Exhibit 10.68
EXECUTION VERSION
TO THE EXTENT THAT THIS AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL
PAPER (AS 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 TRANSFER OR POSSESSION OF ANY
COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE
IDENTIFIED AS THE COUNTERPART DESIGNATED AS THE ORIGINAL ON THE
SIGNATURE PAGE OF THIS AGREEMENT BY GE CAPITAL AVIATION SERVICES,
INC.
AIRCRAFT LEASE AGREEMENT
DATED AS OF MAY 12, 2000
BETWEEN
AVIATION FINANCIAL SERVICES INC.
AS LESSOR
AND
ALOHA AIRLINES, INC.
AS LESSEE
IN RESPECT OF AIRCRAFT: BOEING MODEL 737-700
SERIAL NO: 28641
U.S. REGISTRATION NO.: N741AL
-------------------------------
INCORPORATING THE PROVISIONS OF A
COMMON TERMS AGREEMENT
DATED AS OF MAY 12,2000
AIRCRAFT LEASE AGREEMENT
THIS AIRCRAFT LEASE AGREEMENT is made as of May 12,2000 and is
BETWEEN:
(1) AVIATION FINANCIAL SERVICES INC., a corporation incorporated under
the Laws of the State of Delaware having its principal place of
business and chief executive office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("LESSOR"); and
ALOHA AIRLINES, INC., a corporation incorporated under the Laws of
the State of Delaware with its principal place of business and chief
executive office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
("LESSEE").
WHEREAS:
(A) Lessee wishes to lease the Aircraft (as defined below) from Lessor,
and Lessor wishes to lease the Aircraft to Lessee, on the terms and
subject to the conditions provided herein;
(B) General Electric Capital Corporation ("GECC"), an Affiliate of
Lessor, and Lessee have entered into the Common Terms Agreement (as
defined below) in respect of aircraft that may be leased from time
to time by Lessee or one of its Affiliates from GECC or one of its
Affiliates; and
(C) Lessor and Lessee wish to incorporate by reference such Common
Terms Agreement, as well as Schedules A and B attached hereto, into
this Aircraft Lease Agreement for the Aircraft and a true and
complete copy of such Common Terms Agreement is attached hereto as
Schedule C;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. INTERPRETATION
1.1 DEFINITIONS: In this Aircraft Lease Agreement, the following
capitalized words and expressions have the respective meanings set
forth below:
AIRCRAFT means the Airframe and Engines described on Schedule A
hereto.
AIRFRAME STRUCTURAL CHECK, AIRFRAME SUPPLEMENTAL RENT, ANNUAL
SUPPLEMENTAL RENT ADJUSTMENT, APU SUPPLEMENTAL RENT AND ASSUMED
RATIO are not applicable.
COMMON TERMS AGREEMENT means the "Aircraft Lease Common Terms
Agreement" dated as of May 12, 2000 executed by Lessor and Lessee
(as in effect on the date hereof
-1-
without, unless Lessor and Lessee otherwise expressly agree, giving
any effect to any subsequent amendment, supplement, waiver or other
modification thereto), and which forms part of this Aircraft Lease
Agreement.
DELIVERY CONDITION REQUIREMENTS means the requirements specified in
Part II of Schedule A.
DELIVERY LOCATION means Seattle, Washington or such other location
as Lessor and Lessee mutually agree in order to minimize any Taxes
that may be applicable to the Delivery.
DEPOSIT means all amounts payable pursuant to Section 3.1 hereof.
ENGINE SUPPLEMENTAL RENT AND ENGINE LLP SUPPLEMENTAL RENT are not
applicable.
FINAL DELIVERY DATE means the date that is 90 days after the last
day of the Scheduled Delivery Month.
FINANCING DOCUMENTS means the documents, if any, relating to any
indebtedness of Lessor secured, in whole or in part, by Lessor's
interest in the Aircraft and this Aircraft Lease Agreement.
FINANCING DOCUMENTS CONTEST RIGHTS, FINANCING DOCUMENTS INDEMNITY
AMOUNTS AND FINANCING DOCUMENTS TAX AMOUNTS are all inapplicable.
FINANCING PARTIES means the Persons, if any, that hold the
indebtedness of Lessor evidenced by the Financing Documents, and
shall include the Financing Parties Representative.
FINANCING PARTIES' REPRESENTATIVE the Person, if any, identified by
Lessor to Lessee in writing as the representative of the Financing
Parties and the beneficiary of the Security Interest in the
Aircraft and this Aircraft Lease Agreement created by the Financing
Documents, and its successors and assigns.
GUARANTOR is inapplicable.
INDEMNITEE means each of Lessor, Owner, GECC, GECAS, the Financing
Parties and their respective successors and permitted assigns, and
each of their respective shareholders, subsidiaries, affiliates,
partners, contractors, directors, officers, representatives, agents
and employees.
LANDING GEAR SUPPLEMENTAL RENT is not applicable.
-2-
MANUFACTURER means the manufacturer of the Airframe or an Engine, as
the case may be, as set forth on Schedule A hereto.
OWNER means Lessor.
PRE-APPROVED BANK means (i) First Hawaiian Bank for so long as its
long-term unsecured Dollar denominated debt carries a rating from
S&P of A- or better, and (ii) any bank organized under the laws of
the United States or any State thereof, or the New York branch of a
major international bank for only so long as its long-term Dollar
denominated unsecured debt (or if it does not have long-term
unsecured Dollar denominated debt, its parent corporation's
long-term unsecured Dollar denominated debt) carries a rating from
S&P of A or better.
REDELIVERY LOCATION means any location in the State of Washington,
Oregon or California as Lessor may designate to Lessee or such other
location as may be agreed in writing by Lessor and Lessee.
RENT COMMENCEMENT DATE means the date on which Lessor tenders the
Aircraft under Clause 4.3.(a) of the Common Terms Agreement and the
Lessee Conditions Precedent are met or could reasonably be expected
to be met if the Delivery of the Aircraft had occurred.
SCHEDULED DELIVERY DATE means the date that Aircraft is scheduled to
be delivered by Lessor to Lessee under the Lease, as notified by
Lessor to Lessee pursuant to Section 4.1 of the Common Terms
Agreement, and, notwithstanding any subsequent delays in delivery,
the "Scheduled Delivery Date" shall remain the first such date
notified by Lessor to Lessee pursuant to Section 4.1 of the Common
Terms Agreement.
SCHEDULED DELIVERY MONTH means March 2001.
SCHEDULED DELIVERY WEEK means the week during which the Scheduled
Delivery Date is anticipated to fall, as the same is notified by
Lessor to Lessee pursuant to Section 4.1 of the Common Terms
Agreement.
SCHEDULED EXPIRY DATE means the day immediately preceding the
fifteenth ( 15th) anniversary of the Rent Commencement Date (or in
the event that such date is a day that is not a Business Day, the
immediately preceding Business Day), which date shall be
specifically set forth in Lease Supplement No. 1; provided, however,
that Lessee shall receive a credit for Rent actually paid by Lessee
to Lessor, on a per diem basis, against other obligations owed by
Lessee to Lessor at the Return Occasion in respect of any
non-Business Days which are truncated from the Term based on this
provision.
STATE OF DESIGN means the United States.
-3-
TAX INDEMNITEE means each of Owner, Lessor, and each member of the
consolidated group of which Lessor or Owner is a member for United
States Federal Income Tax purposes, and their successors and
permitted assigns.
1.2 INTERPRETATION: Unless otherwise defined herein, words and
expressions defined in the Common Terms Agreement have the same
respective meanings for the purposes of this Aircraft Lease
Agreement. The construction provisions of Section 1.2 of the Common
Terms Agreement shall apply to this Aircraft Lease Agreement.
2. LEASING
2.1 AGREEMENT TO LEASE: Subject to the terms and conditions of the
Lease, Lessor will lease the Aircraft to Lessee and Lessee will
take delivery of and lease the Aircraft from Lessor in accordance
with the Lease for the duration of the Term.
2.2 TERM: Subject to Sections 4.1 through 4.4 of the Common Terms
Agreement, Delivery of the Aircraft will occur at the Delivery
Location, whereupon Lessee shall accept the Aircraft hereunder and
evidence such Delivery and acceptance by executing and delivering
Lease Supplement No. 1 as provided in Section 4.3 of the Common
Terms Agreement. The Term will commence on the Delivery Date, which
Delivery Date is scheduled to occur in the Scheduled Delivery
Month, and will expire on the Scheduled Expiry Date unless
terminated earlier in accordance with the provisions of the Lease.
2.3 [Not applicable].
3. PAYMENTS
3.1 DEPOSIT AND LETTER OF CREDIT: Lessee shall pay to Lessor the
Deposit in cash (to which Deposit Section 5.13 of the Common Terms
Agreement shall apply) in the amount and at the times provided in
Schedule B hereto. Lessee shall be permitted to deliver to Lessor
an irrevocable Letter of Credit in lieu of a portion of the Deposit
in an amount up to the amount provided in Schedule B as the LC
Amount, which Letter of Credit shall comply with the provisions of
Section 5.14 of the Common Terms Agreement
3.2 RENT: Lessee shall pay Rent to Lessor on each Rent Date during the
Term in the amount provided in Schedule B hereto and as provided
in Sections 5.2 and 5.3 of the Common Terms Agreement. The first
installment of Rent shall be due and payable on the Rent
Commencement Date as defined herein.
3.3 SUPPLEMENTAL RENT: Lessee shall have no obligation to pay
Supplemental Rent.
-4-
3.4 LESSOR'S MAINTENANCE CONTRIBUTION: Lessor shall have no obligation
to make Maintenance Contribution payments.
3.5 LESSOR'S BANK ACCOUNT: For the purposes of Section 5.5 of the
Common Terms Agreement, Lessor's bank account and wire transfer
particulars, to which all payments to Lessor shall be made, are at
the date hereof. Bankers Trust Company, New York, ABA 021 001 033,
For the account of: Aviation Financial Services Inc., Account
Number: ▇▇-▇▇▇-▇▇▇.
3.6 MACRS: Lessor has assumed that MACRS Deductions shall be available
in respect of the leasing of the Aircraft and accordingly the
provisions of Section 5.7(d) of the Common Terms Agreement and the
related provisions of Schedule B shall apply under this Agreement.
4. CONDITION OF THE AIRCRAFT AT DELIVERY
4.1 On the Delivery Date, as a condition to Lessee's obligation to
accept delivery thereof, the Aircraft shall be in the condition
provided in Part III of Schedule A hereto.
5. CONDITION OF THE AIRCRAFT AT REDELIVERY
5.1 On the Return Occasion, Lessee shall redeliver the Aircraft to
Lessor at the Redelivery Location and at such redelivery the
Aircraft shall be in the condition provided in Part II of
Schedule A hereto and in the Common Terms Agreement, including
Schedule 6 of the Common Terms Agreement.
6. ADDRESSES FOR NOTICES
The addresses and facsimile and telephone numbers of Lessor and
Lessee are as follows:
Lessor: Aviation Financial Services Inc.
Address: c/o GE Capital Aviation Services
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Executive Vice President Risk and Portfolio
Management
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Lessee: Aloha Airlines, Inc.
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Executive Vice President and Chief Financial
Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
-5-
7. THE SCHEDULES AND COMMON TERMS AGREEMENT
ALL THE PROVISIONS OF SCHEDULE A HERETO, SCHEDULE B HERETO, AND THE
COMMON TERMS AGREEMENT, ARE INCORPORATED BY REFERENCE HEREIN AND
ARE PART OF THIS AIRCRAFT LEASE AGREEMENT AS IF THEY WERE SET OUT
IN FULL HEREIN. WITHOUT LIN41TING THE GENERALITY OF THE FOREGOING,
BY ITS SIGNATURE BELOW, THE LESSEE ACKNOWLEDGES AND AGREES THAT THE
LEASE OF THE AIRCRAFT HEREUNDER IS ON AN "AS IS, WHERE IS" BASIS
AND THAT THE DISCLAIMERS, EXCULPATIONS AND LIMITATIONS OF
LIABILITY, INDEMNITEES, THE CHOICE OF NEW YORK LAW AS THE GOVERNING
LAW, THE LESSEE'S SUBMISSION TO PERSONAL JURISDICTION IN NEW YORK,
AND THE WAIVER OF ANY RIGHT TO A TRIAL BY JURY PROVIDED FOR IN THE
COMMON TERMS AGREEMENT ARE INCORPORATED HEREIN BY SUCH REFERENCE
AND ARE PART OF THIS AIRCRAFT LEASE AGREEMENT AS IF THE SAME WERE
SET OUT IN FULL HEREIN.
8. NO AMENDMENT EXCEPT IN WRITING
No provision of this Lease, including any provision of Schedule A,
Schedule B or the Common Terms Agreement, may be amended,
rescinded, changed, waived, discharged, terminated or otherwise
modified in any way whatsoever, except by a writing signed by the
party to be charged. Lessor and Lessee acknowledge their agreement
to the provisions of this Section 8 by their signatures below.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK. THE
SIGNATURE PAGE FOLLOWS]
-6-
IN WITNESS WHEREOF, the parties hereto have executed this Aircraft Lease
Agreement, each by their duly authorized representative(s), as of the date
shown at the beginning of this Aircraft Lease Agreement.
LESSOR: LESSEE:
AVIATION FINANCIAL ALOHA AIRLINES, INC.
SERVICES INC.
By: [ILLEGIBLE] By:
----------------------------- -----------------------------
Name: ▇▇▇▇ ▇▇▇ Name:
----------------------------- -----------------------------
Title: Vice President Title:
----------------------------- -----------------------------
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
IN WITNESS WHEREOF, the parties hereto have executed this Aircraft Lease
Agreement, each by their duly authorized representative(s), as of the date
shown at the beginning of this Aircraft Lease Agreement.
LESSOR: LESSEE:
AVIATION FINANCIAL ALOHA AIRLINES, INC.
SERVICES INC.
By: By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------- -----------------------------
Name: Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------- -----------------------------
Title: Title: Exec. Vice President & CFO
----------------------------- -----------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
Title: VP Planning & Development
-----------------------------
SCHEDULE A
PART I-AIRFRAME AND ENGINES DESCRIPTION
AIRCRAFT
Manufacturer: Boeing
Model: 737-700 ETOPS
Serial Number: 28641
U.S. Registration No. To be advised at Delivery and included in
Lease Supplement No. 1
ENGINES (each of which has 750 or more rated takeoff horsepower or the
equivalent of such horsepower)
Engine Type: CFM56-7B24
Serial Nos: To be advised at Delivery and included in
Lease Supplement No. 1
A-1
SCHEDULE A
PART II-DELIVERY CONDITION REQUIREMENTS
Set forth below is a description of the condition in which the Aircraft must
be in order for Lessee to be obligated to accept the Aircraft under the
Lease. It is solely a description of such condition precedent and shall not
be construed as a representation, warranty or agreement of any kind
whatsoever, express or implied, by Lessor with respect to the Aircraft or
its condition, all of which have been disclaimed by Lessor and waived by
Lessee as set forth in the Lease, including in the Common Terms Agreement.
DELIVERY CONDITION REQUIREMENTS:
This "DELIVERY CONDITION REQUIREMENTS" are as follows:
Airframe, New from Manufacturer, configured in
Engines, accordance with GECAS Detail Specification
Components: D6-38808-34 (Revision D), except as modified
in accordance with the specification changes
noted on the Appendix to this Schedule A -
Part II
Livery Painting: Lessee's current livery as in effect on the date
of this Aircraft Lease Agreement, or such other
livery as Lessee may specify in writing to
Lessor so long as Lessee provides to Lessor,
reasonably in advance of the Scheduled
Delivery Month so as to permit Lessor to make
all necessary arrangements for such painting, all
technical specifications necessary in order to
complete the painting of the Aircraft in such
livery
A-2
APPENDIX TO
SCHEDULE A, PART II
SPECIFICATION CHANGES
The following table outlines those specification items which the Lessee has
identified as requiring modification to make the GEF specification
compatible with those aircraft currently in operation by Lessee. Each of the
items listed under the column marked GECAS (left) shall be modified during
production to reflect the configuration listed in the Aloha column (right).
All such modifications shall be accomplished at Lessor's expense.
Notwithstanding the above, it is further agreed that Lessee will afford
Lessor or its designated representative the opportunity to discuss alternate
proposals with regard to those modifications below which cause BFE vendor
changes to Lessor's baseline specification (ref D6-38808-34);
01 GENERAL AIRPLANE DESCRIPTION GECAS ALOHA
Manuals/Instrumentation Units Metric English
03 GENERAL AIRPLANE CRITERIA
Operational Capabilities
Max Taxi Weight 133,500 lbs 155,000 lbs
Max Takeoff Weight 133,000 lbs 154,500 lbs
11 PLACARDS and MARKINGS
Exterior Registry Markings No Yes
21 AIR CONDITIONING
Cabin Ascent Rate (ft/min) 600 750
Cabin Descent Rate (ft/min) 350 500
22 AUTOMATIC FLIGHT CONTROL
DFCS Features
Control Wheel Steering Reversion in Approach Yes No
Mode
Altitude Alert (ft) 300/900 200/900
23 COMMUNICATION
Voice Recorder (1) Allied Signal 980- (1) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
6022-001 ARINC 2100-1020-00
557
Man ON/Auto OFF Switch YA607-YA670 Yes
Audio Entertainment None Matsushita (MPES)
RDAX1302-11
Video Entertaininent None SONY/PSU
mounted
A-3
Monitors Structural Provs 5 VCC same as GEF
Centerline Ovhd
Video Control Center (VCC) Structural Provs Aft
▇▇ ▇▇▇▇ Bin
HF System Single/Complete Dual
Provs for second
Transceiver (1) Rockwell 822- (2) Rockwell 822-
0990-001 ARINC 0330-001
719/753
VHF System Dual/Complete Provs Triple
for Third
Transceiver (2) Allied Signal 064- (3) Rockwell 822-
50000-0110 ARINC 1047-002
716
8.33 KHZ Spacing
Capable YA601-YA606 Yes
Activated YA607-YA670 No
ACARS Part Provisions for Rockwell 822-0666-
ARINC 724B 003
ELT No Artex 453-0004
24 ELECTRICAL POWER
Standby Power Load Additions
Captain's Pilot Heat YA607-YA670 No
ATC No. 1 No Yes
25 EQUIPMENT/FURNISHINGS See NOTE 1
Interior Layout (See Attached) LOPS-377-0201 LOPS-377-0203
12F@38"/112Y@
31" with fixed
class
divider.
Overwater Equipped No, Lifevests Only Yes, 3 x 46 man
Lifeline Yes Liferafts
Installed Positions G1, G4B G1, G2, G4B
Provisions G2 (Seat Track-3/ G2 half galley
Power/Water/Drain/ underbin (Jamco)
Ovhd Ties)
Windscreen(s) Fwd RH Sta 336.75 Fwd Left Hand with
emerg. Equip.
stowage and closet
at BS350
Class Divider(s) Fixed
Rails Yes (Basic) Yes (Basic)
Stow Bin Cutout YA610-YA670 Yes No
Center Overhead Stowage Bins No Yes (3)
(1) Forward
(2) Center
A-4
28 FUEL
Measuring Sticks
Conversion Tables NDU to Kilograms NDU to Pounds
29 HYDRAULIC POWER
Engine Driven Pump Abex ▇▇▇▇▇▇▇
▇▇-▇▇▇▇▇-▇
AC Electric Pump Abex
▇▇-▇▇▇▇▇-▇▇
31 INDICATING/RECORDING SYSTEMS
Flight Data Recorder AlliedSignal ▇▇▇- ▇-▇
▇▇▇▇-▇▇▇ ▇▇▇▇▇ Communications
747 2100-4043-00
Digital Flight Data Acquisition Unit Teledyne 2233000-85 AlliedSignal 967-
ARINC 717 0212-002
Printer Part Provs Half Full Format
Format
Data Loader Connector AlliedSignal 964-
0401-016
Display Format EFIS/MAP PFD/ND
Engine Instrument Display Side-by-Side Over/Under
Engine Fuel Flow N/A Full Time Display
Radio Altitude Display Below ADI Above ADI
Round Dial & Digital Radio Altitude N/A Yes
Ground Speed - Below Airspeed Tape N/A Yes
Landing Altitude Reference Bar N/A Yes
Baro Mins Pointer N/A Yes
Radio Altitude Height Alert Display No 2500 Feet
ADF Pointers in NAV Mode Display Suppressed
TCAS 3 NM Range Ring - Nav Display No Yes
FMC/ADIRU Position Difference Display Exceedence
Weather Radar Range Area Yes Yes
TCAS Resolution Advisory ADI ADI
ILS Failure Flags Inhibited
ILS Localizer Deviation Expanded Scale Autopilot & Flt Dir Autopilot & Flt Dir
Oil Quantity Display % Full Quantity Quarts
Approach Minimums Radio Based
Airspeed Bug #5 Disabled 80 Knots
Control Surface Position - System Display N/A Yes
32 NOSE GEAR TAXI LIGHT 250 Waft 450 Watt
33 LIGHTING
Passenger Cabin Lighting (Zone) Single Two
A-5
Escape Path Lighting Seat Mounted
34 NAVIGATION
Standby Altitude Indicator (1) ▇▇ ▇▇▇▇▇▇▇▇ 501- Sextent
1657-02
Ground Proximity Warning Computer AlliedSignal 965- AlliedSignal 965-
0976-003-204-204 0976-003-204-204
(Enhanced) (Enhanced)
Callouts Bank Angle (Basic) Bank Angle (Basic)
"Plus 100
Minimums"
VHF Nav (VOR)/Marker Beacon Receiver (2) AlliedSignal 066- Rockwell 822-0297-
50012-0101 ARINC 001
711
Multi-Mode Receiver (MMR)(ILS/GPS) (2) AlliedSignal 066- Rockwell 822-1152-
50029-1101 002
ATC Transponder (2) AlliedSignal 066- Rockwell 822-0336-
01127-1301 ARINC 001
718
TCAS Change 7 AlliedSignal 066- No
01127-1601 YA609-
YA670
DME Interrogator (2) AlliedSignal 066- Rockwell 822-0329-
50013-0101 ARINC 001
709
ADF Receiver (1) AlliedSignal 066- (2) Rockwell 822-
50014-0101 ARINC 0299-001
712
Dual Provisions
WAS Computer (1) AlliedSignal 066- Rockwell 622-8971-
50000-1508 ARINC 020
735
WAS Change 7 AlliedSignal 066- No
50000-2220 YA609-
YA670
Flight Management Computer System
Computer (1) Smiths Indust 10- (2) Smiths Indust
62225-003 10-62225-003
2nd Computer Partial Provisions Installed
CDU/MCDU CDU MCDU
Date Base Size
1 MEG YA601
2 MEG YA602-YA670 Yes
Built-In Test Equip Printer Receptacles No No
FMCS Definition
Runaway Offset Position Feet Feet
Alternate Destinations Predictions Inhibit Yes
A-6
Retention of Original Waypoints Inhibit Yes
Message Recall Inhibit Yes
LRRA Transceiver (2) AlliedSignal 066- Rockwell 822-0334-
50007-0101 002
Weather Radar Transceiver (1) AlliedSignal 066- Rockwell 622-5132-
50008-0405 633
Predictive Windshear Activated Activated
35 OXYGEN
Flight Crew System - Press Breathing Yes No
38 WATER/WASTE
Potable Water: Cap/Vol (US Gallons) 40/40 60/50
39 E6 PANEL Yes
52 DOORS
Airstairs, Forward Part Provisions + Installed
Install Data Kit
A-7
SCHEDULE A
PART III- PROCEDURES AND OPERATING CONDITION AT REDELIVERY
On the Return Occasion the Aircraft, subject to ordinary wear and tear of a
kind and to an extent consistent with similar aircraft engaged in
commercial airline operations, will be redelivered to Lessor by Lessee in
accordance with the procedures and in any event in the condition set out
below. For the avoidance of doubt, any damage assessment and/or
rectification criteria used in assessing the redelivery condition shall be
as prescribed in the Manufacturer's structural repair manual ("SRM") and/or
the Manufacturer's Maintenance Planning Document, as appropriate. Any
damage outside the scope of the SRM shall require FAA 8110-3 certification.
1.1 FINAL INSPECTION
Immediately prior to the Return Occasion, Lessee will make the Aircraft
available to Lessor and Owner for inspection ("FINAL INSPECTION") in order
to verify that the condition of the Aircraft complies with the Lease. The
Final Inspection will include, and be long enough to permit Lessor to:
(a) inspect the Aircraft Documents and Records;
(b) inspect the Aircraft (with Lessee to open or remove panels as
reasonably requested by Lessor or Owner based on Lessor's or Owner's
visual observation of the Aircraft and/or their respective review of
the Aircraft Documents and Records), uninstalled Parts and the APU
(including a complete video borescope inspection of the APU);
(c) inspect the Engines, including (i) a complete video borescope
inspection of (A) the low pressure and high pressure compressors and
(B) turbine area and (ii) power assurance runs (including full
take-off power engine run-up performed in accordance with the
performance test in the Engine Manufacturer's test specifications, and
the Engines shall not exceed corrected limits for all parameters using
temperature corrected charts); and
(d) observe a two hour demonstration flight at Lessee's cost (with up to
three (to the extent permitted by FARS) of Lessor's and Owner's
representatives as on-board observers).
Furthermore, Lessee acknowledges that a purchaser or the next operator of
the Aircraft may need to inspect the Aircraft, the Engines and the Aircraft
Documents and Records prior to redelivery and Lessee hereby agrees to
cooperate reasonably at all times during the Term
A-8
with Lessor, Owner and/or such purchaser or such next operator in order to
coordinate, assist and grant access for the above inspections and/or sale
or subsequent lease as applicable.
Lessor or Owner, as the case may be, is responsible for and will indemnify
Lessee against all Losses arising from the death or injury to any observer
or any employee of Lessor or Owner, as the case may be, in connection with
the inspection of the Aircraft under this Section 1.1.
