall not in any
manner affect such clause, provision or part in any other jurisdiction or any
other clause or provision in this Amendment in any jurisdiction.
(d) This Amendment may be signed in any number of counterparts with the
same effect as if all parties to this Amendment signed the same counterpart.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Lessor and Lessee have caused this Amendment to be
duly executed by their duly authorized officers as of the day and year first
above written.
COMPASS CAPITAL CORPORATION, as Lessor
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: EXECUTIVE VICE PRESIDENT
ALOHA AIRLINES, INC., as Lessee
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
IN WITNESS WHEREOF, Lessor and Lessee have caused this Amendment to be
duly executed by their duly authorized officers as of the day and year first
above written.
COMPASS CAPITAL CORPORATION, as Lessor
By:
-----------------------------------
Name:
Title:
ALOHA AIRLINES, INC., as Lessee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: PRESIDENT & CEO
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: EXEC. VICE PRESIDENT & CFO
Schedule 1
DESCRIPTION OF LEASE AGREEMENT
Aircraft Lease Agreement dated as of October 15, 1999, between Compass
Capital Corporation as lessor and Aloha Airlines, Inc. as lessee, recorded by
the Federal Aviation Administration on November 17, 1999, as Conveyance No.
ZZ021143, as amended by Amendment No.1 (N808AL) dated as of May 1, 2000,
recorded on July 21, 2000, as Conveyance No. JJ33659.
Attachment 1 to Lease Amendment No. 2
Appendix A to Lease Agreement
ADDITIONAL DEFINITIONS
In addition to the definitions set forth in Clause 1.1, the following
expressions shall, unless the context otherwise requires, have the following
respective meanings in this Agreement:
[This provision has been omitted as confidential information, and is
separately filed with the Commission.]