1.2 GENERAL CONDITION
The Aircraft will:
(a) be in the same configuration as at Delivery after giving effect to any
post-Delivery modifications to the Aircraft paid for or otherwise
provided by or on behalf of Lessor (or as permitted by the Lease or as
otherwise mutually agreed), be in as good operating condition and
appearance as when delivered to Lessee (after giving effect to any
such post-Delivery modifications), except for ordinary wear and tear
and alterations and modifications authorized or required under the
Lease and paid for by Lessee or a Sub-Lessee, and be clean by major
passenger airline standards;
(b) have installed the full complement of equipment, parts, accessories,
furnishings and loose equipment as when originally delivered to Lessee
(subject to Lessee's rights under Section 8.12 to reverse certain
Equipment Changes, after giving effect to all modifications, repairs
or maintenance performed during the Term, regardless of whether paid
for by Lessee or Lessor) and the Aircraft (including the Aircraft
Documents and Records) shall be in a condition suitable for immediate
registration with the FAA (assuming that the Owner qualifies for such
registration) and immediate operations under FAR Part 121 with a new
operator, without waiver, unless the benefit of such waiver is
applicable to the next operator of the Aircraft; and if any of the
engines or parts tendered for redelivery with the Aircraft is not one
of the Engines or Parts referred to in the Certificate of Technical
Acceptance or a Replacement Engine installed pursuant to Section 8.11
(b) following an Engine Event of Loss, Lessor shall have no obligation
to accept such engine or part unless Lessee furnished to Lessor all
the documents and evidence in respect of such engine or part in
accordance with Section 8.11 (b), as if such engine were a Replacement
Engine or replacement Part, and otherwise complies with such Section
8.11 (b) with respect thereto;
(c) have in existence a valid and effective certificate of airworthiness
(and if required by Lessor, a valid and effective export certificate
of airworthiness) with respect to
A-9
the Aircraft issued by the Air Authority (in the case of an export
certificate of airworthiness no earlier than 30 days prior to the
redelivery);
(d) comply with the Manufacturer's original specifications as at the
Delivery, except as modified during the Term in accordance with the
Manufacturer's service bulletins or letters, Airworthiness Directives,
Air Authority approved data or otherwise as permitted by the Lease;
(e) be fresh out of a "C" Check (or higher check if applicable) in block
format (which shall be the next sequential "C" Check under Lessee's
Maintenance Program following the last regularly scheduled "C" Check
performed by Lessee prior to the Return Occasion if Lessee's
Maintenance Program is based on the then current Manufacturer's
Maintenance Planning Document in block format. If Lessee's Maintenance
Program is not based on the Manufacturer's Maintenance Planning
Document in block format, then Lessee shall integrate the Aircraft
Maintenance Program onto the then current Manufacturer's Maintenance
Planning Document Block Maintenance Program such that all airframe
inspections falling due within the "C" check interval (which shall not
be less than 4,000 Flight Hours) as defined in and in accordance with
the Manufacturer's Maintenance Planning Document have been
accomplished;
(f) have had accomplished all outstanding Airworthiness Directives
affecting that model of Aircraft issued by the FAA requiring action
during the Term or within 180 days after the Return Occasion or the
Scheduled Expiry Date, whichever is later; for this purpose,
compliance shall be by terminating action if:
(i) Lessee has complied by terminating action for sixty-five percent
(65%) of the aircraft of the same model and series then operated
by Lessee; or
(ii) the latest date permitted by such Airworthiness Directive for
required compliance by terminating action falls within 180 days
after the Return Occasion or the Scheduled Expiry Date, whichever
is later.
(iii) In no event shall there be any non-transferable time extensions,
waivers, deviations or alternative means of compliance with any
Airworthiness Directions or other Regulations.
(g) have installed all applicable vendor's and Manufacturer's service
bulletin kits received free of charge by Lessee during the Term that
are appropriate for the Aircraft and to the extent not installed,
those kits will be furnished free of charge to Lessor;
A-10
(h) have the fuselage, empennage, wings and pylons stripped (or sanded if
only three or less coats of paint) and painted in such livery as
Lessor may designate in accordance with standard industry practice;
(i) have all signs and decals clean, secure and legible;
(j) [NOT APPLICABLE];
(k) have no open, deferred, continued, carry over or placarded maintenance
items or watch items or placarded log book items, and all other log
book discrepancies shall be cleared;
(1) all discrepancies discovered during the inspections described above
which exceed the Manufacturer's maintenance manual allowable limits
for in-service aircraft shall have been repaired in accordance with
FAA-approved procedures;
(m) all repairs of a temporary or interim nature, requiring repetitive
inspections or future upgrading, including external doublers with
blind fasteners, shall be upgraded to permanent repair in accordance
with the Manufacturer's Maintenance Planning Document or structural
repair manual; and
(n) all systems shall be fully operational for their intended functions in
accordance with the Manufacturer's Maintenance Planning Document
specifications.
1.3 COMPONENTS
(a) If the Aircraft Lease Agreement specifies Minimum Component Flight
Hours and/or Minimum Component Cycles, each Airframe Flight Hour and
Cycle controlled Hard Time Component (other than the APU) shall have
not less than the Minimum Component Flight Hours and the Minimum
Component Cycles of life remaining to the next scheduled removal, in
accordance with the Lessee's Maintenance Program and shall be
supported by appropriate certification documentation indicating TSN,
CSN, TSO and CSO such as FAA form 8130-1; for this purpose "Hard Time
Component" means any component which has a limited on-wing life in
accordance with the Manufacturer's Maintenance Planning Document and
which can have life fully restored through appropriate maintenance;
(b) If the Aircraft Lease Agreement specifies a Minimum Component Calendar
Life, each calendar-limited component including safety equipment will
have not less than its Minimum Component Calendar Life remaining to
the next scheduled removal in accordance with the Lessee's Maintenance
Program;
(c) Each "on-condition" and "condition-monitored" component will be
serviceable;
A-11
(d) The installed components as a group will have an average of total
flight time since new of not more than that of the Airframe;
(e) If the Aircraft Lease Agreement specifies Minimum Component Flight
Hours and/or Minimum Component Cycles, each Airframe Life-Limited
Component will have not less than the Minimum Component Flight Hours
and the Minimum Component Cycles remaining to next scheduled removal
and will be supported by certification documentation necessary to
demonstrate back-to-birth traceability; for this purpose "Airframe
Life-Limited Componenf" means a component with an ultimate life which
cannot be restored through appropriate maintenance.
1.4 ENGINES
Each Engine (or a Replacement Engine as and to the extent permitted by
Section 1.2(b)) will be installed on the Aircraft and comply with the
following:
(a) If the Aircraft Lease Agreement specifies a Minimum Engine Flight
Hours and/or Minimum Engine Cycles, each Engine will have not less
than the Minimum Engine Flight Hours and Minimum Engine Cycles
expected life remaining to the next scheduled removal. The expected
life remaining will be determined by third party mutually acceptable
to both Lessor and Lessee (at Lessor's cost) or by the Engine
Manufacturer, in each case based on the inspection and checks to be
performed at the Return Occasion in accordance with the Lease;
(b) Each Engine shall have just completed at the location for Lessor's
acceptance on the Return Occasion a hot (including combustion chamber)
and cold section video borescope inspection, which inspection shall be
performed at Lessor's expense, and a power assurance run performed at
Lessee's expense in accordance with the Lessee's Maintenance Program
or Manufacturer's Maintenance Planning Document and any defects
discovered in such inspections which exceed the Engine manufacturer's
in-service limits shall be corrected at Lessee's expense. Lessee shall
cause such borescope inspections to be performed and to be recorded on
videotape by an agency selected by Lessor and shall provide Lessor
with a copy of such videotape on the Return Occasion. No Engine shall
be on "watch" for any reason, requiring any special or out of sequence
inspection. Each Engine shall comply with the operations specification
of Lessee without waiver or exceptions. All items beyond the Engine
manufacturer's in-service limits shall be repaired;
(c) If the Aircraft Lease Agreement specifies Minimum Component Cycles,
each Engine Life-Limited Component will have not less than the Minimum
Component Cycles remaining per the manufacturer's then current
limitations for the part
A-12
number in question, and will be supported by certification
documentation necessary to demonstrate back-to-birth traceability; for
this purpose "Engine Life-Limited Component" means a component with an
ultimate life which cannot be restored through appropriate
maintenance; and
1.5 FUSELAGE, WINDOWS AND DOORS
(a) The fuselage will be free of major dents and abrasions in excess of
the limits specified in Manufacturer's Maintenance Planning Document
or structural repair manual; loose or pulled or missing rivets shall
be replaced;
(b) Windows will be free of delamination, blemishes and crazing, in excess
of the limits specified in the Manufacturer's Maintenance Planning
Document or structural repair manual and will be properly sealed; and
(c) Doors will be free moving, correctly rigged and be fitted with
serviceable seals.
1.6 WINGS AND EMPENNAGE
(a) Leading edges will be free from damage in excess of the limits
specified in the Manufacturer's Maintenance Planning Document or
structural repair manual; and
(b) Unpainted surfaces of the wings and empennage will be polished.
1.7 INTERIOR AND COCKPIT
All soft furnishings, including but not limited to carpets, seat covers and
curtains, will be in good condition, clean and free of stains and meet FAR
fire resistance regulations.
1.8 LANDING GEAR; WHEELS AND BRAKES
(a) The Landing Gear and wheel ▇▇▇▇▇ will be clean, free of leaks and
repaired as necessary;
(b) Each installed Landing Gear shall have no more Cycles accumulated than
the Airframe and, if the Aircraft Lease Agreement specifies Minimum
Landing Gear Flight Hours and/or Minimum Landing Gear Cycles and
Minimum Landing Gear Calendar Time, not less than the Minimum Landing
Gear Flight Hours and the Minimum Landing Gear Cycles and the Minimum
Landing Gear Calendar Time shall be remaining to the next scheduled
overhaul or removal, as the case may be, of each installed Landing
Gear in accordance with the then current Manufacturer's Maintenance
Planning Document and Lessee's Maintenance Program; and
(c) The wheels and brakes will have not less than half of their useful
life remaining.
A-13
1.9 RETURN OF AUXILIARY POWER UNIT (APU)
The APU shall have just completed a borescope inspection and shall meet all
air outputs and temperature limitations under load in accordance with the
Lessee's Maintenance Program and the APU manufacturer's maintenance manual,
and any defects discovered in such inspection, which exceed the APU
manufacturer's in-service limits, shall be corrected at Lessee's expense.
If the Aircraft Lease Agreement specifies a Minimum APU Limit, the APU
shall have not more than the Minimum APU Limit since the last gas path
refurbishment. If the Aircraft Lease Agreement specifies a Minimum APU LLP
Limit, APU Life Limited Parts shall have not less than the Minimum APU LLP
Limit of useful life remaining on average.
1.10 CORROSION
(a) The Aircraft shall be in compliance with the Manufacturer's corrosion
prevention and control program (CPCP) requirements. All CPCP
inspections which would normally be accomplished while access is
provided during structural inspection in accordance with the Lessee's
Maintenance Program during the Term shall have been accomplished;
(b) The entire fuselage will be substantially free from corrosion and will
be adequately treated in accordance with Lessee's corrosion prevention
program and the Manufacturer's Maintenance Planning Document; and
(c) Fuel tanks will be free from contamination and corrosion and a tank
treatment program will be in operation.
1.11 FUEL
If the Aircraft Lease Agreement specifies a Minimum Measurable Fuel
Requirement, at redelivery, the Aircraft fuel tanks shall contain at least
enough fuel to meet the Minimum Measurable Fuel Requirement.
1.12 MAINTENANCE PROGRAM
(a) Prior to the Return Occasion and upon Lessor's or Owner's request,
Lessee will provide Lessor or Owner or its agent reasonable access to
the Lessee's Maintenance Program and the Aircraft Documents and
Records in order to facilitate the Aircraft's integration into any
subsequent operator's fleet; and
(b) Lessee will, if requested by Lessor or Owner to do so, provide
sufficient access to Lessee's Maintenance Program in order to
integrate the Aircraft to the next operator's maintenance program.
Lessor and any Person to whom Lessor grants
A-14
access to Lessee's Maintenance Program shall agree that it will not
disclose the contents of the Lessee's Maintenance Program to any
Person except to the extent necessary to monitor Lessee's compliance
with the Lease and/or to bridge the maintenance program for the
Aircraft from the Lessee's Maintenance Program to another program
after the Return Occasion.
1.13 AIRCRAFT DOCUMENTS
At redelivery Lessee will deliver to Lessor and Owner all current and
complete historical records required to be maintained relevant to the
Aircraft, including documents, manuals, data, overhaul records, life
limited part traceability to "zero time since new", log books, original
delivery documents serviceable parts tags, FAA forms, modification records
and inspection records, and including each of the Aircraft Documents and
Records.
1.13. ETOPS:
The Aircraft shall be certified by the FAA for 180 minutes ETOPS operation
or shall be in such condition as to be eligible for certification by the
FAA for 180 minutes ETOPS operation.
A-15
SCHEDULE B
COMMERCIAL TERMS
Lessor and Lessee hereby agree that the definitions and other
commercial and financial terms set forth in this Schedule B shall apply to
the leasing of the Aircraft under the Lease.
In addition, Lessor and Lessee understand and agree that the
commercial and financial information contained in this Schedule B are
considered by Lessor and Lessee as proprietary and confidential. Lessor and
Lessee each hereby agree, and any of their assignees, upon becoming such
shall agree that it will treat this Schedule B as proprietary and
confidential and will not, without the prior written consent of the other,
disclose or cause to be disclosed, the terms hereof or thereof to any
Person, except to its agents, representatives, advisors, employees,
counsel, underwriters, auditors, investors, financing parties, head lessors
and sub-lessees as necessary or appropriate for the leasing transaction
which is the subject hereof, or except (a) as may be required by applicable
Law or pursuant to an order, or a valid and binding request, issued by any
court or other Government Entity having jurisdiction over Lessor, Lessee or
the assignee of either of them, as the case may be, or (b) as necessary to
enable Lessor or its assignee to make transfers, assignments or other
dispositions to potential transferees, assignees or participants of its
interest in and to the Lease.
In connection with any such disclosure or any filing of the
information contained herein or therein pursuant to any such applicable
Law, Lessor, Lessee or the assignee of either of them, as the case may be,
shall request and use its best reasonable efforts to obtain confidential
treatment of this Schedule B and the other party will cooperate in making
and supporting any such request for confidential treatment.
PART I CASUALTY OCCURRENCE DEFINITIONS
[This provision has been omitted as confidential information, and
is separately filed with the Commission.]
B-1
PART 11 DEPOSIT; DISCOUNT RATE; LC AMOUNT; INTEREST RATE
[This provision has been omitted as confidential information, and
is separately filed with the Commission.]
PART III RENT
[This provision has been omitted as confidential information, and
is separately filed with the Commission.]
B-2
PART IV TAX DEFINITIONS; SPECIAL TAX INDEMNITY
[This provision has been omitted as confidential information, and
is separately filed with the Commission.]
B-3
PART V SUPPLEMENTAL RENT - NOT APPLICABLE
[This provision has been omitted as confidential information, and
is separately filed with the Commission.]
PART VI MAINTENANCE AND RETURN CONDITION DEFINITIONS;
AIRWORTHINESS DIRECTIVE SHARING PAYMENTS
[This provision has been omitted as confidential information, and
is separately filed with the Commission.]
B-4
PART VII SUBLEASE FEE
[This provision has been omitted as confidential information, and
is separately filed with the Commission.]
PART VIII UTILIZATION RATIO
[This provision has been omitted as confidential information, and
is separately filed with the Commission.]
B-6
EXECUTION VERSION
-----------------
____________________________________
AIRCRAFT LEASE
COMMON TERMS AGREEMENT
____________________________________
DATED AS OF MAY 12,2000
BETWEEN
GENERAL ELECTRIC CAPITAL CORPORATION
And
ALOHA AIRLINES, INC.
CONTENTS
SECTION PAGE
1. INTERPRETATION .................................................................1
2. REPRESENTATIONS AND WARRANTIES .................................................2
3. CONDITIONS PRECEDENT ...........................................................2
4. COMMENCEMENT ...................................................................3
5. PAYMENTS .......................................................................5
6. MANUFACTURER'S WARRANTIES .....................................................19
7. LESSOR'S COVENANTS ............................................................20
8. LESSEE'S COVENANTS ............................................................20
9. INSURANCE .....................................................................38
10. INDEMNITY .....................................................................39
11. EVENTS OF LOSS ................................................................41
12. RETURN OF AIRCRAFT ............................................................42
13. DEFAULT .......................................................................45
14. TRANSFER ......................................................................52
15. MISCELLANEOUS .................................................................54
16. DISCLAIMERS AND WAIVERS .......................................................58
17. BROKERS AND OTHER THIRD PARTIES ...............................................61
Schedule 1 Definitions
Schedule 2 Representations and Warranties
Schedule 3 Conditions Precedent
Schedule 4 Pre-Delivery Procedures and Delivery Condition
Schedule 5 Certificate of Technical Acceptance
Schedule 6 [NOT APPLICABLE]
Schedule 7 Insurance Requirements
Schedule 8 Form of Lessee's Legal Opinion
Schedule 9 Events of Default
Schedule 10 [NOT APPLICABLE]
Schedule 11 Form of Lease Termination Certificate
Schedule 12 Form of Lease Supplement No. 1
Schedule 13 Form of Letter of Credit
Schedule 14 Maintenance Performers
Schedule 15 Technical Report
COMMON TERMS AGREEMENT
THIS COMMON TERMS AGREEMENT (this "CTA") is made as of May 12, 2000 BETWEEN:
(1) GENERAL ELECTRIC CAPITAL CORPORATION ("GE CAPITAL") and
(2) ALOHA AIRLINES, INC. ("ALOHA")
WHEREAS:
(A) From time to time, Aloha or one of its Affiliates may wish
to lease commercial aircraft from GE Capital or one of its
Affiliates, and GE Capital or one of its Affiliates may wish
to lease commercial aircraft to Aloha or one of its
Affiliates;
(B) Each party hereto wishes to provide in one document for
certain common terms and conditions, as hereinafter provided
in this CTA, that will be applicable, unless otherwise
stated, to each such lease referred to in Recital (A); and
(C) Each such lease transaction will be concluded only on the
terms of an agreement entitled "Aircraft Lease Agreement,"
which together with this CTA (which will be incorporated
into and become part of such Aircraft Lease Agreement), will
constitute the lease for the applicable aircraft as
identified therein;
NOW, THEREFORE, for good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. INTERPRETATION
1.1 Definitions
All references herein to "Lease" mean the integrated agreement
consisting of the various documents comprising the Lease as defined in
Schedule 1. In the Lease, capitalized words and expressions have the
meanings set out for them in Schedule 1 and in the Aircraft Lease
Agreement.
1.2 Construction
(a) In the Lease, unless otherwise stated, a reference to:
(i) "Lessor," "Lessee," "GECAS," "Owner" or any other
Person includes any of their successors and
assignees;
(ii) plural concepts shall include the singular and
vice versa;
(iii) any document (except this CTA unless Lessor and
Lessee otherwise expressly agree) shall include
any changes to that document and any replacement
for it;
(iv) a Section or a Schedule is a reference to a clause
of or a schedule to this CTA;
(v) any Regulation shall include any changes to that
Regulation and any replacement for it;
(vi) an obligation of a Person refers to any obligation
that Person has under or in relation to the Lease;
and
(vii) "includes," "including", "include" or similar
terms shall not be construed as limiting and shall
mean "including, without limitation."
(b) Headings to Sections and Schedules in the Lease are not
intended to affect their meaning.
2. REPRESENTATIONS AND WARRANTIES
2.1 Lessee's Representations and Warranties
Lessee hereby makes the representations and warranties set out in
Section 1.1 of Schedule 2 as of the date of execution of the Aircraft
Lease Agreement and as of the Delivery Date, and Lessee understands
that these statements must be true, both when the Aircraft Lease
Agreement is executed and on the Delivery Date.
2.2 Lessor's Representations and Warranties
Lessor hereby makes the representations and warranties set out in
Section 1.2 of Schedule 2 as of the date of execution of the Aircraft
Lease Agreement and as of the Delivery Date, and Lessor understands
that these statements must be true, both when the Aircraft Lease
Agreement is executed and on the Delivery Date.
3. CONDITIONS PRECEDENT
3.1 Conditions Precedent
Lessor need not deliver and start the leasing of the Aircraft under
the Lease unless each of the Lessor Conditions Precedent is satisfied
or waived in writing by Lessor. Lessee need not accept and start the
leasing of the Aircraft under the Lease unless each of the Lessee
Conditions Precedent is satisfied or waived in writing by Lessee;
provided, however, in the event that Lessee fails to accept and start
the leasing of the Aircraft under the Lease, any Lessee Condition
Precedent which reasonably could be expected to be met if the Delivery
of the Aircraft had
-2-
occurred shall be deemed to have been satisfied or waived for purposes
of determining Lessee's liability for Rent in respect of the Aircraft
in accordance with Section 4.1(b) below.
3.2 Waiver
If any Lessor Condition Precedent is not satisfied, or waived in
writing by Lessor, on or before the Delivery Date, and Lessor (in its
absolute discretion) nonetheless agrees to deliver the Aircraft to
Lessee and to start the leasing of the Aircraft, Lessee will ensure
that such Lessor Condition Precedent is fulfilled within 15 days after
the Delivery Date, and Lessor may treat as an Event of Default the
failure of Lessee to do so.
4. COMMENCEMENT
4.1 Leasing
(a) Lessor shall notify Lessee of the Scheduled Delivery Week as
soon as possible, but no later than at least thirty (30)
days prior to the Scheduled Delivery Month, and Lessor shall
notify Lessee of the Scheduled Delivery Date as soon as
possible, but no later than at least one (1) week prior to
the Scheduled Delivery Week. Subject to Sections 3.1 and
4.4, Lessor will lease the Aircraft to Lessee and Lessee
will take the Aircraft on lease for the Term, which shall
commence on the Delivery Date, and which shall be evidenced
by Lessee's execution of Lease Supplement No. 1.
(b) If (i) Lessee is unwilling or unable to accept delivery of
the Aircraft on the date on which Lessor tenders the
Aircraft for Delivery to Lessee under and in accordance
with Section 4.3(a), or Lessee fails to fulfil any Lessor
Condition Precedent on or before such date, and (ii) the
Lessee Conditions Precedent are met (or could reasonably be
expected to be met if Delivery had occurred), then the Rent
Commencement Date for the Aircraft shall be deemed to have
occurred on the date on which it is tendered by Lessor for
Delivery in accordance with subclause (ii) of this Section
4.1(b), and Lessee shall be obligated to pay Rent for the
Aircraft on and from such date regardless of whether the
Delivery Date occurs or whether Lessee executes Lease
Supplement No. 1, but Lessor shall have no obligation to
deliver, and Lessee shall have no lease interest in the
Aircraft or other right to possession of the Aircraft,
unless and until Lessee fulfils all Lessor Conditions
Precedent as and when provided in the Lease and Lessee
accepts delivery of the Aircraft as evidenced by its
execution of Lease Supplement No. 1, and so long as no
Default has occurred and is continuing.
(c) Lessee will be responsible for all risks associated with any
loss of or damage to the Aircraft from the Rent Commencement
Date until possession of the Aircraft is returned
-3-
to Lessor on the Return Occasion and Lessor executes and
delivers to Lessee the acknowledgement contemplated by
Section 12.4.
4.2 Procedure before Delivery
Lessor and Lessee will follow the Pre-Delivery Procedure.
4.3 Delivery and Acceptance
(a) After the Pre-Delivery Procedure has been carried out:
(i) Subject to Section 3.1, Lessor will tender
delivery of the Aircraft to Lessee at the Delivery
Location.
(ii) Subject to Section 3.1, Lessee will accept the
Aircraft. Upon such acceptance, Lessee must also
provide evidence of its acceptance by signing
Lease Supplement No. 1 and delivering it to
Lessor.
(b) Lessee's acceptance of the Aircraft shall be regarded as
absolute, unconditional and irrevocable.
4.4 Delayed Delivery
If Delivery takes place after the Scheduled Delivery Date or does not
happen due to an Unforeseen Event or for any other reason (other than
Lessor's willful misconduct in the performance of its obligation to
deliver the Aircraft under and subject to the conditions in the
Lease):
(a) Lessor will not be responsible for any Losses that Lessee
suffers resulting from the delay or from the non-delivery of
the Aircraft;
(b) Lessee will not, except in the circumstances described in
Section 4.4(c), be entitled to terminate the Lease or to
reject the Aircraft when it is offered for Delivery because
of the delay.
(c) If the Aircraft has not been tendered for Delivery, in
accordance with Section 4.3, by the Final Delivery Date,
either party may terminate the Lease by delivering notice to
the other party within 10 days of such Final Delivery Date
(and if such notice is not delivered within such 10-day
period the Final Delivery Date will be deemed extended for
one additional period of 90 days). Upon the delivery of any
such notice or automatically on the expiration of such
90-day period if no such notice has been delivered, all
obligations of each party under the Lease will end on the
date of such notice or the date of the
-4-
expiration of such period, as the case may be, except that
Lessor will repay to Lessee the Deposit (if any) or return
to Lessee or cancel any Letter of Credit and Lessee will
remain obligated under its indmenity set forth in Section 3
of Schedule 4.
(d) Lessee hereby agrees that its only right or remedy for a
delay in or failure of delivery of the Aircraft due to an
Unforeseen Event or for any other reason (other than
Lessor's willful misconduct in the performance of its
obligation to deliver the Aircraft under and subject to the
conditions in the Lease) is the remedy set forth in Section
4.4(c) above and Lessee hereby waives any rights it may have
under Section 2A-406 of the UCC or otherwise for any delay
in or failure of delivery.
5. PAYMENTS
5.1 Deposit
Lessee shall pay Lessor any Deposit that is specified in Section 3 of
the Aircraft Lease Agreement.
5.2 Rental Periods
The first Rental Period will start on the Rent Commencement Date and
each subsequent Rental Period will start on the date immediately
following the last day of the previous Rental Period. Each Rental
Period will end on the date immediately before the numerically
corresponding day in the next month, except that:
(a) if there is no numerically corresponding day in that month,
it will end on the last day of that month; and
(b) if a Rental Period would otherwise overrun the Expiry Date,
it will end on the Expiry Date.
5.3 Rent
(a) TIME OF PAYMENT: Lessee will pay to Lessor or its order Rent
in advance on each Rent Date. Lessor must receive value for
the payment on each Rent Date. If a Rental Period begins on
a day which is not a Business Day, the Rent payable in
respect of that Rental Period shall be paid on the Business
Day immediately following that day.
(b) AMOUNT: The Rent payable during the Term shall be calculated
in accordance with Schedule B of the Aircraft Lease
Agreement.
-5-
5.4 Supplemental Rent
(a) AMOUNT: If, under the Aircraft Lease Agreement, Lessee is
required to pay Supplemental Rent, Lessee will pay that
Supplemental Rent, at the rates referred to in Section 3 of
the Aircraft Lease Agreement, to Lessor in relation to each
calendar month (or part of a month) of the Term, on the
fifteenth day following the end of that calendar month
(except that the last payment of Supplemental Rent during
the Term shall be paid on the Expiry Date).
(b) ADJUSTMENT: If, under the Aircraft Lease Agreement, Lessee
is required to pay Supplemental Rent, the Supplemental Rent
rates shall be adjusted after the Delivery Date in the
manner provided in the Aircraft Lease Agreement.
(c) LESSOR'S PROPERTY: Lessee acknowledges and agrees that
Supplemental Rent is additional rent for the leasing of the
Aircraft and not cash collateral or other collateral
security for Lessee's maintenance obligations under the
Lease. Once paid all Supplemental Rent is the property of
Lessor, it is not refundable to Lessee under any
circumstances whatsoever and Lessee has no interest therein
whatsoever.
5.5 Payments
All payments by Lessee to Lessor under the Lease will be made for
value on the due date in Dollars and in immediately available funds by
wire transfer to the Lessor's Account as specified in the Aircraft
Lease Agreement.
5.6 Withholding and Tax Credit
(a) WITHHOLDING: Lessee must not deduct any amount from any of
its payments under the Lease, for or on account of any
Taxes, unless it is required by law to do so, in which case
Lessee must:
(i) deduct the minimum amount necessary to comply with
the Law;
(ii) pay Lessor an extra amount so that Lessor receives
a net amount on the relevant payment date, that is
equal to the amount that it would have received if
the reduction had not been made (provided that
Lessee shall have no obligation to pay Lessor an
extra amount on account of withholding in relation
to any Taxes with respect to which Lessee is not
required to indemnify Lessor under Section 5.7).
The amount of any such payment to Lessor must take
into account the tax treatment of that payment to
Lessor applying the principles of Section 5.10
such that Lessor shall be in no worse position
than it would have been if the deduction had not
applied in the first place;
-6-
(iii) pay the Tax to the relevant taxing authority
according to the relevant Law; and
(iv) obtain a receipt (if one is available) from the
relevant taxing authority and give it to Lessor.
(b) TAX CREDIT: If Lessor, in good faith, determines that it has
realized a tax benefit (by way of deduction, credit or
otherwise) as a result of any payment for which Lessee is
liable under Section 5.6(a), Section 5.7, Section 5.10,
Section 5.21 or Section 10, Lessor shall pay to Lessee as
soon as practicable after the tax benefit has been realized
(but not before Lessee has made all payments and indemnities
to Lessor required under this Section or Section 5.7), an
amount which will ensure that (after taking account of the
payment itself) Lessor is in no better and no worse
position than it would have been if the Tax giving rise to
the payment hereunder had not been incurred.
Nothing in this Section 5.6(b) shall:
(i) interfere with the right of Lessor to arrange its
tax affairs in whatever manner it thinks fit; or
(ii) oblige Lessor to disclose any information relating
to its Tax affairs or any Tax computations (other
than information reasonably necessary for Lessee
to verify Lessor's determination, which
information may be supplied on a confidential
basis to an independent third party reasonably
acceptable to Lessor and Lessee).
5.7 Tax Indemnity
(a) General:
(i) Except as provided in Section 5.7(c), Lessee will
on demand pay and indemnify each Tax Indemnitee
against any and all Taxes levied or imposed
against or upon or payable by such Tax Indemnitee
or Lessee and arising from, with respect to or in
connection with the transactions pursuant to the
Lease, including all Taxes relating or
attributable to Lessee, the Lease or the Aircraft,
directly or indirectly, in connection with the
importation, exportation, registration, ownership
(but only to the extent relating to or
attributable to or arising as a result of the
possession, operation, use or maintenance of the
Aircraft by Lessee), leasing, sub-leasing,
purchase, delivery, possession, use, operation,
repair, maintenance, overhaul, transportation,
landing, storage, presence or redelivery of the
Aircraft or any part thereof or any rent,
receipts, insurance proceeds, income,
indemnification payment or other amounts arising
therefrom, or the making of any Equipment Change
or the permanent replacement of any Engine.
-7-
(ii) All Taxes indemnified pursuant to this Section
5.7(a) shall be paid by Lessee directly to the
appropriate taxing authority (to the extent
permitted by applicable Law) at or before the time
prescribed by applicable Law. After any payment by
Lessee of any Tax directly to a taxing authority,
Lessee shall furnish to Lessor, on request, a
certified copy of a receipt for Lessee's payment
of such Tax or such other evidence of payment of
such Tax as is reasonably obtainable by Lessee and
reasonably acceptable to Lessor.
(iii) Any amount payable by Lessee to a Tax Indemnitee
pursuant to Section 5.7(a) shall be paid within
ten days after receipt of a written demand
therefor from the relevant Tax Indemnitee
accompanied by a written statement describing in
reasonable detail the basis for such indemnity and
the computation of the amount so payable, provided
that if an amount of any indemnified Tax is being
contested in accordance with Section 5.9 and
Lessee shall have duly performed (and shall
continue to perform) all its obligations under
Section 5.9 with respect to such contest, then
payment of the indemnity with respect to such Tax
under Section 5.7(a) shall, at Lessee's election,
be deferred until the date the contest has been
completed.
(b) Sales and Use Taxes:
(i) Without limiting Section 5.7(a) above, Lessee
shall pay to Lessor (or, if permitted by
applicable Law and if requested by Lessor, Lessee
shall pay to the relevant tax authority for the
account of Lessor):
(y) all sales, use, excise, rental, value
added, goods and services and similar
taxes ("SALES TAXES") required to be
paid to the tax authority of the
jurisdiction in which the Delivery
Location is situated or to the
jurisdiction of the Habitual Base or the
State of Incorporation with respect to
the lease of the Aircraft to Lessee
pursuant to the Lease unless Lessee
delivers to Lessor on or prior to the
Delivery Date such exemption certificate
or other document as may be required by
applicable law to evidence Lessor's
entitlement to exemption from all Sales
Taxes imposed by each such jurisdiction
with respect to the lease of the
Aircraft pursuant to the Lease; and
(z) all Sales Taxes required to be paid to
the tax authority of any jurisdiction in
which the Aircraft may be used, operated
or otherwise located from time to time
unless Lessee deliver to Lessor such
exemption certificates or other
documents as may be required by
applicable law to evidence Lessee's
entitlement to exemption from all Sales
Taxes imposed by each
-8-
such jurisdiction with respect to the
lease of the Aircraft pursuant to the
Lease.
(ii) Lessee and Lessor will cooperate with each other
in connection with the preparation and filing of
any exemption application or similar document that
is reasonably necessary or desirable under
applicable Law to avoid the imposition of any
Sales Taxes with respect to the transactions
contemplated by the Lease.
(iii) The specific obligations with respect to sales and
use taxes set forth in this Section 5.7(b) are in
addition to, and are not in substitution for,
Lessee's obligation to indemnify for sales and use
taxes pursuant to Section 5.7(a).
(c) Lessee is not required to indemnify a Tax Indemnitee under
Section 5.7(a) or Section 5.7(b) to the extent that the Tax
arises because of:
(i) the willful misconduct or gross negligence of the
Tax Indemnitee seeking indemnity under Section
5.7;
(ii) a Tax liability a Tax Indemnitee has which would
have arisen even if the Lease had not been entered
into;
(iii) a Tax liability charged on or measured by a Tax
Indemnitee's net income, profits or gains by any
Government Entity in the United States; but
excluding any Tax (A) that is a Sales Tax (other
than a Sales Tax that is enacted by a Government
Entity as a substitute for or replacement of a Tax
charged on or measured by net income, profits, or
gains as a revenue source for that Government
Entity (a "Replacement Sales Tax")) or (B) that is
imposed by any government or taxing authority of
any jurisdiction (other than the United States
federal government) if and to the extent that such
Tax (including a Replacement Sales Tax) results
from (x) the use, operation, presence,
registration or location of the Aircraft, the
Airframe, any Engine or any Part in the
jurisdiction imposing the Tax, or (y) the situs of
organization, any place of business or any
activity of Lessee or any other Person having use,
possession or custody of the Aircraft, the
Airframe, any Engine or any Part in the
jurisdiction imposing the Tax;
(iv) a Tax liability charged with respect to the
period, or an event occurring, (x) prior to the
Delivery Date or (y) after the Expiry Date and, in
either case, unrelated to Lessor's dealings with
Lessee or to the transactions contemplated by the
Lease;
(v) a Tax liability arising out of any voluntary
transfer or disposition by a Tax Indemnitee of any
equitable or legal interest in the Aircraft or any
part thereof or
-9-
this Agreement to any Person (including a transfer
or disposition by way of security but excluding a
transfer or disposition pursuant to the exercise
of remedies in connection with an Event Default),
provided, however, that Lessor shall in connection
with an Event of Default comply with any request
as Lessee shall make concerning the appropriate
jurisdiction in which such disposition shall be
made unless Lessor reasonably determines (and
advises Lessee) that compliance with such request
by Lessee would generate an adverse consequence or
prejudice Lessor; or
(vi) a Tax liability with respect to a Tax based on or
measured by the value or principal amount of any
loan or promissory note (or security therefor)
entered into by a Tax Indemnitee or anyone
claiming an interest in the Aircraft or any
portion thereof through a Tax Indemnitee; or
(vii) a Tax liability arising out of a Replacement Sales
Tax as described in Section 5.7(c)(iii), but
excluding a Replacement Sales Tax described in
Section 5.7(c)(iii)(B).
(d) Lessee will also indemnify each Tax Indemnitee, on an
After-Tax Basis, as set forth in the Section entitled
"Special Tax Indemnity" in Schedule B of the Aircraft Lease
Agreement, and the provisions of Section 5.9 (TAX CONTEST
AND INFORMATION) shall apply thereto.
5.8 [NOT APPLICABLE]
5.9 Tax Contest and Information
(a) If a Tax Indemnitee receives a notice of an audit or a
written claim for any Tax for which Lessee would be required
to pay an indemnity pursuant to Section 5.6 or Section 5.7,
Lessor or such Tax Indemnitee shall notify Lessee promptly
of such audit or claim, provided that any failure to provide
such notice will not relieve Lessee of any indemnification
obligation pursuant to Section 5.6 or 5.7 except to the
extent that such failure precludes the right to contest such
Taxes. If requested by Lessee in writing promptly after
receipt of notice hereunder, Lessor shall or Lessor shall
cause, to the extent that it has the ability to do so
through relationship or contractual privity, such Tax
Indemnitee to, upon receipt of indemnity satisfactory to it
and at the expense of Lessee (including all costs, expenses,
legal and accountants' fees and disbursements, and
penalties, interest and additions to tax incurred in
contesting such claim) permit Lessee to contest such audit
or claim, or, if such contest (w) relates to an income tax,
(x) involves Taxes in addition to those for which Lessee is
responsible hereunder, (y) may not, under applicable law be
conducted by Lessee, or (z) is one for which Lessee requests
in writing
-10-
that Lessor or the Tax Indemnitee conduct such contest,
Lessor shall, or Lessor shall cause, to the extent that it
has the ability to do so through relationship or contractual
privity, the appropriate Tax Indemnitee to in good faith
contest such audit or claim, by (i) resisting payment
thereof if practicable and appropriate, (ii) not paying the
same except under protest if protest is necessary and
proper, or (iii) if payment is made, using reasonable
efforts to obtain a refund of such Taxes in appropriate
administrative and judicial proceedings. Lessor or the Tax
Indemnitee shall determine the method of any contest
conducted by Lessor or the Tax Indemnitee and (in good faith
consultation with Lessee) control the conduct thereof,
except that with respect to matters described in clause (y)
or in clause (z) above which are not also described in
clause (w) or clause (x) above Lessor shall and Lessor shall
cause, to the extent that it has the ability to do so
through relationship or contractual privity, the Tax
Indemnitee to comply with the reasonable instructions of
Lessee regarding the method of any contest conducted by
Lessor or the Tax Indemnitee and Lessee shall (in good faith
consultation with Lessor) control the conduct thereof.
Lessee shall determine the method of any contest conducted
by Lessee and (in good faith consultation with Lessor or the
Tax Indemnitee) control the conduct thereof. Lessee shall
pay in full all payments of Rent and other amounts payable
pursuant to the Lease, without reduction for or on account
of any Tax (except as provided in Section 5.6), while such
contest is continuing. Lessor shall not be required to
contest, or to continue to contest, a claim for Taxes under
this Section 5.9 if (x) such contest would result in a risk
of criminal penalties or risk of a sale, forfeiture or loss
of, or the imposition of a Security Interest (other than a
Permitted Lien) on, the Aircraft, or (y) Lessee shall not
have furnished, at Lessee's expense, an opinion of
independent tax counsel selected by Lessor and reasonably
satisfactory to Lessee, that a reasonable basis exists for
such contest, or (z) a Default shall be continuing (unless
Lessee shall have provided security reasonably satisfactory
to Lessor securing Lessee's performance of its obligations
under this Section 5.9). If Lessor or any Tax Indemnitee
contests any claim for Taxes by making a payment and seeking
a refund thereof, then Lessee shall advance to Lessor or
such Tax Indemnitee, on an interest-free basis, an amount
equal to the Taxes to be paid by Lessor or such Tax
Indemnitee in connection with the contest and shall
indemnify Lessor or such Tax Indemnitee on an After-Tax
Basis for any adverse tax consequences to Lessor or such Tax
Indemnitee of such interest-free advance. Upon the final
determination of any contest pursuant to this Section 5.9 in
respect of any Taxes for which Lessee shall have made an
advance to Lessor or a Tax Indemnitee in accordance with the
immediately preceding sentence, the amount of Lessee's
obligation shall be determined as if such advance had not
been made; any indemnity obligation of Lessee to Lessor or a
Tax Indemnitee under this Section 5.9 and Lessor's or such
Tax Indemnitee's obligation to repay the advance will be
satisfied first by setoff against each other, and any
difference owing by either party shall be paid within ten
days after such final determination.
-11-
(b) If Lessor or any Tax Indemnitee obtains a refund or
reimbursement of all or any part of any Taxes for which a
full indemnity was paid by Lessee, Lessor shall and Lessor
shall cause such Tax Indemnitee to pay Lessee the amount of
such refund or reimbursement, reduced by any Taxes imposed
on Lessor or such Tax Indemnitee on receipt or accrual of
such refund or reimbursement and increased by any Taxes
saved by Lessor or such Tax Indemnitee by reason of the
deductibility of such payment by Lessor or such Tax
Indemnitee. If, in addition to such refund or reimbursement,
Lessor or such Tax Indemnitee receives an amount of interest
on such refund or reimbursement or a recovery of costs or
attorney's fees with respect thereto that were paid by
Lessee, Lessor or such Tax Indemnitee shall pay to Lessee
the portion of such interest or recovered costs or
attorney's fees which is fairly attributable to such refund,
reduced by any Taxes imposed by Lessor or such Tax
Indemnitee on receipt or accrual of such interest and
increased by any Taxes saved by reason of the deductibility
of such payment by Lessor or such Tax Indemnitee. Neither
Lessor nor the Tax Indemnitee shall be required to make any
payment to Lessee pursuant to this Section 5.9 if, and for
so long as, a Default shall have occurred and be continuing.
(c) Lessor or a Tax Indemnitee in its sole discretion (by
written notice to Lessee) may waive its rights to
indemnification pursuant to Section 5.7 with respect to any
claim for any Tax and may refrain from contesting or
continuing the contest of such claim, in which event Lessee
shall have no obligation to indemnify Lessor for the Taxes
that are the subject of such claim. If Lessor agrees to a
settlement of any contest conducted pursuant to this Section
5.9 without the prior written consent of Lessee, which
consent shall not be unreasonably withheld, then Lessor
shall be deemed to have waived its rights to the
indemnification provided for in Section 5.7 with respect to
the Tax liability accepted in such settlement or with
respect to which Lessee's ability to avoid or minimize,
directly or by instruction to the Lessor or such Tax
Indemnitee regarding how to avoid or minimize, Taxes has
been materially impaired as a result of failure of the
Lessor or such Tax Indemnitee to so contest or continue to
contest.
(d) Information:
(i) If Lessee is required by any applicable Law, or by
any third party, to deliver any report or return
in connection with any Taxes for which Lessee
would be obligated to indemnify Lessor or any
other Tax Indemnitee under the Lease, Lessee will
complete the same and, on request, supply a copy
of the report or return to Lessor.
(11) If any report, return or statement is required to
be made by Lessor or any other Tax Indemnitee with
respect to any Tax for which there is an indemnity
obligation of Lessee under the Lease, and Lessee
knows of, or reasonably should
-12-
have known of, such return, report or statement,
Lessee will promptly notify Lessor of the
requirement and:
(Y) if permitted by applicable Law, make and
timely file such report, return or
statement (except for any report, return
or statement that Lessor has notified
Lessee that Lessor or any other Tax
Indemnitee intends to prepare and file),
prepare such return in such manner as
will show Lessor as lessor of the
Aircraft and the ownership of the
Aircraft in Lessor if required or
appropriate, and provide Lessor upon
request a copy of each such report,
return or statement filed by Lessee, or
(z) if Lessee is not permitted by applicable
Law to file any such report, return or
statement, Lessee will prepare and
deliver to Lessor a proposed form of
such report, return or statement within
a reasonable time prior to the time such
report, return or statement is to be
filed.
(iii) Lessee will provide such information and documents
as Lessor may reasonably request to enable Lessor
or any other Tax Indemnitee to comply with its tax
filing, audit and litigation obligations. Lessor
or any other Tax Indemnitee will provide such
information or documents, at Lessee's expense,
that Lessee does not otherwise have as Lessee may
reasonably request and which are necessary to
enable Lessee to comply with its obligations under
the Lease (including Sections 5.6 and 5.7 of the
CTA and Schedule B of the Aircraft Lease
Agreement) or to minimize Taxes that are the
subject of any filing, audit, or contest under
this Section 5.9.
5.10 Indemnity Payments - After-Tax Basis
The amount of any payment made under Section 5.7 (TAX INDEMNITY)
(including Section 5.7(d)), Section 5.21 (EXPENSES) or Section 10
(INDEMNITY) to or for the benefit of any Indemnitee, shall include
such amount as may be necessary to hold such Indemnitee harmless on an
After-Tax Basis from all Taxes required to be paid by such Indemnitee
with respect to such payment or indemnity (including any payments
pursuant to this Section 5.10.
5.11 Lessor Obligations Following Expiry Date
Within 91 days (or such shorter period after the Expiry Date to which
Lessor may agree after Lessee demonstrates to Lessor's reasonable
satisfaction that Lessee has a net worth, determined in accordance
with GAAP, of not less than Five Million Dollars ($5,000,000.00) as of
the Expiry Date) after:
-13-
(a) redelivery of the Aircraft to Lessor in accordance with and
in the condition required by the Lease; or
(b) payment to Lessor of the Agreed Value following an Event of
Loss after the Delivery Date;
and in each case so long as all amounts which may then be due and
payable under the Lease and the Other Agreements shall have been paid
in full and (no other Default has occurred and is continuing:
(i) Lessor will pay to Lessee the balance of the
Deposit (if any);
(ii) 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; and
(iii) Lessor will return to Lessee or cancel any Letter
of Credit.
5.12 Net Lease
The Lease is a net lease. The Lessee's obligation to pay Rent and to
perform all of its other obligations under the Lease is absolute and
unconditional no matter what happens and no matter how fundamental or
unforeseen the event, including any of the following: (a) any right of
set-off, counterclaim, recoupment, defense or other right which either
party to the Lease may have against the other (including any right of
reimbursement) or which Lessee may have against the Manufacturer, any
manufacturer or seller of or any Person providing services with
respect to the Aircraft, any Engine or any Part or any other Person,
for any reason whatsoever; (b) any unavailability of the Aircraft for
any reason, including 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 (whether or not
the same would, but for this provision, result in the termination of
the Lease by operation of law); (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, Lessee or any other Person; (e) any invalidity or
unenforceability or lack of due authorization of, or other defect in,
the Lease; (f) any Security Interests or Taxes; and/or (g) any other
cause or circumstance which but for this provision would or might
otherwise have the effect of terminating or in any way affecting any
obligation of Lessee under the Lease. Lessee acknowledges and agrees
that it has used its own judgement in selecting the Aircraft, and has
not relied on Lessor or
-14-
on any information supplied by Lessor, that Lessor is not a
manufacturer of or dealer in aircraft and that Lessor has all of the
rights and benefits of a lessor under a lease to which Section 2A-407
of the UCC applies as provided in such Section 2A-407.
Except as expressly set forth elsewhere in the Lease, Lessee hereby
waives, to the extent permitted by applicable Law, any and all right
which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, ▇▇▇▇▇, cancel, quit,
reduce, defer, suspend or surrender the Lease or the Aircraft or any
obligation imposed upon Lessee under the Lease (including payment of
Rent or Supplemental Rent).
Each payment of Rent or Supplemental Rent made by Lessee shall be
final. Lessee will not seek to recover all or any part of any payment
of Rent or Supplemental Rent for any reason whatsoever except manifest
error.
If for any reason whatsoever the Lease shall be terminated in whole or
in part by operation of Law, except as specifically provided in the
Lease, Lessee waives all rights (if any) to any termination or
diminution in its Rent or Supplemental Rent obligations hereunder and
nonetheless agrees to pay to Lessor, an amount equal to each Rent and
Supplemental Rent payment at the time such payments would have become
due and payable in accordance with the terms thereof had the Lease not
been terminated in whole or in part and so long as such payments are
made and all other terms and conditions hereof are complied with by
Lessee, Lessor and Lessee will deem the Lease to remain in full force
and effect and Lessee shall continue in possession of the Aircraft
under the terms and conditions of the Lease
Nothing in this Section 5.12 will be construed to limit Lessee's right
to institute separate legal proceedings against Lessor in the event of
Lessor's breach of the Lease as and to the extent permitted by
Sections 7.1 and 16.3 of this CTA, or to limit Lessee's rights and
remedies against any other Person.
5.13 Further Provisions regarding Deposit
(a) If, under the Lease, Lessee is required to pay a Deposit,
Lessee hereby grants a security interest in the Deposit to
Lessor and the remaining provisions of this Section shall
apply. Lessee agrees that Lessor shall be entitled to
commingle the Deposit with Lessor's general or other funds,
Lessor will have no obligation to pay any interest thereon
and Lessor will not hold any such funds as agent or in trust
for Lessee or in any similar fiduciary capacity. In this
regard, Lessee acknowledges and agrees that it is not
located in the State of
New York within the meaning of
Section 7-101 1-c. (b) of the
New York General Obligations
Law and, therefore, the requirements of Section 7-101 of the
New York General Obligations Law to the effect that Lessor
hold the Deposit in a separate, interest bearing account do
not apply.
-15-
(b) If any Event of Default or any Default under clause (g) of
Schedule 9 shall have occurred and be continuing, in
addition to all rights and remedies accorded to Lessor
elsewhere in the Lease or under Law in respect of the
Deposit, Lessor may immediately or at any time thereafter,
without prior notice to Lessee, apply all or part of the
Deposit in or towards the payment or discharge of any
matured obligation owed by Lessee or any affiliate or
associate of Lessee under the Lease or the Other Agreements,
in such order as Lessor sees fit, and/or exercise any of the
rights of set-off described in Section 5.20 against all or
part of the Deposit.
(c) If Lessor exercises the rights described in Section 5.13(b)
above, Lessee shall, following a demand in writing from
Lessor, immediately restore the Deposit to the level at
which it stood immediately prior to such exercise.
5.14 Letter of Credit
(a) If, under the Lease, Lessee is required or elects to provide
Lessor with a Letter of Credit, the provisions of this
Section shall apply. Any Letter of Credit provided by Lessee
to Lessor will be issued and payable by a Pre-Approved Bank
or another bank acceptable to Lessor in its sole and
absolute discretion and in substantially the form of
Schedule 13, or in another form and substance acceptable to
Lessor in its sole and absolute discretion, and, if not
issued by a Pre-Approved Bank or by the
New York branch of a
major international bank acceptable to Lessor in its sole
and absolute discretion from time to time, will be confirmed
by and payable at the
New York branch of a major
international bank acceptable to Lessor in its sole and
absolute discretion from time to time, and will be issued as
security for all payment obligations of Lessee or any its
Affiliates under the Lease and each Other Agreement
(including any and all Losses suffered or incurred by Lessor
or any of its Affiliates in respect of which Lessee or any
if its Affiliates is obligated under the Lease or each Other
Agreement), which shall remain in full force and effect
until the Required LC Expiry Date and may be drawn down by
Lessor upon demand at any time or times prior to the
Required LC Expiry Date following (i) the occurrence of an
Event of Default or a Default under clause (g) of Schedule
9, or (ii) the receipt by Lessor of notice of non-renewal of
the Letter of Credit under Section 5.14(b) below.
(b) The Letter of Credit may have a validity period or periods
ending prior to the Required LC Expiry Date, provided that
(i) the Letter of Credit shall be renewed automatically,
without further act or deed by any party, until such time as
Lessor receives notice of non-renewal of the Letter
Credit, (ii) notice of non-renewal of the Letter of Credit
shall be provided to Lessor no less than 30 Business Days
prior to its then scheduled expiry date, (iii) Lessor
shall be entitled to draw the full amount of the Letter of
Credit immediately in
-16-
the event that Lessor receives any notice of non-renewal of
the Letter of Credit; and (iv) a Letter of Credit shall
remain in force at all times up to the Required LC Expiry
Date.
(c) If at any time during the Term, the current issuing or
confirming bank for the Letter of Credit ceases to meet the
requirements set forth in the definition of Pre-Approved
Bank, Lessee shall within five (5) Business Days after the
date of notice from Lessor of such decrease in credit
rating, cause the Letter of Credit to be replaced by a
Letter of Credit issued by another bank that meets the
definition of a Pre-Approved Bank and (if requested by
Lessor in its sole and absolute discretion) that such
replacement Letter of Credit is confirmed by another bank
that meets the requirement of a Pre-Approved Bank.
(d) If Lessor makes a drawing under the Letter of Credit, Lessee
shall, following a demand in writing by Lessor, immediately
cause the maximum amount available for drawing under the
Letter of Credit to be restored to the level at which it
stood immediately prior to such drawing.
5.15 Guarantee
If, under the Aircraft Lease Agreement, Lessee is required to provide
Lessor with a Guarantee, Lessee will on or prior to the Delivery Date
provide Lessor with the Guarantee.
5.16 Late Payment Interest
If Lessee fails to pay any amount payable under the Lease on the due
date, Lessee will pay on demand from time to time to Lessor interest
(both before and after judgement) on that amount, from the due date to
the date of payment in full by Lessee to Lessor, at the Interest Rate.
All such interest will be compounded monthly and calculated on the
basis of the actual number of days elapsed in the month, assuming a 30
day month and a 360 day year.
5.17 Currency
(a) Except for Losses and expenses suffered or incurred by
Lessor, which shall be payable by Lessee to Lessor in the
currency and in the amount in which such Loss is suffered or
incurred, all amounts payable to Lessor under the Lease
shall be payable in Dollars in
New York and payment in
Dollars in New York is of the essence. Lessee must indemnify
Lessor against any Loss Lessor suffers if:
(i) Lessor receives an amount relating to Lessee's
obligations in a different currency from that in
which payments should be made under the Lease; or
(ii) Lessee pays a judgement or claim in a different
currency from that in which payments should be
made under the Lease.
-17-
(b) Lessee relinquishes any right to pay any amount under the
Lease in a currency which is different from the currency
provided in the Lease. Notwithstanding any such receipt,
judgement or claim described in Section 5.17(a), Lessee
shall have a separate obligation to pay, and Lessor shall
have a separate claim against Lessee for, amounts to be
indemnified by Lessee under this Section 5.17.
5.18 Certificates
Except where expressly provided in the Lease, any certificate or
determination by Lessor as to any rate of interest or as to any other
amount payable under the Lease will, in the absence of manifest error,
be presumed to be correct.
5.19 Appropriation
If any sum paid or recovered by Lessor in respect of the liabilities
of Lessee under the Lease is less than the amount then due, Lessor may
apply that sum to amounts due under the Lease in such proportions and
order and generally in such manner as Lessor may determine in its sole
discretion.
5.20 Set-off
(a) In this sub-clause, references to Lessee will also include
Lessee Affiliates.
(b) Lessor may, without notice, set-off any obligations owed by
Lessee under the Lease or under the Other Agreements against
any obligation Lessor or any of its Affiliates owes Lessee
under the Lease or under the Other Agreements, regardless of
the place of payment or currency. Promptly after making any
such set-off, Lessor shall notify Lessee thereof, including
in such notice such information about the set-off as may be
reasonably required to enable a reasonable person to
identify the claims so set off and to verify the calculation
of the set-off, but neither failure to give such notice nor
any alleged defect in such notice shall affect the
effectiveness of any such set-off.
If the obligations are in different currencies, Lessor may convert
either obligation at the market rate of exchange available in New
York. If the amount of an obligation is unknown, Lessor may estimate
the amount. Any difference between the estimated obligation and the
actual obligation will be paid by either Lessor or Lessee, as
appropriate, when the amount becomes known.
5.21 Expenses
Lessee will pay to Lessor on demand all reasonable expenses (including
all legal fees and expenses and the fees and expenses of other
professional advisers) that the Lessor suffers or incurs:
-18-
(a) to deal with any amendments, extensions, consents or waivers
that are required in connection with the Lease (but
excluding any expenses incurred by Lessor or Owner in
connection with any change in the ownership or financing of
the Aircraft or a change in the Lease that is otherwise
requested by Lessor or Owner, and in each case unrelated to
any consent, waiver or amendment requested by Lessee or any
other act or omission of Lessee) or to deal with any
replacement of any Engine or Part (except for the
replacement of an Engine by or at the request of Lessor
prior to the Delivery Date);
(b) for FAA counsel and otherwise to act upon any advice and
obtain assistance to perfect the Lease in the State of
Registry and the State of Incorporation (and any other
appropriate place); and
(c) in contemplation of, or otherwise in connection with, the
enforcement or preservation of any of Lessor's rights under
the Lease (including under Section 10) or in respect of the
repossession of any Aircraft.
All amounts payable pursuant to this Section 5.21 will be paid in the
currency in which they are incurred by Lessor.
6. MANUFACTURER'S WARRANTIES
(a) So long as no Default has occurred which is continuing,
Lessor shall make available to Lessee during the Term the
benefit of all manufacturer's warranties in relation to the
repair or remedy of any defect in the Aircraft (including
compensation for loss of use of the Aircraft) to the extent
that it is permitted to do so. In furtherance of the
foregoing, Lessor shall take such actions, at Lessee's cost
and expense, as Lessee may reasonably request to make such
warranties available to Lessee.
(b) If a Default has occurred and is continuing Lessor may
immediately recover from Lessee the proceeds of any warranty
claims previously paid to Lessee to the extent that such
claims relate to any defect in the Aircraft not fully and
completely rectified by Lessee before such Default and
Lessor may:
(i) retain for its own account any such proceeds
previously paid to Lessor which would have been
remitted to Lessee under this Section 6 in the
absence of such Default; and
(ii) cause any proceeds of any pending claims to be
paid to Lessor, rather than Lessee.
-19-
(c) Lessee will take all steps at the end of the Term as may be
reasonably required to ensure that the benefit of any
warranties relating to the Aircraft which have not expired
is vested in Lessor.
7. LESSOR'S COVENANTS
7.1 Quiet Enjoyment
So long as no Default has occurred and is continuing, Lessor will not
interfere with Lessee's right to quiet use and possession of the
Aircraft during the Term. Exercise by Lessor of its rights of
inspection or other rights provided to it under the Lease in the
absence of a Default shall not be considered to be a breach of the
foregoing covenant. Lessee agrees that its only right with respect to
a default by Lessor under the Lease is to make a claim against Lessor
for actual damages resulting directly therefrom and in any event
subject to Section 16.3 hereof, and Lessee hereby waives any and all
other rights or remedies it may have under Section 2A-211 of the UCC
or Sections 2A-508 through 2A-522 of the UCC or otherwise.
7.2 Maintenance Contributions
If, under the Aircraft Lease Agreement for the Aircraft, Lessee is
required to pay Supplemental Rent, then provided no Default has
occurred and is continuing, Lessor will pay such amounts, if any, as
may be specified in the Aircraft Lease Agreement to Lessee by way of
contribution to the cost of maintenance of the Aircraft, which
payments, if any, shall be made in the amounts and in the manner
specified in the Aircraft Lease Agreement.
8. LESSEE'S COVENANTS
8.1 Duration: Lessee shall perform and comply, or cause its Permitted
Sub-Lessee or maintenance contractor to perform and comply, with its
undertakings and covenants in the Lease at all times during the Term.
All such undertakings and covenants shall, except where expressly
otherwise stated, be performed at the expense of Lessee.
8.2 Information
Lessee will:
(a) provide Lessor with a Technical Report for the Aircraft
within 15 days after the end of each calendar month
throughout the Term and otherwise provide Lessor with a
Technical Report for the Aircraft within thirty (30) days
after Lessor's request therefor;
(b) provide Lessor with the Financial Information;
-20-
(c) (i) notify Lessor of any Event of Loss and of any event
which is likely to result in an insurance claim in excess of
the Damage Notification Threshold promptly after the
occurrence of any such event, (ii) consult with Lessor in
the course of, and keep Lessor fully apprised as to the
details of, any negotiations with its insurers or insurance
brokers (and, in the case of repairable damage, with any
applicable repair facility) with respect to any insurance
claim arising out of such event, and (iii) obtain Lessor's
prior approval before agreeing to any disposition of any
insurance claim in excess of the Damage Notification
Threshold;
(d) upon the occurrence of any event which is likely to give
rise to an insurance claim under any of the Insurances
relating to the Aircraft, Lessee shall promptly execute and
deliver all documents and instruments and take all such
other action as may reasonably be required to initiate and
process any such claim under the applicable insurance, and
in any event, Lessee shall initiate such claim, execute such
documents or instruments and take such other action promptly
following a written request by Lessor that Lessee initiate
such claim, execute such document or instrument or take such
other action;
(e) provide Lessor, upon request, with evidence that all Taxes
and charges that are due and payable and were incurred by
Lessee in connection with the Aircraft, its location and its
operations, including those invoiced by airports and air
traffic control authorities have been paid in full (or are
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
risk of the Aircraft or any interest therein being sold,
forfeited or otherwise lost or of criminal liability on the
part of Lessor or Owner);
(f) provide Lessor with such other information concerning the
location, condition, use and operation of the Aircraft or
concerning the business or financial affairs of Lessee, as
Lessor may from time to time reasonably request;
(g) [NOT APPLICABLE];
(h) [NOT APPLICABLE];
(i) notify Lessor promptly as to any material modification to
Lessee's Maintenance Program (including, without limitation,
any change from maintenance on a block format to maintenance
on a phase-basis); provided, however, that Lessee shall not
make any modifications to Lessee's Maintenance Program which
may adversely affect the return conditions specified in Part
III of Schedule A to the Aircraft Lease Agreement without
prior consultation with Lessor. For the avoidance of doubt,
changes to Lessee's Maintenance Program extending or
shortening times between scheduled overhaul of Parts
-21-
shall not be deemed to be material modification or to
adversely affect the return conditions;
8.3 Lawful and Safe Operation
Lessee will operate the Aircraft for commercial purposes from the
Delivery Date until the Return Occasion from a base within the State
of Registry or from such other base outside the State of Registry
pursuant to a sub-lease or a wet-lease complying with Section 8.4(a),
provided, always that Lessee must not use or operate the Aircraft or
suffer or permit the Aircraft to be used or operated:
(a) in violation of any applicable Regulations or in a manner
causing Lessor, Owner, any Financing Party or GECAS to be in
violation of (i) any applicable Regulations of the United
States, (ii) any applicable Regulations of any jurisdiction
of which Lessee is notified in writing by Lessor as a
jurisdiction applicable to Lessor, Owner, GECAS or any
Financing Party, or (iii) any applicable Regulations of any
other jurisdiction into which or over which the Aircraft is
operated; provided, however, that nothing in Section
8.3(a)(ii) shall be deemed to require Lessee to comply with
any Regulations of any jurisdiction other than the United
States which pertain to the maintenance or modification of
aircraft.
(b) for any purpose for which the Aircraft was not designed or
which is illegal;
(c) to carry cargo which could reasonably be expected to damage
the Aircraft;
(d) in any circumstances or place where the Aircraft is not
covered by the Insurances; or
(e) for purposes of training, qualifying or re-confirming the
status of cockpit personnel except for the benefit of
Lessee's or a Permitted Sub-Lessee's cockpit personnel,
and then only if the use of the Aircraft for such purpose
is not disproportionate to the use for such purpose of
other aircraft of the same type operated by Lessee or
such Permitted Sub-Lessee, as the case may be.
8.4 Subleasing
(a) AT NO TIME PRIOR TO THE RETURN OCCASION WILL LESSEE
SUB-LEASE, WET-LEASE OR OTHERWISE GIVE POSSESSION OR CONTROL
OF THE AIRCRAFT OR ANY ENGINE TO, OR OTHERWISE PERMIT THE
AIRCRAFT OR ANY ENGINE TO BE IN THE POSSESSION OR CONTROL
OF, ANY PERSON EXCEPT:
-22-
(i) when the prior written consent of Lessor has been
obtained, which consent shall not be unreasonably
withheld (it being expressly acknowledged by
Lessor and Lessee that the withholding of Lessor's
consent in respect of any sub-lease or wet lease
shall not be deemed to be unreasonable if the
terms of such sub-lease do not comply with the
conditions set out in Section 8.4(b) or the terms
of such wet lease do not comply with Section
8.4(c), as the case may be); or
(ii) where the Aircraft or Engine is delivered to a
manufacturer or maintenance facility for work to
be done on it as required or permitted under the
Lease; or
(iii) to a sub-lessee of the Aircraft to which Lessor
consents in writing (a "PERMITTED SUB-LESSEE"),
pursuant to a sub-lease to which Lessor consents
in (a "PERMITTED SUB-LEASE"), which complies with
the conditions set out in Section 8.4(b), and
provided that no Default shall have occurred and
be continuing at the commencement of such
sub-lease;
(iv) on a wet-lease which complies with Section 8.4(c);
or
(v) with respect to an Engine, as permitted under
Section 8.11.
(b) If Lessor grants its consent to a proposed sub-lessee and a
proposed sub-lease, in addition to any conditions required
by Lessor as part of any such consent of Lessor, each of the
following conditions shall be required to be satisfied in
relation to any Permitted Sub-Lease prior to any sub-leasing
pursuant to this Section:
(i) NOTIFICATION: at least 30 days prior to entering
into any Permitted Sub-Lease, Lessee shall give
Lessor written notice, specifying the identity of
the Permitted Sub-Lessee, the term of the
Permitted Sub-Lease, the delivery date under the
Permitted Sub-Lease and the habitual base of the
Permitted Sub-Lessee;
(ii) TERM: the term of the Permitted Sub-Lease shall
not be capable of extending beyond one month (or
such shorter period as Lessor may agree (which
agreement shall not be unreasonably withheld) in
giving its consent to such Permitted Sub-Lease)
before the Scheduled Expiry Date;
(iii) FORM: a Permitted Sub-Lease shall:
(aa) not contain provisions inconsistent with
the provisions of the Lease (but may
impose additional or more stringent
obligations on any Permitted Sub-Lessee
than are imposed on Lessee under the
Lease);
-23-
(bb) provide that no further subleases of the
Aircraft by such Permitted Sub-Lessee
are permitted; and
(cc) include provisions substantially
identical to or having substantially the
same effect as Sections 2.1, 5.6, 5.7,
5.10, 5.12, 5.16, 5.17, 5.21, 8, 9, 10,
11, 13, 15.1, 15.8 and 16 and Schedules
2 (Section 1.1), 7 and 9 of the Lease
(but the Permitted Sub-Lease may impose
additional or more stringent obligations
on any Permitted Sub-Lessee than are
imposed on Lessee under the Lease);
(iv) SUBORDINATION AND ASSIGNMENT: the Permitted
Sub-Lease shall provide that (aa) the Permitted
Sub-Lease is subject and subordinate to the Lease
in all respects and the rights of the Permitted
Sub-Lessee under the Permitted Sub Lease are
subject and subordinate in all respects to the
rights of Lessor under the Lease; and (bb) prior
to delivery of the Aircraft to the Permitted
Sub-Lessee (as a condition precedent thereof), the
Permitted Sub-Lessee shall provide an
acknowledgement to Lessor and Owner in a form
reasonably satisfactory to Lessor, confirming its
agreement to this provision and confirming that,
except to the extent, if any, that it receives a
quiet enjoyment letter from Lessor pursuant to
Section 8.4(b)(v) below, its rights to possession
of the Aircraft under the Permitted Sub-Lease will
terminate immediately upon the termination of the
Lease, and that it will redeliver the Aircraft to
Lessor, upon notification from Lessor that an
Event of Default has occurred and that it has, as
a result thereof, terminated Lessee's right to
possession of the Aircraft under the Lease (the
"SUBORDINATION ACKNOWLEDGEMENT"). The Permitted
Sub-Lease shall be assigned, as security, to
Lessor for Lessee's obligations under the Lease,
pursuant to an agreement reasonably acceptable to
Lessor (the "SUB-LEASE ASSIGNMENT") (and, if
applicable, Lessor's interest in such Sub-Lease
Assignment may be reassigned, as security, to
Owner and/or the Financing Parties'
Representative);
(v) QUIET ENJOYMENT: the Permitted Sub-Lease shall
provide that the Permitted Sub-Lessee shall have
the right to quiet enjoyment of the Aircraft for
so long as no Event of Default has occurred under
the Lease; provided, however, that, upon request
by a Permitted Sub-Lessee, Lessor shall, and shall
cause the Financing Parties Representative (if
applicable) to, execute and deliver to the
Permitted Sub-Lessee a letter of quiet enjoyment
in respect of the Permitted Sub-Lessee's use and
possession of the Aircraft for so long as no event
of default occurs under the Permitted Sub-Lease,
notwithstanding the occurrence of an Event of
Default under the Lease, in a form substantially
similar to Section 7.1 hereof if Lessor is
satisfied in its sole discretion as to (i) the
creditworthiness of the Proposed Sub-
-24-
Lessee at the time of such request, (ii) the
sufficiency of the rentals and other payment
obligations, including indemnities under the
Permitted Sub-Lease to discharge in full the Rent
and the indemnity obligations of Lessee under the
Lease, (iii) the installment frequency of the rent
payable under the Permitted Sub-Lease, (iv) the
acknowledgment of and agreement by the Permitted
Sub-Lessee to be bound by the provisions of
Section 16 hereof, (v) the acknowledgment by
each of the Permitted Sub-Lessee and the Lessee
that Lessor shall have no greater liability to
either Permitted Sub-Lessee or the Lessee in
respect of Lessor's obligations under Section
7.1 hereof or under such letter than Lessor
would have had under Section 7.1 in the absence
of the Permitted Sub-Lease, (vi) the form and
substance of the Subordination Acknowledgment,
and (vii) the terms of the Permitted Sub-Lease
in respect of the matters contemplated by this
Section 8.4(b);
(vi) OBLIGATIONS OF LESSEE: Lessee shall remain
primarily liable under the Lease for the
performance and observance of all its obligations
to the same extent as if no Permitted Sub-Lease
had been entered into. To the extent that the
Permitted Sub-Lessee properly performs an
obligation under the Permitted Sub-Lease, Lessor
agrees that such performance shall also be
regarded as discharging (to such extent) Lessee's
corresponding obligation;
(vii) INSURANCES: all insurance requirements herein
shall be complied with either by Lessee or by the
Permitted Sub-Lessee as if references in the
insurance provisions of the Lease to "Lessee" were
references to "the Permitted Sub-Lessee", and
Lessee shall provide or cause the Permitted
Sub-Lessee to provide the insurance certificate
and brokers' letter of undertaking referred to in
Section 9.3(c)(ii) at least five (5) Business Days
prior to the commencement of the Permitted
Sub-Lease;
(viii) REGISTRATION: there shall be no change in the
registration of the Aircraft from its State of
Registry;
(ix) REPOSSESSION OR POLITICAL RISK INSURANCE: if
reasonably required by Lessor or if required of
Lessor by Owner or the Financing Parties'
Representative, repossession or political risk
insurance, as the case may be, shall be obtained
by Lessor at Lessee's cost, provided that
repossession or political risk insurance, as the
case may be, will not be required if the Permitted
Sub-Lessee meets the requirements of Sections
8.7(iv) and (v). If repossession or political risk
insurance is required, the Permitted Sub-Lease
must provide that, if any such repossession or
political risk, as the case may be, insurance
cannot be obtained or renewed, a termination event
will occur upon notice by Lessor to Lessee or the
-25-
Permitted Sub-Lessee of an inability to procure
repossession or political risk, as the case may
be, insurance;
(x) LEGAL OPINIONS: as a condition precedent to the
effectiveness of the Permitted Sub-Lease, Lessee
shall provide to Lessor the following legal
opinions (at Lessee's or Permitted Sub-Lessee's
expense) addressed to Lessor, Owner and the
Financing Parties' Representative from counsel
reasonably acceptable to Lessor;
(aa) a legal opinion in relation to the
Permitted Sub-Lease in form and
substance reasonably satisfactory to,
and containing such other matters set
out in Schedule 8 requested by, Lessor
and confirming further that each of the
Subordination Acknowledgement, the
Permitted Sub-Lease and the Sub-Lease
Assignment is valid, binding and (except
as limited by any equitable principles
and applicable bankruptcy, insolvency,
reorganization, moratorium or similar
laws affecting creditors' or lessors'
rights generally) enforceable against
Permitted Sub-Lessee and, in the case of
the Sub-Lease Assignment, properly
perfected as against Lessee;
(bb) if the Habitual Base is not in the
United States, one or more legal
opinions in form and from counsel
reasonably acceptable to Lessor to the
effect, inter alia, that Lessor's,
Owner's and Financing Parties'
Representative's interests in the
Aircraft will be recognized under the
laws of such country or countries (it
being expressly understood that there
shall be no requirement that any single
legal point or issue be covered in
opinions from more than one counsel
except to the extent, if any, that the
laws of more than one jurisdiction may
be at issue); and
(cc) such opinions as may be required under
the Financing Documents.
Final forms of the foregoing opinion or opinions
(x) shall be forwarded promptly to Lessor at least
five Business Days prior to the effective date of
the Permitted Sub-Lease, and (y) may, if different
opinions are required hereunder, be made by a
single counsel qualified to render opinions in
each such country;
(xi) FILINGS: Lessee shall co-operate with Lessor (at
no cost to Lessor) in connection with the
execution and filing of any documents reasonably
required by Lessor to be executed and filed from
time to time with any registry or authority in the
Habitual Base, the State of Registration and State
of Incorporation (of each of Lessee and the
Permitted Sub-Lessee) in order to protect the
interests of Lessor, Owner and Financing Parties'
Representative in and to the Aircraft, the Lease
or
-26-
the Permitted Sub-Lease and/or to ensure the
validity, enforcement or priority thereof;
(xii) EXPENSES: Lessee will pay to Lessor on demand all
reasonable out of pocket expenses (including
legal, survey and other costs) and Taxes payable
or incurred by Lessor, Owner or Financing Parties'
Representative in connection with the review and
approval of the documentation required pursuant to
this Section or otherwise incurred in connection
with any requested sub-lease or the sub-leasing of
the Aircraft thereunder, and will pay any
Sublease Fee specified in the Aircraft Lease
Agreement for such Aircraft;
(xiii) PERMITTED SUB-LEASE: Promptly after its execution,
Lessee shall provide Lessor with a copy of the
signed Permitted Sub-Lease;
(xiv) ACKNOWLEDGEMENT BY GUARANTOR: If a Guarantee is
required under the Aircraft Lease Agreement,
Lessee shall provide to Lessor at least five
Business Days prior to the effective date of the
Permitted Sub-Lease an acknowledgement by
Guarantor of the Permitted Sub-Lease and
confirmation that the Guarantee will remain in
full force and effect during the term of such
Permitted Sub-Lease;
(xv) FINANCING RESTRICTIONS AND REQUIREMENTS: If Lessee
requests Lessor's consent to a sub-lease, it will not
be unreasonable for Lessor to decline its consent to
such sub-lease, if such sub-lease would result in a
breach by Lessor of the restrictions contained in or
give rise to any liability or adversely affect
Lessor's rights or obligations or otherwise result in
a detriment under any of the Financing Documents; and
(xvi) MAINTENANCE PROGRAM: Lessee shall, or shall cause the
Permitted Sub-Lessee to, provide Lessor with such
information as Lessor may reasonably request with
respect to the Maintenance Program of the Permitted
Sub-Lessee, and Lessor shall be reasonably satisfied
with the Maintenance Program of the Permitted
SubLessee.
(c) Notwithstanding Section 8.4(a), Lessee shall be permitted
to wet lease the Aircraft provided such wet lease
constitutes an arrangement whereby Lessee agrees to furnish
the Aircraft to a third party pursuant to which the Aircraft
(i) shall be operated solely by regular employees of Lessee
possessing all current certificates and licenses that are
required by applicable Regulations, including by the State
of Registry, and shall remain in the operational control and
possession of Lessee, (ii) shall be subject to insurance
coverage as provided for in the Lease, (iii) shall be used
and operated in accordance with the Lease and shall be
maintained or caused to be maintained by Lessee in
accordance
-27-
with Lessee's Maintenance Program and Lessee's normal
maintenance practices, (iv) shall not be subject to any
change in its State of Registry, and (v) shall not be
operated out of a Habitual Base located outside the United
States; and provided always that, such arrangement is
expressly subordinated to the Lease and the rights of Lessor
and Owner thereunder and to the Aircraft, and Lessee
provides Lessor with all opinions, certificates and other
documents requested by Lessor which are required to be
provided, and takes all other action requested by Lessor
which is required of Lessee or Lessor under any Financing
Document in connection with such a wet lease.
8.5 Inspection
(a) Lessee will permit Lessor's, Owner's and the Financing
Parties' Representative representatives to inspect the
Aircraft at any time. Unless a Default has occurred and is
continuing, any such Person will give Lessee reasonable
notice of inspection and will ensure that it does not result
in a disruption to the scheduled operation or maintenance of
the Aircraft. Lessee shall comply with the reasonable
requests of Lessor's, Owner's and the Financing Parties'
Representative representatives during the course of an
inspection, including any request to travel on the flight
deck of the Aircraft as an observer, subject, to any
applicable Regulations and insurance requirements.
(b) The cost of conducting an inspection shall be borne by
Lessor, Owner or the Financing Parties, as the case may be,
unless, as a result of that inspection, Lessee is found to
be in material default of its obligations under the Lease in
which case the cost shall be borne by Lessee.
(c) No liability or obligation will be incurred by Lessor,
Owner, Financing Parties' Representative or the Financing
Parties, as the case may be, by reason of non-exercise by
any of them of the inspection rights referred to in this
Section.
8.6 Ownership; Property Interests; Related Matters
(a) Lessee will:
(i) fix and maintain Nameplates containing the
Nameplate Inscription in a prominent position in
the cockpit or cabin of the Aircraft and on each
Engine;
(ii) in any circumstance where such interests are
relevant, take all reasonable steps to make sure
that all relevant persons know about the interests
of Owner, Lessor and Financing Parties
Representative in the Aircraft; and
(iii) pay all navigation charges, air traffic control
charges, landing charges or other amounts of any
nature imposed by any Government Entity with
respect to
-28-
Lessee, the Aircraft and/or the Lease except to
the extent that, in the reasonable opinion of
Lessor, 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 Owner.
(b) Lessee will not:
(i) represent that it is the owner of the Aircraft or
that it has an economic interest (equivalent to
ownership) in the Aircraft for Tax treatment or
other purposes;
(ii) take any action or fail to take any action, other
than action required under the Lease (including
under Section 7.1) to be taken by Lessor,
Affiliates of Lessor, Owner or a Financing Party,
if such action or omission could result in a
forfeiture or seizure of the Aircraft or otherwise
similarly put Owner's and/or Lessor's and/or
Financing Parties' Representative's rights or
interests at risk;
(iii) represent to others that Owner, Lessor or
Financing Parties' Representative is associated
with or responsible for the business activities
and/or flight operations of Lessee;
(iv) allow the Aircraft or Owner's, Lessor's or
Financing Parties' Representative's interest in it
or the Lease to, become or remain subject to any
Security Interest (other than a Permitted Lien);
or
(v) allow the name of any Person to be placed on the
Aircraft or any Engine as a designation that could
reasonably be interpreted as a claim of ownership
or as a Security Interest; provided, that Lessee
may place thereon, or allow a Permitted Sub-Lessee
to place thereon, its customary livery, insignia
and colors.
8.7 General
Lessee will:
(i) maintain its business as a commercial scheduled
airline, will preserve its corporate existence
(other than as permitted in Section 8.7(vii)
below) and will maintain all rights, privileges,
licenses and franchises material thereto or
material to performing its obligations under the
Lease;
(ii) not operate, maintain, insure or deal with, or
keep records with respect to, the Aircraft in a
manner which discriminates against the Aircraft
adversely insofar as
-29-
Lessor's, Owner's or Financing Parties' interests
are concerned, when compared with the manner in
which Lessee operates, maintains, insures or deals
with, or keep records with respect to, similar
aircraft, engines or parts in Lessee's fleet;
provided, however, in the event that Lessee
determines that any particular expenditure or
modification may not be prudent during the last
nine months prior to the Scheduled Expiry Date,
then Lessor and Lessee shall discuss the issue and
negotiate in good faith to agree on a mutually
acceptable solution.
(iii) not change the location of its chief executive
office from that described in the heading of
the Aircraft Lease Agreement or otherwise be
located (as defined in Section 9-103(3)(d) of
the UCC) at any place in the United States
other than the location described the heading
of the Aircraft Lease Agreement, except upon 30
days prior written notice thereof to Lessor;
(iv) remain a Certificated Air Carrier and maintain its
status so as to fall within the purview of Section
1110 of Title 11 of the U.S.C. or any analogous
statute;
(v) remain a "citizen of the United States" as defined
in Section 40102(a)(15)(c) of Title 49 of the
U.S.C.;
(vi) not liquidate or dissolve; and
(vii) not consolidate with or merge into or with any
other corporation or other Person, and not convey,
transfer, lease or otherwise dispose of all or
substantially all of its property and other assets
to, or acquire all or any substantial part of the
property or other assets or capital stock of (if
such acquisition is analogous in either purpose or
effect to a consolidation or merger), any
corporation or other Person, unless Lessee
provides Lessor with written notice of such
transaction promptly following Lessee's execution
of a binding agreement or commitment to enter into
any such transaction, which notice shall in any
event be provided no later than 30 days prior to
the effectiveness or consummation of any such
transaction and which notice shall describe such
transaction in reasonable detail and contain or be
accompanied by evidence reasonably satisfactory to
Lessor demonstrating that such transaction will
comply with the following requirements of this
Section and unless:
(x) such transaction shall not have any
material adverse effect on the rights of
Lessor, Owner or the Financing Parties'
Representative under or in respect of
the Lease or the Aircraft; and all
applicable requirements of the Financing
Documents shall have been complied with
in connection therewith;
-30-
(y) the Person formed by or surviving such
consolidation or merger or the Person
which acquires by conveyance, transfer,
lease or other disposition all or
substantially all of such property and
other assets or stock (the "SUCCESSOR
ENTITY"): (A) shall be a corporation
organized and existing under the laws of
the United States or any State thereof
or the District of Columbia; (B)
immediately after giving effect to such
transaction, shall be Lessee or shall
have acquired or succeeded to all or
substantially all of the property and
other assets of Lessee (if such assets
are being transferred) as an entirety,
and shall have a tangible net worth
(determined in accordance with GAAP) of
not less than Lessee's tangible net
worth (determined in accordance with
GAAP) immediately prior to such
transaction; (C) shall be a "citizen of
the United States" of America as defined
in Section 40102(a)(15)(c) of Title 49
of the U.S.C. and a Certificated Air
Carrier; and (D) shall execute and
deliver to Lessor such recordations and
filings with any Governmental Entity and
such other documents as Lessor
determines shall be reasonably necessary
or advisable to evidence, or in
connection with, such consolidation,
merger, sale, lease, transfer or other
disposition and an agreement, in form
and substance reasonably satisfactory to
Lessor which is a legal, valid, binding
and enforceable assumption by such
Successor Entity of the due and punctual
performance and observance of each
covenant and condition of the Lease and
the other related documents to which
Lessee is a party, and an officer's
certificate to such effect and to the
effect that the other requirements of
this Section have been satisfied, and
a legal opinion from counsel to such
effect and otherwise in such form and
substance reasonably satisfactory to
Lessor; and
(z) no Default shall have occurred and be
continuing or shall occur as a result
thereof.
8.8 Records
Lessee will keep all Aircraft Documents and Records:
(a) in English;
(b) according to good United States airline practice; and
(c) so they meet the requirements of applicable Regulations
(including FAR 91.417) and Lessee's Maintenance Program.
-31-
8.9 Protection
Lessee will:
(a) take all actions requested by Lessor that are within
Lessee's control to keep the Aircraft registered with the
Air Authority in the name of Owner and, if applicable,
subject to the first-priority Security Interest in favor of
Financing Parties' Representative; and
(b) make any and all filings required to be made with the Air
Authority registry that are within its control and take all
other actions within its control that are necessary or
advisable to reflect on the Air Authority registry any
change in the ownership of the Aircraft, or in the interests
of Lessor, Owner or the Financing Parties' Representative in
the Lease or the Aircraft, any modification to the Aircraft
(such as the permanent replacement of any Engine or Part in
accordance with the Lease) or as a result of any change in
applicable Regulation. Lessor will bear any costs incurred
as a consequence of a transfer by Lessor, Owner or the
Financing Parties' Representative of the interests of
Lessor, Owner or the Financing Parties' Representative in
the Lease or the Aircraft or a change in the identity of
Lessor, Owner or the Financing Parties' Representative (in
each case, unrelated to the replacement of any Engine or
Part or a Default), and Lessee will bear any other costs
incurred in complying with this Section, including in
connection with the replacement of any Engine or Part.
8.10 Maintenance and Repair
Lessee will maintain, overhaul and repair the Aircraft (or arrange for
the Aircraft to be maintained, overhauled and repaired, through the
Maintenance Performer), so that:
(a) the Aircraft is kept in as good operating condition and
repair as the condition of the Aircraft as at Delivery and
after giving effect to any post-Delivery modifications,
repairs or maintenance paid for or otherwise provided by or
on behalf of Lessor, except for ordinary wear and tear;
(b) the Lessee has a current certificate of airworthiness
(issued by the Air Authority in the appropriate public
transport category) for the Aircraft;
(c) the Aircraft complies with (i) all applicable Regulations
including the standard stipulated by FAR Part 121 Subpart
L and any other rules and regulations of the FAA and,
subject to the provisions of Section 8.10(d), in at least
the same manner and with at least the same care,
including record keeping, 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 and
continue operating the Aircraft in its fleet after
-32-
the Expiry Date, including all maintenance to the Airframe,
any Engine or any Part required to maintain all warranties,
performance guaranties or service life policies that are
assigned by Lessor to Lessee in full force and effect; and
(ii) the requirements of all Airworthiness Directives and
all service bulletins designated by the State of Design or
State of Registry as "mandatory," and to be carried out
before the Return Occasion or the Scheduled Expiry Date,
whichever is later, or within a period of 180 days after the
Return Occasion or the Scheduled Expiry Date, whichever is
later; and
(d) all maintenance is carried out according to Lessee's
Maintenance Program in at least the same manner and with at
least the same care, including maintenance scheduling,
modification status and technical condition, as is the case
with respect to similar aircraft owned or otherwise operated
by Lessee; provided, however, in the event that Lessee
determines that any particular expenditure or modification
may not be prudent during the last nine months prior to the
Scheduled Expiry Date, then Lessor and Lessee shall discuss
the issue and negotiate in good faith to agree on a mutually
acceptable solution.
8.11 Removal of Engines and Parts
(a) GENERAL: Lessee must replace, within one hundred and five
(105) days thereof, any Engine that has suffered an Engine
Event of Loss in accordance with Section 8.11(b), and any
Part which is permanently removed from the Aircraft must be
replaced in accordance with Section 8.11(b). Any Part which
otherwise is lost, stolen, destroyed, seized, obsolete,
confiscated, damaged beyond repair or permanently rendered
unfit for any reason, must be replaced in accordance with
Section 8.11(b). Any Engine or Part may be installed on
another aircraft Lessee owns or leases in accordance with
Section 8.11(c). Lessee may temporarily install an engine
or part in accordance with Section 8.11(d). Lessee shall
obtain from any Person to whom possession of an Engine is
given (other than (i) any Maintenance Performer to whom an
Engine is delivered for maintenance, repair or overhaul,
(ii) the Engine Manufacturer, or (iii) any other Person to
whom an Engine is given solely for purpose of transporting
the Engine), and from the lessor of any airframe on which an
Engine is installed and from any holder of a Security
Interest in any airframe on which an Engine is installed, an
agreement in writing (which agreement, in the case of a
lease or Security Interest, may be contained in the
applicable lease or Security Interest agreement covering
such airframe) that such Person will not acquire or claim
any rights, title or interest in such Engine as a result of
such Engine being installed on such other airframe at any
time while such Engine is subject to the Lease. In the event
Lessee shall have received from a lessor of or secured party
holding a Security Interest in any airframe leased to Lessee
or owned by Lessee a written agreement pursuant to the
foregoing sentence and the lease or Security Interest
covering such airframe also covers an engine or engines
owned by the lessor under such lease or subject to such
Security
-33-
Interest in favor of the secured party under such Security
Interest, Lessor hereby agrees for the benefit of such
lessor or secured party that Lessor will not acquire or
claim as against such lessor or secured party, any rights,
title or interest in any such engine as a result of such
engine being installed on the Airframe at any time while
such engine is owned by such lessor and subject to such
lease or such Security Interest in favor of such secured
party.
(b) PERMANENT REPLACEMENT: If Lessee permanently replaces an
Engine or Part:
(i) in the case of an Engine, the replacement engine
must be of the same manufacturer and model, or at
Lessee's option an engine of an improved model,
and have equivalent or better remaining useful
life and modification status as the Engine it
replaces, and is otherwise of an equivalent or
better value and utility and suitable for
installation and use on the Airframe without
impairing the value or utility of the Airframe and
compatible with the remaining installed Engine(s);
(ii) in the case of a Part, the replacement part must
be in good operating condition, have a value and
utility the same or better than the Part it is
replacing, be of the same or a more advanced make
and model and be of the same interchangeable
modification status as the Part it is replacing;
(iii) the replacement engine or part must have become
and remain, until replaced in accordance with this
Section, the property of Owner free from Security
Interests (other than Permitted Liens), and
subject to the applicable Financing Documents;
(iv) Lessee must have full details of the source and
maintenance records of the replacement engine or
part and in the case of serialized rotable parts,
also have a complete service history; and
(v) Lessee must comply with the requirements of the
Financing Documents in connection with any such
replacement including to provide such legal
opinions and other documents as may be required
under the Financing Documents.
(c) OTHER AIRCRAFT: An Engine or Part may be installed on an
aircraft which Lessee owns or leases if:
(i) no Event of Default has occurred and is
continuing;
(ii) Lessee or a Permitted Sub-Lessee has operational
control over the aircraft;
(iii) Owner keeps the ownership of the Engine or Part
concerned until replaced in accordance with
Section 8.11(b);
-34-
(iv) the Engine or Part does not become subject to a
Security Interest and the applicable airframe is
not subject to any Security Interest except a
Permitted Lien or a lease or Security Interest
described in Section 8.11(a) above; and
(v) the Engine or Part is replaced in accordance with
Section 8.11(b) or is removed from the aircraft
as soon as practicable under Lessee's engine
rotation program but not later than the Expiry
Date.
(d) TEMPORARY REPLACEMENT: Lessee may install any engine or part
on the Aircraft as a temporary replacement if:
(i) no Event of Default has occurred and is
continuing;
(ii) there is not available an engine or part complying
with the requirements of the Lease for a
replacement Engine or Part;
(iii) it would result in an unreasonable disruption of
the operation of the Aircraft or the business of
Lessee to have the Aircraft grounded until such
time as an engine or part complying with the
requirements of the Lease for a replacement Engine
or Part becomes available for installation;
(iv) as soon as practicable (under Lessee's engine
rotation program in the case of an engine) after
an engine or part is installed on the Aircraft,
but before the earlier of sixty (60) days after
such temporary replacement or the Expiry Date,
Lessee removes that engine or part and replaces it
with the original Engine or Part (or by an engine
or part which is allowed by Section 8.11(b)); and
(v) the Insurances for the Aircraft are not adversely
affected.
(e) POOLING/INTERCHANGE: Lessee shall not subject any Engine or
Part to any pooling, interchange, lease or similar
arrangement unless Lessee obtains Lessor's prior written
consent thereto, which consent shall not be unreasonably
withheld.
(f) ENGINES: Notwithstanding anything to the contrary set forth
in Sections 8.11(c) and (d) above, so long as no Default
shall have occurred and be continuing, any Engine may remain
installed on an aircraft other than the Aircraft, and any
auxiliary power unit may remain installed on the Aircraft
indefinitely during the Term; provided, however, (i) upon
the occurrence of any Default, Lessee shall promptly, and in
any case within sixty (60) days following the occurrence of
such Default, cause each Engine to be re-installed on the
Aircraft, or, at Lessee's election, cause any of the Engines
to be replaced by a replacement Engine meeting the
requirements of, and in accordance with, Section 8.11(b),
and (ii) in any event Lessee shall cause such Engine to be
either re-installed on the Aircraft or
-35-
replaced by a replacement Engine meeting the requirements
of, and in accordance with, Section 8.11(b) on or before
the Expiry Date.
(g) APU: Notwithstanding anything to the contrary set forth in
Sections 8.11(c) and (d) above, so long as no Default shall
have occurred and be continuing, the APU may remain
installed on an aircraft other than the Aircraft, and any
auxiliary power unit may remain installed on the Aircraft
indefinitely during the Term; provided, however, (i) upon
the occurrence of any Default, Lessee shall promptly, and in
any case within sixty (60) days following the occurrence of
such Default, cause the APU to be re-installed on the
Aircraft, or, at Lessee's election, cause the APU to be
replaced by a replacement auxiliary power unit meeting the
requirements of, and in accordance with, Section 8.11(b),
and (ii) in any event Lessee shall cause the APU to be
either re-installed on the Aircraft or replaced by a
Replacement APU meeting the requirements of, and in
accordance with, Section 8.11(b) on or before the Expiry
Date.
8.12 Equipment Changes
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 or required by the Lease;
or
(ii) has (x) a cost (including labor) of less than the
Modification Approval Amount or (y) the prior
written approval of Lessor, and (z) in either
case, does not diminish the condition, utility,
airworthiness or value of the Aircraft.
So long as no Default has occurred and is continuing, Lessee may
remove or reverse any Equipment Change provided that the Equipment
Change is not required pursuant to the terms of the Lease or to
maintain the Insurances and removal or reversal does not diminish the
value, utility, airworthiness or condition of the Aircraft assuming
that such Equipment Change was not made and that Aircraft is
maintained in accordance with the Lease. Furthermore, Lessor may
require Lessee to remove or reverse any Equipment Change on the Expiry
Date and to restore the Aircraft to its condition prior to that
Equipment Change. Any Equipment Change not so removed or reversed
becomes the property of Lessor or Owner, as the case may be, at the
Expiry Date.
8.13 Title on an Equipment Change
Title to any equipment that is installed on the Airframe shall, except
in the case of an engine or an auxiliary power unit or a temporary
replacement of a Part or any In-Flight Equipment, vest in Owner solely
by virtue of its attachment to the Airframe or an Engine and it shall
then be subject
-36-
to the Lease and, if applicable, the Financing Documents, as if it
were attached to the Aircraft at Delivery. In the case of any
replacement of an Engine or the APU pursuant to Section 8.11(b), and
otherwise if so requested by Lessor, Lessee will provide a properly
executed ▇▇▇▇ of sale or similar instrument to evidence the vesting of
good and marketable title, free and clear of Security Interest (except
Lessor Liens), to any such Replacement Engine, Replacement APU or
other equipment in Owner and all documents required under the
Financing Documents. After Lessor has determined that Lessee has
permanently replaced an Engine or the APU in accordance with Section
8.11(b) and this Section 8.13, Lessor will, or will procure that Owner
will, without recourse or warranty (except as to the absence of
Lessor's Liens), transfer to Lessee or will procure that Owner will
transfer to Lessee all of Lessor's or Owner's, as the case may be,
rights to the engine or the auxiliary power unit that has been
replaced, on an AS IS, WHERE IS basis, and will at Lessee's expense
provide or will procure that Owner provides a ▇▇▇▇ of sale or similar
instrument as Lessee may reasonably request to evidence such transfer.
Lessee shall indemnify, on an After-Tax Basis, Lessor, Owner and each
other Tax Indemnitee for all fees, expenses and Taxes incurred by
Lessor, Owner or any other Tax Indemnitee in connection with any such
transfer.
8.14 Inflight Equipment
(a) Notwithstanding any other provision of this Agreement,
Lessor acknowledges that Lessee may at any time during the
Term install a telephone system and/or an inflight
entertainment system for passenger use (collectively, the
Inflight Equipment) on the Aircraft notwithstanding that
the Inflight Equipment may not be owned by Lessee provided
that:
(i) Lessee shall give Lessor notice of the
installation of any Inflight Equipment on the
Aircraft and the name and address of the owner of
such Inflight Equipment;
(ii) the documents pursuant to which the owner of the
Inflight Equipment installs same on the Aircraft
shall provide that such owner shall not have any
lien, security interest, claim or other
encumbrance on or against the Aircraft, and such
owner only right with respect to the Aircraft
shall be to remove the Inflight Equipment from the
Aircraft and, such documents shall also provide
that such owner shall remove the Inflight
Equipment from the Aircraft not later than the
earlier of (A) thirty (30) days after notice from
Lessor of the occurrence of an Event of Default,
and (B) the Expiry Date;
(iii) such right of removal is subject to and
conditioned upon such owner restoring, or causing
Lessee to restore, all alterations made to the
Aircraft in connection with the installation of
the Inflight Equipment to the condition prior to
the installation thereof (ordinary wear and tear
excepted).
(b) Lessor acknowledges that at all times:
(i) the owner of the Inflight Equipment has and will
retain sole and exclusive right and title to and
in the Inflight Equipment;
(ii) the Inflight Equipment shall not constitute a Part
or a part of the Aircraft;
-37-
(iii) title to the Inflight Equipment shall not transfer
to or from Lessor pursuant to Clauses 8.12 and
8.13; and
(iv) the Inflight Equipment shall not become subject to
the Security Interest of any Person to whom Lessor
grants a Security Interest in the Aircraft
pursuant to Clause 14.1.
9. INSURANCE
9.1 Insurance
Lessee will maintain the Insurance in full force during the Term, and
thereafter as expressly required in the Lease, which Insurance shall
be of the type usual and customary in the industry for comparable
operators operating similar equipment in similar circumstances, and
shall be through reputable brokers and insurers of recognized standing
in the commercial aviation insurance industry. The Insurance shall in
any event meet the requirements set forth in Schedule 7.
9.2 [NOT APPLICABLE]
9.3 Insurance Undertakings and Information: Lessee will:
(a) comply with the terms and conditions of each policy of any
Insurance and not do, consent or agree to any act or
omission which:
(i) invalidates or may invalidate any Insurance; or
(ii) renders or may render void or voidable the whole
or any part of any Insurance; or
(iii) brings any particular liability within the scope
of an exclusion or exception to any Insurance;
(b) not take out any insurance or reinsurance in respect of the
Aircraft other than that which is required under the Lease
which adversely affects the Insurance required to be
maintained hereunder; provided, however, Lessee may purchase
a separate "hull total loss" policy with respect to the
Aircraft in such amount as Lessee may desire;
(c) commence renewal procedures at least 30 days prior to expiry
of any of the Insurance and provide to Lessor:
(i) if requested by Lessor in writing, a written
status report of renewal negotiation as of the
time of the request;
(ii) [NOT APPLICABLE];
-38-
(iii) receipt of certificates of insurance (and where
appropriate certificates of reinsurance), and
broker's (and any reinsurance broker's) letter of
undertaking in a form acceptable to Lessor,
detailing the coverage and confirming compliance
with the specified insurance requirements of the
Lease and, in the case of the broker's letter of
undertaking, opining that the Insurance complies
with the requirements of the Lease on or before
each renewal date;
(d) on reasonable request, provide to Lessor copies of documents
or other information evidencing the Insurances; and
(e) provide any other insurance and reinsurance related
information, or assistance, in respect of the Insurance as
Lessor may reasonably require.
9.4 Failure to Insure
If Lessee fails to maintain any of the Insurance in compliance with
the Lease:
(a) each of the Indemnitees will be entitled but not bound
(without prejudice to any other rights of Lessor under the
Lease) to pay the premiums due or to effect and maintain
insurance satisfactory to such Indemnitee or otherwise
remedy Lessee's failure in such manner (including, without
limitation to effect and maintain an "owner's interest"
policy) as such Indemnitee considers appropriate. Any sums
so expended by any such Indemnitee will become immediately
due and payable by Lessee on demand by Lessor together with
interest thereon at the Interest Rate, from the date of
expenditure by such Indemnitee up to the date of
reimbursement by Lessee; and
(b) Lessor at any time while such failure is continuing may
require the Aircraft to remain at any airport or to proceed
to and remain at any airport designated by Lessor until the
failure is remedied to Lessor's reasonable satisfaction.
9.5 Continuing Indemnity
Lessee shall effect and maintain product legal liability insurance
after the Expiry Date with respect to its liability under Section 10
(INDEMNITY) for two years, and such insurance shall name each
Indemnitee as an additional insured.
10. INDEMNITY
(a) Except as provided in Section 10(b) below, Lessee agrees to
assume liability for and to indemnify each of the
Indemnitees against and agrees to pay on demand any and all
Losses which an Indemnitee may at any time suffer or incur
at any time, whether directly or indirectly, arising out of,
related to or in any way connected with:
-39-
(i) the ownership, maintenance, overhaul, service,
repair, delivery, possession, transfer of
ownership or possession, import, export,
registration, control, storage, modification,
leasing, insurance, inspection, testing, design,
date processing, sub leasing, use, condition,
redelivery or other matters relating to the
Aircraft, any Engine or any Part (regardless of
whether in the air or on the ground, and
regardless of whether such Losses are based on
strict liability in tort, any act or omission,
including the negligence, of any Indemnitee, or
otherwise); or
(ii) any breach by the Lessee of any of its obligations
under the Lease; or
(iii) the design, testing or use of or any article or
material in, the Aircraft, any Engine or any Part
or its use or operation, including any defect in
design and regardless of whether it is
discoverable, and any infringement of patent,
copyright, trademark, design or other proprietary
right claimed by any Person or a breach of any
obligation of confidentiality claimed to be owed
to any Person.
For the avoidance of doubt, the reference to
"ownership" in clause (i) shall not require
Lessee to indemnify Lessor in respect of (y)
any defect in Lessor's or Owner's title to the
Aircraft or (z) any decline in residual value
of the Aircraft if Lessee shall have fully
complied with its obligations under the Lease.
(b) Lessee is not required to indemnify any particular
Indemnitee (provided that (i) Lessor and its Subsidiaries
and Affiliates and its and their officers, directors,
representatives, agents, partners, contractors and employees
shall be treated as a single Indemnitee, and (ii) each
Financing Party and its shareholders, subsidiaries,
affiliates, partners, contractors, directors, officers,
representatives, agents and employees shall be treated as a
single Indemnitee) under this Section, to the extent a
particular Loss is:
(i) caused solely by the willful misconduct of that
Indemnitee or gross negligence of that Indemnitee,
other than gross negligence imputed to that
Indemnitee by reason of its interest in the
Aircraft or the Lease;
(ii) caused solely by Lessor's breach of the Lease
which does not result from a Default;
(iii) related to any Taxes (but without prejudice to any
Indemnitee's rights under any other provision of
this Lease relating to Taxes);
(iv) caused solely by an event which occurs before the
commencement of the Term (except where the Loss is
suffered during the Term as a result of a pre-
Delivery defect in or such Loss otherwise arises
out of or relates to or is any way
-40-
connected with the manufacture, design,
maintenance, repair, rebuilding, overhaul or
modification of the Aircraft);
(v) caused solely by an event which occurs after the
redelivery of the Aircraft to Lessor in compliance
with the Lease and is not attributable to any act,
omission, event or circumstance occurring prior to
such redelivery;
(vi) caused solely as a result of any sale, assignment,
transfer or other disposition (whether voluntary
or involuntary) by such Indemnitee of the Aircraft
or Engine or any interest therein that is not a
replacement thereof under the Lease or is
otherwise not contemplated under the Lease, and
unless such sale, transfer or other disposition
has resulted from or occurred following a Default;
or
(vii) consists of normal administrative costs and
expenses of such Indemnitee (but excluding any
such costs or expenses resulting from the
occurrence of any Default); or
(viii) consists of costs or expenses for which Lessor has
expressly agreed to be responsible under any other
provision of the Lease.
11. EVENTS OF LOSS
11.1 Events of Loss
(a) If an Event of Loss occurs prior to Delivery of the
Aircraft, the Lease will immediately terminate and except as
expressly stated in the Lease neither party will have any
further obligation other than pursuant to Section 5.21 and
Section 3 of Schedule 4, except that Lessor will return the
Deposit (if any) to Lessee and return to Lessee or cancel
any Letter of Credit.
(b) If an Event of Loss occurs after Delivery, Lessee will pay
the Agreed Value to Lessor on or prior to the earlier of (i)
sixty (60) days after the Event of Loss and (ii) the date of
receipt of insurance proceeds in respect of that Event of
Loss.
(c) Subject to the rights of any insurers and reinsurers or
other third party, upon irrevocable payment in full to
Lessor of the Agreed Value and all other amounts which may
be or become payable to Lessor under the Lease, and if
Lessee requests such transfer, Lessor will, or will procure
that Owner will, without recourse or warranty (except as to
the absence of Lessor's Liens) transfer to Lessee or will
procure that Owner transfers to Lessee or to Lessee's
designee legal and beneficial title, subject to no Lessor's
Liens (but otherwise without warranty), to the Aircraft, on
an AS IS, WHERE IS basis, and will at Lessee's expense,
execute and deliver or will procure that Owner executes and
delivers
-41-
such bills of sale and other documents and instruments as
Lessee may reasonably request to evidence (on the public
record or otherwise) such transfer, free and clear of all
rights of Lessor and Owner and Lessor Liens. Lessee shall
indemnify, on an After-Tax Basis, Lessor, Owner and each
other Tax Indemnitee for all fees, expenses and Taxes
incurred by Lessor, Owner or any other Tax Indemnitee in
connection with any such transfer.
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 the Lease will not
be suspended or abated either in whole or in part, and
Lessee will not be released from any of its other
obligations (other than operational obligations with which
Lessee is unable to comply solely by virtue of the
requisition); and
(b) so long as no Default has occurred and is continuing, Lessee
will be entitled to any compensation paid by the
requisitioning authority in respect of such authority's use
of the Aircraft, such Engine or such Part during 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 the Lease. 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
the Lease in respect of any such change, but, if any Default
has occurred and is continuing, Lessor may apply the
compensation in or towards settlement of any amounts owing
by Lessee under the Lease and/or under any Other Agreement.
12. RETURN OF AIRCRAFT
12.1 Return
On the Expiry Date or redelivery of the Aircraft pursuant to Section
13.2 or termination of the leasing of the Aircraft under the Lease,
Lessee will, unless an Event of Loss has occurred, redeliver the
Aircraft and the Aircraft Documents and Records at Lessee's expense to
Lessor at the Redelivery Location, in accordance with the procedures
and in compliance with the conditions set forth in the Aircraft Lease
Agreement, free and clear of all Security Interests (other than Lessor
Liens) and in a condition qualifying for and having a valid and fully
effective certification of airworthiness under FAR Part 121. Lessor
shall commence the Final Inspection in accordance with the Aircraft
Lease Agreement promptly upon Lessee making the Aircraft and the
Aircraft Documents and Records available for the Final Inspection
provided that Lessee gives
-42-
Lessor no less than thirty (30) days prior written notice of the
availability of the Aircraft and the Aircraft Documents and Records
for such inspection.
12.2 Non-Compliance
If at the time of Final Inspection Lessee has not fully complied with
any of its obligations under the Lease (including, without limitation,
Part III of Schedule A to the Aircraft Lease Agreement), or Lessee
fails to make the Aircraft available to Lessor on a timely basis for
inspection and redelivery pursuant to Section 12.1 and Part III of
Schedule A to the Aircraft Lease Agreement (whether such failure is
due to any act or omission of Lessee or any other circumstance
whatsoever), the Term shall be extended until the time when the
Aircraft has been redelivered to Lessor in full compliance with the
Lease, for the sole purpose of enabling such non-compliance or failure
to be promptly rectified, and during such extension period:
(a) Lessee shall not use the Aircraft in flight operations
except those related directly to the redelivery of the
Aircraft to Lessor;
(b) all Lessee's obligations and covenants under the Lease will
remain in full force until Lessee so redelivers the
Aircraft; and
(c) Lessee shall pay Rent to Lessor at a rate per month equal to
the amount of Rent payable in respect of the last scheduled
Rental Period plus 50 per cent thereof, calculated on a per
diem basis; provided, however, with respect to the portion
of such extension, if any, attributable solely to a good
faith dispute between Lessor and Lessee as to the meaning of
some particular language in the Lease applicable to the
return of the Aircraft, whether set forth in Part III of
Schedule A to the Aircraft Lease Agreement or elsewhere (but
not, for the avoidance of doubt, in respect of any dispute
as to the result or outcome of any inspection or check
required in connection with the Final Inspection under the
Lease), Lessee shall pay to Lessor Rent, calculated on a per
diem basis, at 50% of the rate otherwise applicable, which
rate shall be equal to (i) 50% of the rate applicable to the
last scheduled Rental Period, without giving effect to the
50% premium required in the introductory clause of this
paragraph (c), if as of the Scheduled Expiry Date the
Aircraft is in full compliance with the requirements of the
Lease for return to Lessor (other than the item in dispute),
and (ii) 50% of the rate specified in the introductory
clause of this paragraph (c), or 75% of the rate applicable
to the last scheduled Rental Period, if the rate specified
in the introductory clause of this paragraph (c) becomes
applicable as of the Scheduled Expiry Date due to Lessee's
failure to comply with its obligations in respect of the
Final Inspection in a timely manner or the Aircraft
otherwise fails to comply as of the Scheduled Delivery Date
with the requirements of the Lease for return to Lessor in
any respect other than in reference to the disputed
language. For so long as the Aircraft remains non-compliant
with any requirements of the Lease other than those that are
the
-43-
subject of the disputed language, Lessee shall pay to Lessor
Rent in the amount specified in the introductory clause of
this paragraph (c), and the Rent rate specified in this
clause (ii) shall become applicable, if at all, only from
and after such time as the Aircraft is brought into
compliance with all requirements of the Lease for return to
Lessor (including, but not limited to, Part III of Schedule
A to the Aircraft Lease Agreement) other than the with
respect to the items that are the subject of the disputed
language, such that the disputed language remains as the
sole cause in the delay in the return of the Aircraft to
Lessor.
Any such extension shall not prejudice Lessor's right to treat such
non-compliance or failure as an Event of Default at any time, and to
enforce such rights and remedies as may be available to Lessor in
respect thereof under the terms of the Lease or applicable Law. Without
limiting the generality of the foregoing, Lessee's Rent obligation
under paragraph (c) above shall be without prejudice to Lessor's rights
to terminate the letting of the Aircraft and to indemnification
pursuant to Section 13.3.
Lessor may elect (either on first tender of the Aircraft by Lessee or
at any time during the said extension period) to accept redelivery of
the Aircraft notwithstanding non-compliance with Section 12.1 or Part
III of Schedule A to the Aircraft lease Agreement, in which case Lessee
will indemnify Lessor on an After-Tax Basis, and provide cash to Lessor
(in an amount satisfactory to Lessor) as security for that indemnity,
in respect of the cost to Lessor of putting the Aircraft into the
condition required by the Lease.
12.3 Redelivery
Upon redelivery Lessee will provide to Lessor, upon Lessor's request,
all documents necessary to export the Aircraft from the United States
(including a valid and subsisting export certificate of airworthiness
for the Aircraft) or required in relation to the deregistration of the
Aircraft with the Air Authority.
12.4 Acknowledgement
Provided Lessee has complied with its obligations under Section 12
hereof and Part III of Schedule A to the Aircraft Lease 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 the Lease which acknowledgement shall be without
prejudice to Lessor's accrued and continuing rights under the Lease or
any Other Agreement.
-44-
13. DEFAULT
13.1 Events
The occurrence of any of the Events of Default will constitute a
repudiation (but not a termination) of the Lease by Lessee (whether
the occurrence of any such Event of Default is voluntary or
involuntary or occurs by operation of Law or pursuant to or in
compliance with any judgement, decree or order of any court or any
order, rule or regulation of any Government Entity).
13.2 Rights and Remedies
If an Event of Default occurs, Lessor may at its option (and without
prejudice to any of its other rights under the Lease), 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 cancel the leasing of the Aircraft (but
without prejudice to the continuing obligations of Lessee
under the Lease), whereupon all rights of Lessee under the
Lease shall cease; and/or
(b) proceed by appropriate court action or actions to enforce
performance of the Lease including the payment of all Rent
and all other amounts payable to Lessor or any Indemnitee
pursuant to the terms of the Lease; and/or
(c) proceed by appropriate court action or actions to recover
damages for the breach of the Lease which shall include:
(i) all Rent and other amounts which are or become due
and payable hereunder prior to the earlier to
occur of the date Lessor sells or re-leases the
Aircraft or receives payment of the amount
calculated pursuant to clause (ii) below;
(ii) an amount equal to the aggregate Rent for the
remainder of the Term (determined without
reference to any right of Lessor to cancel the
leasing of the Aircraft, whether or not such right
is exercised), discounted periodically (equal to
installment frequency) to present worth at the
Discount Rate to the date of payment by Lessee to
Lessor, less the applicable amount set forth
below:
A. in the event that Lessor has re-let the
Aircraft on terms (other than rental
payment terms) which, taken as a whole,
Lessor reasonably regards as being
substantially similar to the material
economic terms of the Lease (taking into
account factors affecting the degree of
risk associated with such re-lease
and/or the residual value of the
Aircraft thereunder, but
-45-
excluding the rental payment terms), an
amount equal to the aggregate basic
rental payments to become due under such
re-lease for the period coinciding with
the remainder of the Term (determined
without reference to any right of Lessor
to cancel the leasing of the Aircraft,
whether or not such right is exercised),
discounted periodically (equal to
installment frequency) to present worth
at the Discount Rate to the date of
payment by Lessee; or
B. in the event that Lessor has not re-let
the Aircraft or has sold the Aircraft or
has re-let the Aircraft on terms which,
taken as a whole, Lessor does not
reasonably regard as being substantially
similar to the material economic terms
of the Lease (taking into account
factors affecting the degree of risk
associated with such re-lease and/or the
residual value of the Aircraft
thereunder, but excluding the rental
payment terms), an amount equal to the
fair market rental value (determined
pursuant to the Appraisal Procedure) of
the Aircraft for the period commencing
with the date that Lessor reasonably
anticipates that the Aircraft could be
re-let at such rental rate and ending
with the date that the Term was
scheduled to expire (determined without
reference to any right of Lessor to
cancel the leasing of the Aircraft,
whether or not such right is exercised),
discounted periodically (equal to
installment frequency) to present worth
at the Discount Rate to the date of
payment by Lessee.
(iii) all costs and other incidental damages associated
with Lessor's exercise of its remedies hereunder
or otherwise incurred by Lessor as a result of an
Event of Default, including repossession costs,
legal fees, Aircraft storage, maintenance and
insurance costs, Aircraft re-lease or sale costs
(including, in the case of a release, any costs
incurred to transition the Aircraft to the next
operator's maintenance program) and Lessor's
internal costs and expenses (including the cost of
personnel time calculated based upon the
compensation paid to the individuals involved on
an annual basis and a general Lessor overhead
allocation), all such costs and incidental damages
being referred to herein collectively as
"Enforcement and Remarketing Costs";
(iv) any loss, premium, penalty or expense which may be
incurred in repaying funds raised to finance the
Aircraft or in unwinding any financial instrument
relating in whole or in part to Lessor's financing
of the Aircraft, all such amounts being referred
to herein collectively as "Unwind Expenses";
(v) any loss, cost, expense or liability, or damage to
Lessor's residual interest in the Aircraft,
sustained by Lessor due to Lessee's failure to
maintain the Aircraft in
-46-
accordance with the terms of this Agreement or
Lessee's failure to redeliver the Aircraft in the
condition required by this Agreement, including
any consequential loss of revenues or profits, all
such amounts being referred to herein collectively
as "Aircraft Condition Damages"; and
(vi) such additional amount, if any, as may be
necessary to place Lessor in the same economic
position, on an After-Tax Basis, as Lessor would
have been in if Lessee had timely performed each
of its obligations under this Agreement; and/or
(d) either:
(i) enter upon the premises where all or any part of
the Aircraft is located and take immediate
possession of and, at Lessor's sole option, remove
the same (and/or any engine which is not an Engine
but which is installed on the Airframe, subject to
the rights of the lessor or secured party
thereof), all without liability accruing to Lessor
for or by reason of such entry or taking of
possession whether for the restoration of damage
to property, conversion or otherwise, caused by
such entry or taking, except damages caused by
gross negligence or willful misconduct; or
(ii) by delivering notice to Lessee, require Lessee to
redeliver the Aircraft to Lessor at Phoenix Sky
Harbor International Airport in Phoenix, Arizona
(or such other location as Lessor may require) on
the date specified in such notice and in all
respects in the condition required by the Lease
upon the Return Occasion (it being understood that
Lessee shall not delay any such return for the
purpose of placing the Aircraft in such condition,
but shall nevertheless be liable to Lessor for the
failure of the Aircraft to be in such condition);
and/or
(e) sell at private or public sale, as Lessor may determine, or
hold, use, operate or lease to others the Aircraft as Lessor
in its sole discretion may determine, all free and clear of
any rights of Lessee; and/or
(f) by written notice to Lessee specifying a payment date (which
shall be a date not earlier than five (5) Business Days
following the date of such notice), Lessor may demand that
Lessee pay to Lessor, and Lessee shall pay to Lessor on the
payment date specified in such notice (in lieu of the Rent
due for the period commencing after the date specified for
payment in such notice) the sum of the following amounts:
(i) all Rent and other amounts which are or are
expected to become due and payable hereunder prior
to the payment date specified by Lessor;
-47-
(ii) an amount equaling the aggregate Rent for the
remainder of the Term (determined without
reference to any right of Lessor to cancel the
leasing of the Aircraft, whether or not such right
is exercised), discounted periodically (equal to
installment frequency) to present worth at the
Discount Rate to the payment date specified by
Lessee to Lessor, less the applicable amount set
forth below:
A. in the event that Lessor has re-let the
Aircraft on terms (other than rental
payment terms) which, taken as a whole,
Lessor reasonably regards as being
substantially similar to the material
economic terms of the Lease (taking into
account factors affecting the degree of
risk associated with such re-lease
and/or the residual value of the
Aircraft thereunder, but excluding the
rental payment terms), an amount equal
to the aggregate basic rental payments
to become due under such re-lease for
the period coinciding with the remainder
of the Term (determined without
reference to any right of Lessor to
cancel the leasing of the Aircraft,
whether or not such right is exercised),
discounted periodically (equal to
installment frequency) to present worth
at the Discount Rate to the date of
payment by Lessee; or
B. in the event that Lessor has not re-let
the Aircraft or has sold the Aircraft or
has re-let the Aircraft on terms which,
taken as a whole, Lessor does not
reasonably regard as being substantially
similar to the material economic terms
of the Lease (taking into account
factors affecting the degree of risk
associated with such release and/or the
residual value of the Aircraft
thereunder, but excluding the rental
payment terms), an amount equal to the
fair market rental value (determined
pursuant to the Appraisal Procedure) of
the Aircraft for the period commencing
with the date that Lessor reasonably
anticipates that the Aircraft could be
re-let at such rental rate and ending
with the date that the Term was
scheduled to expire (determined without
reference to any right of Lessor to
cancel the leasing of the Aircraft,
whether or not such right is exercised),
discounted periodically (equal to
installment frequency) to present worth
at the Discount Rate to the date of
payment by Lessee;
(iii) an amount equal to Lessor's reasonably anticipated
Enforcement and Remarketing Costs, Unwind Expenses
and Aircraft Condition Damages; and
(iv) such additional amount, if any, as may be
necessary to place Lessor in the same economic
position, on an After-Tax Basis, as Lessor would
have been in if Lessee had timely performed each
of its obligations under this Agreement;
-48-
(v) it being understood that, to the extent that any
of the foregoing amounts represents an estimate by
Lessor of losses, damages, costs or expenses which
Lessor expects to incur, (y) Lessor shall adjust
the amount thereof as needed to reflect the actual
amount of such losses, damages, costs or expenses
incurred by Lessor when substantially all of such
amounts become known to Lessor, but Lessee shall
nevertheless be obligated to pay the amount
demanded by Lessor (subject to such subsequent
adjustment in which (i) amounts, if any, actually
paid by Lessee to Lessor upon such demand as may
exceed the actual amount of losses, damages, costs
or expenses incurred by Lessor as finally
determined by Lessor are refunded to Lessee or
otherwise credited to the account of Lessee and
(ii) additional amounts, if any, as may be
required to cure any shortfall between the
estimated amounts paid by Lessee and the actual
amount of losses, damages, costs or expenses
incurred by Lessor as finally determined by Lessor
are paid by Lessee to Lessor), and (z)
notwithstanding the amount specified in such
demand, Lessor shall be entitled to claim such
other (and greater) amount in any action against
Lessee hereunder; and/or
(g) draw upon the Deposit or the Letter of Credit and apply such
amounts to any amounts owing to Lessor hereunder and/or make
demand against any Guarantor for any or all of the
foregoing.
In addition to the foregoing, Lessor shall be entitled to exercise
such other rights and remedies as may be available under applicable
Law and Lessee shall be liable on an After-Tax Basis for, and shall
pay Lessor on demand: (i) interest on all unpaid amounts at the
Interest Rate, from the due date until the date of payment in full;
(ii) all reasonable legal fees and other reasonable costs and expenses
incurred by Lessor by reason of the occurrence of any Event of Default
or the exercise of Lessor's remedies with respect thereto; and (iii)
all reasonable expenses, disbursements, costs and fees incurred in (A)
repossessing, storing, preserving, shipping, maintaining, repairing
and refurbishing the Aircraft, the Airframe, any Engine or Part to the
condition required by Section 12 hereof and (B) preparing the
Aircraft, the Airframe, an Engine or Part for sale or lease,
advertising the sale or lease of the Aircraft, the Airframe, an Engine
or Part and selling or releasing the Aircraft, the Airframe, an Engine
or Part.
Lessor is hereby authorized and instructed, but shall have no
obligation, to make any expenditures which Lessor, in its sole
discretion, considers advisable to repair and restore the Aircraft,
the Airframe, an Engine or Part to the condition required by Section
12 hereof (it being understood that Lessee shall be liable for all
such expenditures).
Lessee hereby agrees that, in the event of the return to or
repossession by Lessor of the Aircraft, the Airframe, an Engine or
Part, any rights in any warranty (express or implied) previously
-49-
assigned to Lessee or otherwise held by Lessee shall without further
act, notice or writing be assigned or reassigned to Lessor, if
assignable.
No remedy referred to in this Section 13 is intended to be exclusive,
but, to the extent permissible under the Lease or under applicable
Law, each shall be cumulative and in addition to any other remedy
referred to above or otherwise available to Lessor at Law or in
equity; and the exercise or beginning of exercise by Lessor of any one
or more of such remedies shall not preclude the simultaneous or later
exercise by Lessor of any or all of such other remedies; provided,
however, that nothing in this Section 13 shall be construed to permit
Lessor to obtain a duplicate recovery of any element of damages to
which Lessor is entitled. No express or implied waiver by Lessor of
any Default or Event of Default shall in any way be, or be construed
to be, a waiver of any future or subsequent Default or Event of
Default.
-50-
13.3 Power of Attorney: Lessee hereby appoints Lessor as the
attorney-in-fact of Lessee, with full authority in the place and stead
of Lessee and in the name of Lessee or otherwise, for the purpose of
carrying out the provisions of the Lease and taking any action and
executing any instrument that Lessor may deem necessary or advisable
to accomplish the purposes hereof; provided, however, that Lessor may
only take action or execute instruments under this Section 13 after an
Event of Default has occurred and is continuing. Lessee hereby
declares that the foregoing powers are granted for valuable
consideration, constitute powers granted as security for the
performance of the obligations of Lessee hereunder and are coupled
with an interest and shall be irrevocable. Without limiting the
generality of the foregoing or any other rights of Lessor under the
Lease, upon the occurrence and during the continuation of an Event of
Default, Lessor shall have the sole and exclusive right and power to
(i) settle, compromise, adjust or defend any actions, suits or
proceedings relating to or pertaining to the Aircraft, Airframe or any
Engine, or the Lease and (ii) make proof of loss, appear in and
prosecute any action arising from any policy or policies of insurance
maintained pursuant to the Lease, and settle, adjust or compromise any
claims for loss, damage or destruction under, or take any other action
in respect of, any such policy or policies.
13.4 Sale or Re-Lease
If an Event of Default occurs, Lessor may sell or re-lease or
otherwise deal with the Aircraft at such time and in such manner and
on such terms as Lessor considers appropriate in its absolute
discretion, free and clear of any interest of Lessee, as if the Lease
had never been entered into. Lessor shall have no duty or obligation
to sell the Aircraft, and Lessor shall be obligated to attempt to
re-lease the Aircraft only to the extent, if any, that it is required
to do so under Article 2A of the UCC, and Lessee hereby disclaims any
right to compel Lessor to sell or otherwise release the Aircraft.
13.5 Removal of Lease from FAA Registry
If an Event of Default occurs, Lessee will at the request of Lessor
immediately take all steps necessary to enable the Aircraft to be
redelivered to Lessor in accordance with and free and clear of the
Lease and Lessee hereby irrevocably and by way of security for its
obligations under the Lease appoints (which appointment is coupled
with an interest) Lessor as its attorney-in-fact to execute and
deliver any documentation and to do any act or thing not prohibited by
Law required in connection with the foregoing during the continuance
of an Event of Default. Without limiting the foregoing, Lessor may
file with the FAA the Lease Termination Certificate provided to Lessor
under the Lease.
-51-
14. TRANSFER
14.1 Lessee
LESSEE WILL NOT ASSIGN, DELEGATE OR OTHERWISE TRANSFER (VOLUNTARILY,
INVOLUNTARILY, BY OPERATION OF LAW OR OTHERWISE) ANY OF ITS RIGHTS OR
OBLIGATIONS UNDER THE LEASE (INCLUDING THE AIRCRAFT LEASE AGREEMENT OR
THIS CTA), OR CREATE OR PERMIT TO EXIST ANY SECURITY INTEREST OVER ANY
OF ITS RIGHTS UNDER THE LEASE (INCLUDING THE AIRCRAFT LEASE AGREEMENT
OR THIS CTA), AND ANY ATTEMPT TO DO SO SHALL BE NULL AND VOID. The
foregoing shall not be construed to prohibit a Permitted Sub-Lease.
14.2 Lessor
Lessee acknowledges and agrees that Lessor will, if applicable under
the Financing Documents, assign as security Lessor's interest in the
Lease as described in the Acknowledgement and Agreement referred to in
Schedule 3.
In addition insofar as Lessee is concerned, Lessor may, without the
consent of Lessee, further transfer all or any of its rights or
obligations under the Lease or all or any of its right, title or
interest in and to the Aircraft, including pursuant to:
(a) a sale and leaseback; or
(b) a novation or assignment of the Lease and/or a sale of the
Aircraft (including to a special purpose or securitization
or monetization trust, fund, limited liability company,
corporation, partnership or other vehicle or in connection
with any other direct or indirect raising of capital); or
(c) a secured loan financing.
Lessor will promptly notify Lessee of any transfer and Lessee agrees
promptly to execute and deliver in connection with any transfer such
documents and assurances (including an acknowledgement of the transfer
and a certificate as to the absence of any Default under the Lease)
and to take such further action as Lessor may reasonably request to
establish or protect the rights and remedies created or intended to be
created in favor of the transferee in connection with any transfer.
After any transfer, the transferee shall be entitled to be an
Indemnitee and to such other rights under the Lease as Lessor shall
specify. Upon an assignment or novation described in clause (b),
Lessor shall be released from all obligations and liabilities under
the Lease to the extent such obligations and liabilities are assumed
by such transferee, and the Lease, including this CTA as in effect at
that time and as incorporated in the Aircraft Lease Agreement, shall
be
-52-
deemed applicable as between Lessee and the transferee of the Lease
and may be amended, supplemented or otherwise modified without the
consent of the transferor (if this CTA is applicable to the Other
Agreements not so transferred, it shall remain in full force and
effect and may be amended, supplemented or otherwise modified without
the consent of the transferee). Notwithstanding any such assignment or
novation, Lessor, Owner, Financing Parties' Representative and each
other Indemnitee shall continue to be entitled to indemnification
under Section 10, and shall continue to be named as an additional
insured under all Insurances referred to in Section 9 for a period of
not less than two years after such transfer. The agreements,
covenants, obligations and liabilities contained in the Lease,
including all obligations to pay Rent and indemnify each Indemnitee,
are made for the benefit of Lessor (and, in the case of Section 10,
each other Indemnitee) and its or their respective successors and
assigns, notwithstanding the possibility that any such Person was not
originally a party to the Lease or may, at the time such enforcement
is sought, not be a party to the Lease.
14.3 Conditions
In connection with any such transfer by Lessor:
(a) QUIET ENJOYMENT: as a condition precedent to such transfer
becoming effective, Lessor will procure that the transferee
or any new owner of the Aircraft or any new holder of a
Security Interest in the Aircraft or any holder of an
interest in the Aircraft or the Lease (by way of security or
otherwise), as the case may be, shall in the case of a
transferee that is the "Lessor" acknowledge Lessor's
obligation under Section 7.1 or, if not the Lessor, execute
and deliver to Lessee a letter of quiet enjoyment in respect
of Lessee's use and possession of the Aircraft in a form
substantially similar to Section 7.1 hereof;
(b) COSTS: Lessor shall reimburse to Lessee its reasonable
out-of-pocket expenses (including reasonable legal fees and
expenses) actually incurred in connection with co-operating
with Lessor in relation to any such transfer referred to in
this Section 14, provided that such expenses are
substantiated to Lessor's reasonable satisfaction;
(c) RIGHTS OF LESSEE: as a condition precedent to any transfer
becoming effective, such transfer shall not, at the time of
the transfer, materially expand Lessee's obligations under
the Lease or materially reduce Lessee's rights under the
Lease, in each case as compared to what such obligations and
rights would have been in the absence of such transfer;
provided, however, that no transfer to any Person that meets
the requirements of a "citizen of the United States" under
49 U.S.C. Section 40102(a)(15) shall be deemed to materially
expand Lessee's obligations or materially restrict Lessee's
rights under the Lease.
-53-
15. MISCELLANEOUS
15.1 Survival
Lessee's obligations under Section 3 of Schedule 4, under Sections
5.6, 5.7, 5.10, 5.21, 9.5, 10, 12, and 13.2 and under any other
provision of the Lease providing for an obligation on the part of the
Lessee to indemnify Lessor or any other Indemnitee shall survive the
expiration or any termination of the Lease and continue in full force
and effect.
15.2 Waivers, Remedies Cumulative
The rights of Lessor under the Lease may be exercised as often as
necessary, are cumulative and not exclusive of its rights under any
Law; and may be waived only in writing and specifically. Delay by
Lessor in exercising, or non-exercise of, any such right will not
constitute a waiver of that right.
15.3 Delegation
Lessor may delegate to any Person all or any of the rights, powers or
discretion vested in it by the Lease, 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.
15.4 Severability
If a provision of the Lease 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 the Lease; or
(b) the legality, validity or enforceability in any other
jurisdiction of that or any other provision of the Lease.
15.5 Remedy
If Lessee fails to comply with any provision of the Lease, 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 such
non-compliance as a 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 fees and expenses) in connection with the non-compliance.
-54-
15.6 Time of Essence
The time stipulated in the Lease for all payments payable by Lessee
and the prompt, punctual performance of Lessee's other obligations
under the Lease are of the essence of the Lease.
15.7 Notices
All notices under, or in connection with, the Lease will, unless
otherwise stated, be given in writing by means of a overnight courier
service or facsimile. Any such notice is deemed effectively to be
given when received by the recipient (or if receipt is refused by the
intended recipient, when so refused).
The addresses and facsimile and telephone numbers of Lessee and Lessor
are as set forth in the Aircraft Lease Agreement.
15.8 Governing Law; Jurisdiction; WAIVER OF JURY TRIAL
(a) PURSUANT TO AND IN ACCORDANCE WITH SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW, THE PARTIES HERETO AGREE THAT
THE LEASE IN ALL RESPECTS SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, AS APPLIED TO CONTRACTS TO BE PERFORMED
WHOLLY WITHIN THE STATE OF NEW YORK (EXCLUSIVE OF SECTION
7-101 OF THE NEW YORK GENERAL OBLIGATIONS LAW WHICH IS
INAPPLICABLE TO THE LEASE). THE PARTIES AGREE THAT THE LEASE
WAS EXECUTED AND DELIVERED IN THE STATE OF NEW YORK.
(b) Pursuant to and in accordance with Section 5-1402 of the New
York General Obligations Law, Lessee and Lessor each agree
that the United States District Court for the Southern
District of New York and any New York state court sitting in
the County of New York, New York, and all related appellate
courts, are to have non-exclusive jurisdiction to settle any
disputes arising out of or relating to the Lease and submits
itself and its property to the non-exclusive jurisdiction of
the foregoing courts with respect to such disputes.
(c) Without prejudice to any other mode of service, Lessee:
(i) appoints CT Corporation System, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as its agent for
service of process relating to any proceedings
before the New York courts in connection with the
Lease and agrees to maintain the process agent in
New York notified to Lessor;
-55-
(ii) agrees that failure by a process agent to notify
Lessee of the process shall not invalidate the
proceedings concerned;
(iii) consents to the service of process relating to any
such proceedings by prepaid mailing of a copy of
the process to Lessee's agent at the address
identified in paragraph (i) or by prepaid mailing
by air mail, certified or registered mail of a
copy of the process to Lessee at the address set
forth in Section 15.7.
(d) [NOT APPLICABLE.]
(e) Each of Lessor and Lessee:
(i) waives to the fullest extent permitted by Law any
objection which it may now or hereafter have to
the courts referred to in Section 15.8(b) above on
grounds of inconvenient forum or otherwise as
regards proceedings in connection with the Lease;
(ii) waives to the fullest extent permitted by Law any
objection which it may now or hereafter have to
the laying of venue of any suit, action or
proceeding arising out of or relating to the Lease
brought in the courts referred to in Section
15.8(b); and
(iii) agrees that a judgement or order of any court
referred to in Section 15.8(b) in connection with
the Lease is conclusive and binding on it and may
be enforced against it in the courts of any other
jurisdiction.
(f) Nothing in this Section 15.8 limits the right of either
party to bring proceedings against the other in connection
with the Lease:
(i) in any other court of competent jurisdiction; or
(ii) concurrently in more than one jurisdiction.
(g) Each of Lessee and Lessor irrevocably and unconditionally:
(i) agrees that if the other brings legal proceedings
against it or its assets in relation to the Lease
no sovereign or other immunity from such legal
proceedings (which will be deemed to include suit,
court jurisdiction, attachment prior to judgement,
attachment in aid of execution of a judgement,
other attachment, the obtaining of judgement,
execution of a judgement or other enforcement or
legal process or remedy) will be claimed by or on
behalf of itself or with respect to its assets;
and
-56-
(ii) waives any such right of immunity which it or its
assets now has or may in the future acquire and
agrees that the foregoing waiver shall have the
fullest extent permitted under the Foreign
Sovereign Immunities Act of 1976 of the United
States and is intended to be irrevocable for the
purposes of such Act.
(h) EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL IN
RESPECT OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THE LEASE OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS
CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING
ESTABLISHED, including, without limitation, contract claims,
tort claims, breach of duty claims and other common law and
statutory claims. Each of Lessor and Lessee represents and
warrants that each has reviewed and voluntarily waives its
jury trial rights following consultation with its legal
counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THE LEASE. In the event of litigation, this
Section may be filed as a written consent to a trial by the
court.
15.9 Sole and Entire Agreement; True Lease; Section 1110
(a) ENTIRE AGREEMENT: The Lease 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. Any amendments to
the Lease must be made in writing and signed on behalf of
Lessor and Lessee.
(b) TRUE LEASE: The parties intend and agree that the Lease:
(i) constitutes a "true lease", and not a "security
interest" as defined in Section 1-201(37) of the
UCC;
(ii) constitutes a "true lease" for United States
Federal income tax purposes; and
(iii) confers only a leasehold interest on Lessee in and
to the Aircraft on and subject to the terms of the
Lease, and no ownership or other interest with
respect to the Aircraft is provided to Lessee
under the Lease.
Lessee shall not file a tax return that is inconsistent with
the provisions of this Section 15.9(b).
(c) SECTION 1110: Lessee acknowledges that Lessor would not have
entered into the Lease unless it had available to it the
benefits of a lessor under Section 1110 of Title 11 of the
-57-
U.S.C. Lessee covenants and agrees with Lessor that to
better ensure the availability of such benefits, Lessee
shall not oppose 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, except in a situation in
which 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 the Lease and take such
other action not inconsistent with the Lease as Lessor
reasonably requests 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.
15.10 Indemnitees
All rights expressed to be granted to each Indemnitee (other than
Lessor) under the Lease are given to Lessor on behalf of that
Indemnitee, and each Indemnitee is an express third party beneficiary
thereof.
15.11 Counterparts
The Lease (including the Aircraft Lease Agreement and this CTA) may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. To the extent, if any, that the Lease constitutes chattel
paper (as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction), no security interest in the
Lease may be created through the transfer or possession of any
counterpart other than the original counterpart, which shall be
identified as the counterpart designated as the "original" on the
signature page of the Aircraft Lease Agreement by Financing Parties'
Representative, Owner or Lessor, as the case may be.
15.12 Language
All notices to be given under the Lease will be in English. All
documents delivered to Lessor pursuant to the Lease (including any
documents to be delivered pursuant to the Conditions Precedent) will
be in English.
16. DISCLAIMERS AND WAIVERS
LESSOR AND LESSEE AGREE THAT THE DISCLAIMERS, WAIVERS AND
CONFIRMATIONS SET FORTH IN CLAUSES 16.1 TO 16.4 BELOW SHALL APPLY AT
ALL TIMES DURING THE TERM. LESSEE'S ACCEPTANCE OF THE AIRCRAFT IN
ACCORDANCE WITH SECTION 4.3 SHALL BE CONCLUSIVE EVIDENCE THAT
-58-
LESSEE HAS FULLY INSPECTED THE AIRCRAFT AND EVERY PART THEREOF AND THAT
THE AIRCRAFT, THE ENGINES, THE PARTS AND THE AIRCRAFT DOCUMENTS AND
RECORDS ARE TECHNICALLY ACCEPTABLE TO LESSEE AND SATISFY THE DELIVERY
CONDITION REQUIREMENTS AND ARE IN SUITABLE CONDITION FOR DELIVERY TO
AND ACCEPTANCE BY LESSEE.
16.1 Exclusion
THE AIRCRAFT IS LEASED AND DELIVERED UNDER THE LEASE "AS IS, WHERE IS,"
AND LESSEE AGREES AND ACKNOWLEDGES THAT:
(a) LESSOR WELL HAVE NO LIABILITY IN RELATION TO, AND LESSOR HAS
NOT AND WILL NOT BE DEEMED TO HAVE ACCEPTED, MADE OR GIVEN
(WHETHER BY VIRTUE OF HAVING DONE OR FAILED TO DO ANY ACT,
OR HAVING ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR
IN RELATION TO THE LEASE OR OTHERWISE), ANY GUARANTEES,
COVENANTS, WARRANTIES OR REPRESENTATIONS, EXPRESS OR
IMPLIED, WITH RESPECT TO, THE AIRCRAFT OR ANY ENGINE OR PART
OR ANY SERVICES PROVIDED BY LESSOR UNDER THE LEASE,
INCLUDING (BUT NOT LIMITED TO) THE TITLE (EXCEPT AS AND TO
THE EXTENT EXPRESSLY PROVIDED IN SECTION 7.1), DESCRIPTION,
AIRWORTHINESS, COMPLIANCE WITH SPECIFICATIONS, OPERATION,
MERCHANTABILITY, QUALITY, FREEDOM FROM INFRINGEMENT OF
PATENT, COPYRIGHT, TRADEMARK OR OTHER PROPRIETARY RIGHTS,
FITNESS FOR ANY PARTICULAR USE OR PURPOSE, VALUE,
DURABILITY, DATE PROCESSING, CONDITION, OR DESIGN, OR AS TO
THE QUALITY OF THE MATERIAL OR WORKMANSHIP, THE ABSENCE OF
LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, OR AS
TO ANY OTHER MATTER WHATSOEVER, EXPRESS OR IMPLIED
(INCLUDING ANY IMPLIED WARRANTY ARISING FROM A COURSE OF
PERFORMANCE OR DEALING OR USAGE OF TRADE) WITH RESPECT TO
THE AIRCRAFT, ANY ENGINE OR ANY PART OR ANY SERVICES
PROVIDED BY LESSOR UNDER THE LEASE; AND
(b) LESSOR SHALL NOT HAVE ANY OBLIGATION OR LIABILITY WHATSOEVER
TO LESSEE (WHETHER ARISING IN CONTRACT OR IN TORT, AND
WHETHER ARISING BY REFERENCE TO NEGLIGENCE,
MISREPRESENTATION OR STRICT LIABILITY OF LESSOR OR
OTHERWISE) FOR:
(i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO
BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT
OR ANY ENGINE OR BY ANY INADEQUACY THEREOF OR
DEFICIENCY OR
-59-
DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN
CONNECTION THEREWITH (EXCEPT FOR DIRECT DAMAGES
DUE TO LESSOR'S BREACH AS AND TO THE EXTENT
EXPRESSLY PROVIDED IN SECTION 4.4 OR 7.1 HEREOF);
(ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT
OR ANY RISKS RELATING THERETO;
(iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR
ANTICIPATED PROFITS OR ANY OTHER DIRECT (EXCEPT
FOR DIRECT DAMAGES DUE TO LESSOR'S BREACH AS
PROVIDED IN SECTION 4.4 or 7.1), INDIRECT OR
CONSEQUENTIAL LOSS OR DAMAGE; OR
(iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE,
REPAIR, IMPROVEMENT OR REPLACEMENT OF THE
AIRCRAFT, ANY ENGINE OR ANY PART.
16.2 Waiver
LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND LESSOR, ALL ITS RIGHTS IN
RESPECT OF ANY CONDITION, WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, ON THE PART OF LESSOR AND ALL CLAIMS AGAINST LESSOR HOWSOEVER
AND WHENEVER ARISING AT ANY TIME IN RESPECT OF OR OUT OF ANY OF THE
MATTERS REFERRED TO IN SECTION 16.1.
16.3 Disclaimer Of Consequential Damages
LESSEE AGREES THAT IT SHALL NOT BE ENTITLED TO RECOVER, AND HEREBY
DISCLAIMS AND WAIVES ANY RIGHT THAT IT MAY OTHERWISE HAVE TO RECOVER,
FOR INTERRUPTION OF SERVICE, LOSS OF BUSINESS, LOST PROFITS OR REVENUES
OR CONSEQUENTIAL DAMAGES (AS DEFINED IN SECTION 2A-520 OF THE UCC OR
OTHERWISE) AS A RESULT OF ANY BREACH OR ALLEGED BREACH BY LESSOR OF ANY
OF THE AGREEMENTS, REPRESENTATIONS OR WARRANTIES OF LESSOR CONTAINED IN
THE LEASE (INCLUDING A BREACH BY LESSOR UNDER SECTION 4.4 OR 7.1).
16.4 Confirmation
LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF THIS
SECTION 16 AND ACKNOWLEDGES THAT RENT AND OTHER AMOUNTS PAYABLE UNDER
THE LEASE HAVE BEEN CALCULATED BASED ON ITS PROVISIONS.
-60-
16.5 Limitation
LESSOR HEREBY EXPRESSLY AGREES AND ACKNOWLEDGES THAT NOTHING IN THIS
SECTION 16 SHALL DEROGATE FROM LESSOR'S OBLIGATIONS UNDER, OR
OTHERWISE LIMIT LESSOR'S LIABILITY IN RESPECT OF, SECTIONS 2.2,
4.4(c), 7.1, 7.2,14.2 or 14.3 HEREOF OR SECTION 2(c) OF SCHEDULE 4
HERETO.
17. BROKERS AND OTHER THIRD PARTIES
17.1 No Brokers
Each of the parties hereby represents and warrants to the other that
it has not paid, agreed to pay or caused to be paid directly or
indirectly in any form, any commission, percentage, contingent fee,
brokerage or other similar payments of any kind, in connection with
the establishment or operation of the Lease, to any Person (other than
fees payable to legal advisers or portfolio services).
17.2 Indemnity
Each party agrees to indemnify and hold the other harmless from and
against any and all claims, suits, damages, costs and expenses
(including, reasonable legal fees and expenses) asserted by any agent,
broker or other third party for any commission or compensation of any
nature whatsoever based upon the Lease or the Aircraft, if such claim,
suit, damage, cost or expense arises out of any breach by the
indemnifying party, its employees or agents of Section 17.1.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
THE SIGNATURE PAGE FOLLOWS.
-61-
IN WITNESS WHEREOF the parties hereto have executed the Common Terms Agreement
on the date shown at the beginning of the document.
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ [illegible]
--------------------------------
Name: [illegible]
--------------------------------
Title: Vice President
--------------------------------
ALOHA AIRLINES, INC
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
IN WITNESS WHEREOF the parties hereto have executed the Common Terms Agreement
on the date shown at the beginning of the document.
GENERAL ELECTRIC CAPITAL CORPORATION
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
ALOHA AIRLINES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Title: Exec. Vice President & CFO
--------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Title: VP Planning & Development
--------------------------------
SCHEDULE 1
DEFINITIONS
The following words and expressions have the respective meanings set forth
below:
ACT means the Federal Aviation Act of 1958, as amended, and as recodified in
Title 49 U.S.C. pursuant to Public Law 103-272, or any similar legislation of
the United States enacted in substitution or replacement thereof.
AFFILIATE means as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person means
the power, directly or indirectly, either to (a) vote 50% or more of the
securities having ordinary voting power for the election of directors (or
persons performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
AFTER-TAX BASIS means in the case of any amount payable on an "After-Tax Basis"
to or for the benefit of any Person (including any amount payable pursuant to
this definition) that the total amount paid shall be such that the Person
actually realizes the amount payable, after deduction from the total amount
paid of the net amount of all Taxes required to be paid by such Person with
respect to the receipt or accrual by it of such amount.
AGREED VALUE has the meaning given in the Aircraft Lease Agreement.
AIR AUTHORITY means the FAA.
AIRCRAFT has the meaning given in the Aircraft Lease Agreement.
AIRCRAFT DOCUMENTS AND RECORDS means the documents, data and records identified
in the list attached to the Certificate of Technical Acceptance, and any other
documents and records Lessee is required to maintain under Section 8.8, and all
additions, renewals, revisions and replacements from time to time made to any
of the foregoing in accordance with the Lease.
AIRCRAFT LEASE AGREEMENT means the specific aircraft lease agreement for the
Aircraft entered or to be entered into between the parties hereto or Affiliates
thereof.
AIRFRAME means the Aircraft, excluding the Engines and Aircraft Documents and
Records.
AIRFRAME STRUCTURAL CHECK has the meaning given in the Aircraft Lease
Agreement.
AIRFRAME SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease
Agreement.
1-1
AIRWORTHINESS DIRECTIVE means an airworthiness directive issued by the State of
Design or the State of Registry.
ANNUAL SUPPLEMENTAL RENT ADJUSTMENT has the meaning given in the Aircraft Lease
Agreement.
APPRAISAL PROCEDURE means the following procedure for determining the "fair
market rental value" of the Aircraft pursuant to Sections 13.2 and 13.4 of the
CTA: (a) Lessor shall select an independent aircraft appraiser in its sole and
absolute discretion who shall make a determination of "fair market rental
value" of the Aircraft; and (b) the fees and expenses of the appraiser shall be
paid by Lessee. "Fair market rental value" shall mean the value determined by
an appraisal completed on an "as-is" and "where-is" basis.
APU means the auxiliary power unit installed on the Aircraft on the Delivery
Date and any replacement auxiliary power unit installed on the Aircraft and
title to which is transferred to Owner in accordance with the Lease.
APU SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease Agreement.
ASSUMED UTILIZATION has the meaning given in the Aircraft Lease Agreement.
ASSUMED RATIO has the meaning given in the Aircraft Lease Agreement.
BUSINESS DAY means any day other than a Saturday, Sunday or other day on which
banking institutions in New York, New York or Honolulu, Hawaii are authorized
or required by Law to be closed.
"C" CHECK means a block "C" check in accordance with Lessee's Maintenance
Program or, if the Lessee's Maintenance Program is not based on the
Manufacturer's Maintenance Planning Document on a block basis, in accordance
with the Manufacturer's Maintenance Planning Document.
CERTIFICATE OF TECHNICAL ACCEPTANCE means a certificate of technical acceptance
in the form of Part 1 or Part 2, as applicable, of Schedule 5.
CERTIFICATED AIR CARRIER means any Person (except the United States Government)
that is a "citizen of the United States of America" (as defined in Section
40102 of Title 49 of the U.S.C.) and holding a Certificate of Public
Convenience and Necessity issued under Section 41102 of Title 49 of U.S.C. by
the Department of Transportation or any predecessor or successor agency
thereto, and an air carrier operating certificate issued pursuant to Chapter
447 of Title 49 of U.S.C. or, in the event such certificates shall no longer be
applicable, any Person (except the United States Government) that is a citizen
of the United States (as defined in Section 40102 of Title 49 of the U.S.C.)
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 capable of
carrying ten or more individuals or 6,000 pounds or more of cargo, which also
is certificated so as to entitle Lessor, as a lessor, to the benefits of
Section 1110 of Title 11 of U.S.C. with respect to the Aircraft.
1-2
CONDITIONS PRECEDENT means Lessee Conditions Precedent and Lessor's Conditions
Precedent, collectively, or any of them, as the context may require.
CYCLE means one take-off and landing of the Aircraft.
DAMAGE NOTIFICATION THRESHOLD has the meaning given in the Aircraft Lease
Agreement.
DEDUCTIBLE AMOUNT has the meaning given in the Aircraft Lease Agreement.
DEFAULT means any Event of Default or any event or circumstance which, with the
giving of notice and/or lapse of time and/or determination of materiality
and/or fulfillment of any other condition, would constitute an Event of
Default.
DEFECT means any defect or non-conformity with the Delivery Condition
Requirements notified by Lessee to Lessor during the Pre-Delivery Procedure.
DELIVERY means delivery of the Aircraft by Lessor to Lessee under the Lease.
DELIVERY CONDITION REQUIREMENTS has the meaning given in the Aircraft Lease
Agreement.
DELIVERY DATE means the date on which Delivery occurs.
DELIVERY LOCATION has the meaning given in the Aircraft Lease Agreement.
DEPOSIT has the meaning given in the Aircraft Lease Agreement.
DISCOUNT RATE has the meaning given in the Aircraft Lease Agreement.
DOLLARS AND $ means the lawful currency of the United States.
ENGINE means, whether or not installed on the Aircraft:
(a) each engine of the manufacture and model specified in the Aircraft
Lease Agreement for the Aircraft which Lessor offers to Lessee for
delivery with the Airframe on the Delivery Date, such engines being
described as to serial numbers on the Certificate of Technical
Acceptance; and
(b) any Replacement Engine, with effect from the time when title thereto
has passed to Owner in accordance with the Lease;
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 passed to Lessee pursuant to the Lease.
ENGINE CYCLE means operation of an engine on an aircraft from and including a
take-off to and including the landing of that aircraft.
1-3
ENGINE EVENT OF LOSS means the occurrence, with respect to the Engine only,
whether or not installed on the Airframe, of any of those events described in
the definition of Event of Loss.
ENGINE FLIGHT HOUR means each hour or part thereof an Engine is operated,
elapsing from the moment the wheels of an aircraft on which such Engine is
installed leave the ground until the wheels of such aircraft next touch the
ground.
ENGINE LLP REPLACEMENT has the meaning given in Section 7.2(ii);
ENGINE LLP SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease
Agreement.
ENGINE REFURBISHMENT means all scheduled and unscheduled off the wing Engine
maintenance and repair accomplished for each module in accordance with the
performance restoration or full overhaul sections of the Manufacturer's
workscope planning guide.
ENGINE SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease Agreement.
EQUIPMENT CHANGE has the meaning given in Section 8.12.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
EVENT OF DEFAULT means any event or condition specified in Schedule 9.
EVENT OF LOSS means with respect to the Aircraft (including for the purposes of
this definition the Airframe):
(a) the actual or constructive, compromised, arranged or agreed total loss
of the Aircraft; or
(b) the Aircraft being destroyed, damaged beyond reasonable economic
repair as determined by Lessor or permanently rendered unfit for
normal use for any reason whatsoever; or
(c) the Aircraft being condemned, confiscated or requisitioned for title,
or title to the Aircraft being otherwise compulsorily acquired by the
government of the State of Registry or any other Government Entity; or
(d) the Aircraft being hijacked, stolen, confiscated, detained, seized,
condemned or requisitioned for use or hire for the lesser of (i) a
period of more than 30 days (or 60 days in the case of requisition for
use or hire by the government of the State of Registry) or (ii) a
period equal to or exceeding the remaining balance of the Term; or
(e) as a result of any rule, regulation, order or other action by the FAA
the use of the Aircraft by Lessee or any Permitted Sub Lessee shall
have been prohibited for a period of twelve (12) consecutive months.
1-4
EXPIRY DATE means the Scheduled Expiry Date or, if earlier (i) the date when
Lessor acting in accordance with the provisions of the Lease, terminates the
leasing of the Aircraft to Lessee under the Lease, or (ii) subject to the
provisions of Section 11.1 and 11.2, the date when Lessor receives the Agreed
Value together with any other amounts then due and unpaid under the Lease and
the Other Agreements following an Event of Loss; provided, that if the Term is
extended pursuant to Section 12.2, the Expiry Date shall be extended to the
date to which the Term is extended pursuant to Section 12.2.
FAA means the Federal Aviation Administration of the United States and any
successor thereof.
FAR means the Federal Aviation Regulations set forth in Title 14 of the United
States Code of Federal Regulations, as amended and modified from time to time.
FINAL DELIVERY DATE has the meaning given in the Aircraft Lease Agreement.
FINAL INSPECTION has the meaning given in Section 1.1 of Part III of Schedule A
to the Aircraft Lease Agreement.
FINANCIAL INDEBTEDNESS means 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 (exclusive of trade
payables); or
(d) any guarantee, indemnity or similar assurance against financial loss
of any person in respect of the above.
FINANCIAL INFORMATION means:
(a) as soon as available but not in any event later than 60 days after the
last day of each fiscal quarter of Lessee, the consolidated financial
statements of Aloha Airgroup, Inc. (consisting of a balance sheet and
statements of operations and of retained earnings and cash flows)
prepared for the most recent previous fiscal quarter certified by a
qualified financial officer of Aloha Airgroup, Inc. as being true and
correct and fairly presenting its financial condition and results of
operation in accordance with GAAP (subject to year end adjustments);
and
(b) as soon as available but not in any event later than 120 days after
the last day of each fiscal year of Lessee, the audited combined
financial statements of Aloha Airgroup, Inc. (consisting of a balance
sheet and statements of operations and of retained earnings and cash
flows), prepared for the fiscal year then most recently ended
certified by the independent auditors of Aloha Airgroup, Inc. without
qualification.
1-5
FINANCING DOCUMENTS (if applicable) has the meaning given in the Aircraft Lease
Agreement.
FINANCING DOCUMENTS CONTEST RIGHTS (if applicable) has the meaning given in the
Aircraft Lease Agreement.
FINANCING DOCUMENTS INDEMNITY AMOUNTS (if applicable) has the meaning given in
the Aircraft Lease Agreement.
FINANCING DOCUMENTS TAX AMOUNTS (if applicable) has the meaning given in the
Aircraft Lease Agreement.
FINANCING PARTIES (if applicable) has the meaning given in the Aircraft Lease
Agreement.
FINANCING PARTIES' REPRESENTATIVE (if applicable) has the meaning given in the
Aircraft Lease Agreement.
FINANCING STATEMENTS means Uniform Commercial Code Financing Statements in
respect of the Lease and the Aircraft and Engines leased thereunder prepared in
a form acceptable for filing with the applicable Government Entities in the
state in which Lessee's chief executive office is located (as the term "chief
executive office" is defined in Article 9 of the Uniform Commercial Code as in
effect in such state) and such other jurisdictions as Lessor shall reasonably
require.
FLIGHT HOUR means each hour or part thereof 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.
GAAP means generally accepted accounting principles in the United States.
GE CAPITAL means General Electric Capital Corporation.
GECAS means either or both of GE Capital Aviation Services, Limited and GE
Capital Aviation Services, Inc.
GOVERNMENT ENTITY means:
(a) national government, political subdivision thereof, or local
jurisdiction therein;
(b) any instrumentality, board, commission, court, or agency of any of the
above, 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.
1-6
GUARANTEE means, if applicable, a guarantee by the Guarantor in form and
substance reasonably acceptable to Lessor and references to the Guarantee
include reference to any replacement or re-issued guarantee.
GUARANTOR (if applicable) has the meaning given in the Aircraft Lease
Agreement.
HABITUAL BASE means the jurisdiction in which the Aircraft's primary aircraft
operations center is located.
INDEMNITEE has the meaning given in the Aircraft Lease Agreement.
INTEREST RATE has the meaning given in the Aircraft Lease Agreement.
INSURANCE means the insurance in respect of the Aircraft in form and substance
satisfactory to Lessor, and includes any insurance and reinsurance required by
Section 9 and Schedule 7.
LANDING GEAR means the landing gear assembly of the Aircraft excluding any
rotable components.
LANDING GEAR SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease
Agreement.
LAW means and includes (a) any statute, decree, constitution, regulation,
order, judgement or other directive of any Government Entity; (b) any treaty,
pact, compact or other agreement to which any Government Entity is a signatory
or party; (c) any judicial or administrative interpretation or application of
any Law described in (a) or (b) above; and (d) any amendment or revision of any
Law described in (a), (b) or (c) above.
LC AMOUNT has the meaning given in the Aircraft Lease Agreement.
LEASE means the Aircraft Lease Agreement for the Aircraft (of which this CTA
forms a part), any schedules or documents executed pursuant to the Schedules
hereto or pursuant to the Aircraft Lease Agreement, any Lease Supplement to the
Lease (including Lease Supplement No. 1), and any side letters related to the
Lease.
LEASE SUPPLEMENT means any Lease Supplement executed and delivered with respect
to, the Lease.
LEASE SUPPLEMENT NO. 1 means a Lease Supplement No. 1 substantially in the form
of Schedule 12.
LEASE TERMINATION CERTIFICATE means a Lease Termination Certificate
substantially in the form of Schedule 11 in respect of the Lease.
LESSEE means the Person named as Lessee in the Aircraft Lease Agreement.
LESSEE AFFILIATE means any Subsidiary or other Affiliate for the time being of
Lessee.
LESSEE CONDITIONS PRECEDENT means the conditions specified in Part B of
Schedule 3.
1-7
LESSEE'S MAINTENANCE PROGRAM means the Maintenance Program specifically
approved by the Air Authority for maintenance of the Aircraft by Lessee, or at
any time that a Permitted Sub-Lease approved by Lessor and meeting the
requirements of Section 8.4(b) is in effect, by the Permitted Sub-Lessee under
such Permitted Sub-Lease.
LESSOR means the Person named as Lessor in the Aircraft Lease Agreement.
LESSOR CONDITIONS PRECEDENT means the conditions specified in Part A of
Schedule 3.
LESSOR LIEN means (i) any Security Interest whatsoever from time to time
created by Lessor or Owner in connection with the financing of the Aircraft,
including the Financing Documents, and (ii) any other Security Interest in the
Aircraft which (a) results from acts of or claims against Lessor or Owner or
any affiliate of Lessor or Owner that do not relate to the transactions
contemplated by the Lease or by any other contract or agreement between Lessee
or any affiliate of Lessee and Lessor or Owner or any affiliate of Lessor or
Owner and (b) is not attributable to Lessee or Lessee's use or possession of
the Aircraft.
LESSOR/OWNER TAX JURISDICTION has the meaning given in the Aircraft Lease
Agreement.
LESSOR TAXES means Taxes for which Lessee is not obligated to indemnify Lessor
and/or Owner and/or a Financing Party as provided in Section 5.7(c).
LETTER OF CREDIT means any letter of credit issued in relation to the Lease
pursuant to Section 5.14 and any replacement or renewal of that letter of
credit.
LOSSES means any and all cost, expense (including any and all reasonable legal
fees and expenses and the fees and expenses of other professional advisers),
claims, proceedings, losses, liabilities, obligations, damages (whether direct,
indirect, special, incidental or consequential), suits, judgements, fees,
penalties or fines (whether criminal or civil) of any kind or nature
whatsoever, including any of the foregoing arising or imposed with or without
any Indemnitee's fault or negligence, whether passive or active or under the
doctrine of strict liability.
MAINTENANCE CONTRIBUTIONS means, as and if applicable, all amounts payable by
Lessor pursuant to Section 7.2.
MAINTENANCE PERFORMER means (i) any of the Persons identified on Schedule 14
hereto (until such time as Lessor delivers written notice to Lessee of the
removal of any such Person from the list of Maintenance Performers), or (ii)
such other mutually acceptable Persons as may be added to Schedule 14 hereto
from time to time (Lessee shall advise Lessor in writing of any request to add
a Person to Schedule 14 and Lessor shall respond in writing).
MAINTENANCE PROGRAM means an Air Authority approved maintenance program for the
Aircraft and encompassing scheduled maintenance, condition-monitored
maintenance, and/or on-condition
1-8
maintenance of Airframe, Engines and Parts, including servicing, testing,
preventive maintenance, repairs, structural inspections, system checks,
overhauls, approved modifications, engineering orders, airworthiness
directives, corrosion control, inspections and treatments.
MAJOR CHECKS means any C-check, multiple C-check or heavier check (including
structural inspections and CPCP) suggested for commercial aircraft of the same
model as the Aircraft by its manufacturer (however denominated) as set out in
the Lessee's Maintenance Program.
MANUFACTURER has the meaning given in the Aircraft Lease Agreement.
MANUFACTURER'S MAINTENANCE PLANNING DOCUMENT means the recommended maintenance
program for the Aircraft issued by the Manufacturer as in effect at the time of
any applicable determination.
MINIMUM AIRFRAME LIFE LIMITED COMPONENT CYCLES has the meaning given in the
Aircraft Lease Agreement.
MINIMUM AIRFRAME LIFE LIMITED COMPONENT FLIGHT HOURS has the meaning given in
the Aircraft Lease Agreement.
MINIMUM APU LIMIT has the meaning given in the Aircraft Lease Agreement.
MINIMUM APU LLP LIMIT has the meaning given in the Aircraft Lease Agreement.
MINIMUM COMPONENT CALENDAR LIFE has the meaning given in the Aircraft Lease
Agreement.
MINIMUM COMPONENT CYCLES has the meaning given in the Aircraft Lease Agreement.
MINIMUM COMPONENT FLIGHT HOURS has the meaning given in the Aircraft Lease
Agreement.
MINIMUM ENGINE CYCLES has the meaning given in the Aircraft Lease Agreement.
MINIMUM ENGINE FLIGHT HOURS has the meaning given in the Aircraft Lease
Agreement.
MINIMUM LANDING GEAR CALENDAR TIME has the meaning given in the Aircraft Lease
Agreement.
MINIMUM LANDING GEAR CYCLES has the meaning given in the Aircraft Lease
Agreement.
MINIMUM LANDING GEAR FLIGHT HOURS has the meaning given in the Aircraft Lease
Agreement.
MINIMUM LIABILITY COVERAGE has the meaning given in the Aircraft Lease
Agreement.
MINIMUM MEASURABLE FUEL REQUIREMENT has the meaning given in the Aircraft Lease
Agreement.
NAMEPLATE INSCRIPTION means the inscription to be included on the Nameplates as
reasonably requested by Lessor from time to time.
1-9
NAMEPLATES means the fireproof plates to be installed on the Aircraft in
accordance with Section 8.6(a).
OTHER AGREEMENTS means any aircraft, engine or spare parts related lease or
financing agreement (including an aircraft, engine or spare parts related loan,
hire purchase, conditional sale, credit sale or security agreement) from time
to time entered into between Lessor (or any Subsidiary or Affiliate of Lessor),
on the one hand, and Lessee (or any Subsidiary or Affiliate of Lessee), on the
other hand.
OWNER has the meaning given in the Aircraft Lease Agreement.
PART means, whether or not installed on the Aircraft:
(a) any component, furnishing or equipment (other than a complete Engine
or engine) incorporated or installed in or attached to or furnished
with the Aircraft on the Delivery Date or thereafter if paid for or
otherwise provided by or on behalf of Lessor; and
(b) any other component, furnishing or equipment (other than a complete
Engine or engine), with effect from the time when title thereto has
passed to Owner pursuant to the Lease;
(c) but excludes any such items title to which has passed to Lessee
pursuant to the Lease.
PART 36 OR FAR PART 36 means Part 36 of the FAR, as amended or modified from
time to time.
PART 121 OR FAR PART 121 means Part 121 of the FAR, as amended or modified from
time to time.
PERMITTED LIEN means:
(a) any lien for Taxes not assessed or, if assessed, not yet due and
payable, or being diligently contested in good faith by appropriate
proceedings;
(b) any lien of a repairer, mechanic, hangar-keeper or other similar lien
arising in the ordinary course of business by operation of Law in
respect of obligations which are not overdue or are being diligently
contested in good faith by appropriate proceedings;
(c) any Lessor Lien; and
(d) rights of others under any sub-lease or other arrangements to the
extent expressly permitted under Section 8.4;
but only if (in the case of both (a) and (b)) (i) adequate reserves have been
provided by Lessee for the payment of such Taxes or obligations; and (ii) such
proceedings, or the continued existence of the lien, do not give rise to any
risk of the sale, forfeiture or other loss of the Aircraft or any interest
therein or of criminal liability on the part of Lessor or Owner.
1-10
PERMITTED SUB-LEASE means any sub-lease of the Aircraft to a Permitted
Sub-Lessee to which Lessor has consented as provided for in Section 8.4(a).
PERMITTED SUB-LESSEE means any sub-lessee of the Aircraft to which Lessor has
consented as provided in Section 8.4(a).
PERSON means any individual person, any form of corporate or business
association, trust, Government Entity, or organization or association of which
any of the above is a member or a participant.
PRE-APPROVED BANK has the meaning given in the Aircraft Lease Agreement.
PRE-DELIVERY PROCEDURE means the procedure leading to Delivery as specified in
Schedule 4.
REDELIVERY LOCATION has the meaning given in the Aircraft Lease Agreement.
REGULATIONS means any Law or regulation, official directive or recommendation,
mandatory requirement, or contractual undertaking, or airworthiness
requirements or limitations, which applies to Lessee or the Aircraft and any
Law or regulation, official directive or recommendation or mandatory
requirement which applies to Lessor, Owner, Financing Parties' Representative
or GECAS.
RENT means the basic monthly "Rent", as defined in Schedule B of the Aircraft
Lease Agreement, and payable pursuant to Section 5.3.
RENT COMMENCEMENT DATE has the meaning given, in the Aircraft Lease Agreement.
RENTAL PERIOD means each period ascertained in accordance with Section 5.2.
RENT DATE means the first day of each Rental Period.
REPLACEMENT APU means an "APU" that has duly replaced the APU in accordance
with the requirements of Section 8.1 1(b).
REPLACEMENT ENGINE means an "Engine" that has duly replaced an "Engine" in
accordance with the requirements of Section 8.1 1(b).
REQUIRED LC EXPIRY DATE means the date being 91 days after the Expiry Date.
RETURN OCCASION means the date on which the Aircraft is redelivered to Lessor
in accordance with Section 12.
SCHEDULED DELIVERY DATE has the meaning given in the Aircraft Lease Agreement.
SCHEDULED DELIVERY MONTH has the meaning given in the Aircraft Lease Agreement.
SCHEDULED DELIVERY WEEK has the meaning given in the Aircraft Lease Agreement.
1-11
SCHEDULED EXPIRY DATE has the meaning given in the Aircraft Lease Agreement.
SECURITY INTEREST means any mortgage, chattel mortgage, security interest,
charge, pledge, lien, conditional sale agreement, title retention agreement,
equipment trust agreement, encumbrance, assignment, hypothecation, right of
detention, right of set-off or any other agreement or arrangement having the
effect of conferring security.
STATE OF DESIGN has the meaning specified in the Aircraft Lease Agreement.
STATE OF INCORPORATION means the United States and the state of organization of
the applicable Person as identified in the heading of the Aircraft Lease
Agreement.
STATE OF REGISTRY means the United States.
SUBSIDIARY means:
(a) in relation to any reference to financial statements, any Person whose
financial statements are consolidated with the accounts of Lessee in
accordance with GAAP; and
(b) for any other purpose, an entity from time to time of which another
has direct or indirect control or owns directly or indirectly more
than 50 percent of the voting share capital or similar equity
interests.
SUPPLEMENTAL RENT means, as and if applicable, all amounts payable under the
Lease in respect of each of Airframe Supplemental Rent, Engine Supplemental
Rent, Engine LLP Supplemental Rent, APU Supplemental Rent and Landing Gear
Supplemental Rent.
TAXES means any and all present and future taxes, duties, withholdings, levies,
assessments, imposts, fees and other governmental charges of all kinds
(including any value added or similar tax and any stamp, documentary, license,
registration or similar fees or tax) imposed by a Government Entity, together
with any penalties, fines, surcharges and interest thereon and any additions
thereto.
TAX INDEMNITEE has the meaning given in the Aircraft Lease Agreement.
TECHNICAL REPORT means a monthly report of the Flight Hours, Cycles, Engine
Flight Hours and Engine Cycles operated by the Airframe and Engines in respect
of each calendar month substantially in the form attached as Schedule 15.
TERM means the period commencing on the Delivery Date and ending on the Expiry
Date.
UCC means the Uniform Commercial Code as in effect in the State of New York.
UNFORESEEN EVENT means:
1-12
(a) civil disturbance or act of any Government Entity;
(b) natural disaster or any other act of God;
(c) Law of, or any allocation or other action by, a Government Entity or
any unexpected shortage of labor, materials or facilities affecting
the Aircraft;
(d) any damage or Defect;
(e) labor disputes;
(f) breach of contract by any Person (other than Lessor), or other failure
to deliver or redeliver the Aircraft by any Person (whether or not a
breach) with possession or control of the Aircraft (other than by
Lessor, if it has possession and control of the Aircraft), including
any failure to deliver or delay in delivery by any prior lessee, any
seller of the Aircraft or any Person performing modifications or
maintenance to the Aircraft and any breach by any prior lessee, seller
or modification or maintenance performer or failure to cooperate by
any prior lessee, seller or modification or maintenance performer, or
any "excusable" or "inexcusable" delay under any previous lease,
purchase or modification or maintenance agreement for the Aircraft, or
any purchase or modification or maintenance agreement for the Aircraft
terminating prior to Delivery (including due to Lessor or an Affiliate
of Lessor voluntarily terminating such agreement);
(g) delays in obtaining the Aircraft or any equipment or services for the
Aircraft;
(h) any delay due to Air Authority certifications; or
(i) any other cause beyond the control of Lessor or not occasioned by
Lessor's gross negligence or willful misconduct.
UNITED STATES means the United States of America.
U.S.C. means the United States Code.
1-13
SCHEDULE 2
REPRESENTATIONS AND WARRANTIES
1.1 LESSEE'S REPRESENTATIONS AND WARRANTIES
Lessee's representations and warranties to Lessor as of the date of execution
of the Lease and the Delivery Date are as follows:
(a) STATUS: It is duly organized, validly existing and in good standing in
its State of Incorporation.
(b) NON-CONFLICT: Execution, delivery and performance of the Lease do not
contravene or breach any Regulation applicable to Lessee.
(c) POWER AND AUTHORITY: It has all corporate and other power and
authority to execute, deliver and perform the Lease, and the Lease has
been duly authorized, executed and delivered by Lessee.
(d) LEGAL VALIDITY: The Lease is its legal, valid and binding obligation,
enforceable against Lessee in accordance with its terms.
(e) NO EVENT OF DEFAULT: No Event of Default has occurred and is
continuing or would occur because of Delivery.
(f) LITIGATION: It is not involved in any litigation or other dispute
which could materially and adversely affect its financial condition or
its ability to perform its obligations under the Lease.
(g) FINANCIAL INFORMATION: Its audited financial statements most recently
delivered to Lessor:
(i) have been prepared in accordance with GAAP; and
(ii) are true and correct and present fairly the financial condition
and results of operations of Lessee as at the date thereof and
for the period then ending.
(h) FULL DISCLOSURE: Neither the audited financial statements referred to
in paragraph (g) nor any other financial, operational or credit
related information provided to Lessor by Lessee for the purposes of
the Lease contains as of the date thereof any untrue statement of a
material fact or omits to state any material fact necessary in order
to make the statements therein not misleading in the light of the
circumstances under which they were made.
2-1
(i) LOCATION: Lessee's chief executive office (as that term is defined in
Article 9 of the UCC) is located at the address set forth in the
heading of the Aircraft Lease Agreement; and the records of the Lessee
concerning the Aircraft are maintained at such chief executive office
or at the Habitual Base of the Aircraft.
(j) 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 U.S.C. with respect to the
Aircraft.
(k) CITIZEN OF THE UNITED STATES: Lessee is a "citizen of the United
States" as defined in Section 40102 of Title 49 of the U.S.C.
(l) ERISA: Lessee is not engaged in any transaction in connection with
which it could be subjected to either a civil penalty assessed
pursuant to Section 502 of ERISA or any tax imposed by Section 4975 of
the Internal Revenue Code; no material liability to the Pension
Benefit Guaranty Corporation has been or is expected by Lessee to be
incurred with respect to any employee pension benefit plan (as defined
in Section 3 of ERISA) maintained by Lessee or by any trade or
business (whether or not incorporated) which together with Lessee
would be treated as a single employer under Section 4001 of ERISA and
Section 414 of the Internal Revenue Code; there has been no reportable
event (as defined in Section 4043(b) of ERISA) with respect to any
such employee pension benefit plan; no notice of intent to terminate
any such employee pension benefit plan has been filed or is expected
to be filed, nor has any such employee pension benefit been
terminated; no circumstance exists or is anticipated that constitutes
or would constitute grounds under Section 4042 of ERISA for the
Pension Benefit Guaranty Corporation to institute proceedings to
terminate, or to appoint a trustee to manage the administration of,
such an employee pension benefit plan; and no accumulated funding
deficiency (as defined in Section 302 of ERISA or Section 412 of the
Internal Revenue Code), whether or not waived, exists with respect to
any such employee pension benefit plan.
(m) MATERIAL ADVERSE CHANGE: there has been no material adverse change in
the financial condition or operations of Lessee and Lessee Affiliates
or in the ability of Lessee to comply with its obligations under the
Lease since the date of the financial statements most recently
provided to Lessor on or prior to the date of the Aircraft Lease
Agreement.
1.2 LESSOR'S REPRESENTATIONS AND WARRANTIES
Lessor's representations and warranties to Lessee as of the date of execution
of the Lease and the Delivery Date are as follows:
(a) STATUS: It is duly organized, validly existing and in good standing in
its State of Incorporation.
2-2
(b) NON-CONFLICT: Execution, delivery and performance of the Lease do not
contravene or breach any Regulation applicable to Lessor.
(c) POWER AND AUTHORITY: It has all corporate and other power and
authority to execute, deliver and perform the Lease, and the Lease has
been duly authorized, executed and delivered by Lessor.
(d) LEGAL VALIDITY: The Lease is its legal, valid and binding obligation,
enforceable against Lessor in accordance with its terms.
(e) CITIZEN OF THE UNITED STATES: Lessor is a "citizen of the United
States" as defined in Section 40102 of Title 49 of the U.S.C. and the
FAR.
2-3
SCHEDULE 3
CONDITIONS PRECEDENT
PART A - LESSOR CONDITIONS PRECEDENT
The conditions precedent to Lessor's obligation to deliver and to commence the
leasing of the Aircraft are as follows. All documents delivered to Lessor
pursuant to this Schedule 3 will be in English:
1.1 PRELIMINARY CONDITIONS
Lessor will receive from Lessee, not later than two Business Days prior to the
Scheduled Delivery Date, each of the following, satisfactory in form and
substance to Lessor:
(a) OPINION(S): forms of the opinion(s) substantially in the
form of Schedule 8 that will be issued on the Delivery Date
by legal counsel(s) reasonably acceptable to Lessor with
respect to the laws of the State of New York, the state of
the location of Lessee's chief executive offices and the
general corporate laws of the State of Incorporation;
(b) APPROVALS: evidence of the issue of each approval, license
and consent, if any, which is required in relation to, or in
connection with the performance by Lessee of any of its
obligations under the Lease;
(c) IMPORT: evidence that any required 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 Taxes;
(d) PROCESS AGENT: a letter from the process agent appointed by
Lessee in the Lease accepting that appointment;
(e) LICENSES: copies of Lessee's air transport license, air
carrier operating certificate, air operator's certificates,
including authority to operate the Aircraft under FAR Part
121, and a Certificate of Public Convenience and Necessity
issued under Section 40102 of Title 49 of U.S.C.;
(f) UCC: Financing Statements with respect to the Lease and the
Aircraft in a form reasonably acceptable to Lessor shall
have been executed and delivered by Lessee to Lessor and
duly filed in each jurisdiction reasonably requested by
Lessor;
(g) LETTER OF CREDIT (if applicable): the form of the Letter of
Credit;
(h) GENERAL: such other documents as Lessor may reasonably
request.
3-1
1.2 FINAL CONDITIONS
(a) Final Documents: Lessor shall receive on or before the
Delivery Date each of the following:
(i) CERTIFICATE OF TECHNICAL ACCEPTANCE AND LEASE
SUPPLEMENT NO. 1: each of the Certificate of
Technical Acceptance and Lease Supplement No. 1,
dated and fully completed, and executed by Lessee,
and, in the case of Lease Supplement No. 1, filed
for recording at the FAA (together with the CTA);
(ii) OPINIONS: a signed original (or facsimile
transmission thereof) of each of the opinions
referred to in Section 1.1(a) of this Schedule,
dated the Delivery Date;
(iii) PAYMENTS: all sums due to Lessor under the Lease
on or before the Delivery Date, including the
first payment of Rent and, if applicable, the
balance of the Deposit;
(iv) INSURANCE: certificates of insurance, an opinion
and undertaking from Lessee's insurance broker and
other evidence reasonably satisfactory to Lessor
that Lessee is taking the required steps to ensure
due compliance with the provisions of the
Agreement as to Insurance with effect on and after
the Delivery Date;
(v) FINANCIAL INFORMATION: the latest Financial
Information of Lessee requested by Lessor;
(vi) LETTER OF CREDIT (if applicable): the Letter of
Credit;
(vii) GUARANTEE (if applicable): the Guarantee, duly
executed and delivered by the Guarantor, and an
opinion of legal counsel acceptable to Lessor in
respect of the Guarantee in form and substance
acceptable to Lessor and its legal counsel;
(viii) LESSEE'S MAINTENANCE PROGRAM: such information and
documents relating to the Lessee's Maintenance
Program as Lessor may reasonably require;
(ix) FILINGS: evidence that on the Delivery Date 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 the Lease and
to protect the interests of Owner and, if
applicable, the Financing Parties in the Aircraft,
any Engine or any Part and in the Lease;
(x) FAA OPINION: evidence that there will be issued an
opinion of ___________________ or other counsel
reasonably acceptable to Lessor who are recognized
specialists with regard to FAA registration
matters in a form reasonably acceptable to Lessor
as
3-2
to the due filing for recordation of the Lease
and, if applicable, the Financing Documents, (the
costs for which shall be paid by Lessee);
(xi) CERTIFICATE OF LEASE TERMINATION: a certificate of
lease termination executed by a duly authorized
officer of Lessee substantially in the form of
Schedule 11 acknowledging that the Lease is no
longer in effect with respect to the Aircraft and
Engines, which certificate Lessor will hold in
escrow to be filed at the FAA upon the expiration
or other termination of the Lease;
(xii) ACKNOWLEDGEMENT AND AGREEMENT RE ASSIGNMENT (if
applicable): an acknowledgement of and certain
agreements with respect to the assignment by
Lessor of this Lease to Owner and Financing
Parties' Representative in the form previously
provided to Lessee or as Owner or Financing
Parties' Representative may otherwise reasonably
request; and
(xiii) GENERAL: such other documents as Lessor may
reasonably request;
(c) REPRESENTATIONS/WARRANTIES: the representations and
warranties of Lessee in Schedule 2 shall be true and correct
in all material respects, and would be true and correct in
all material respects if repeated on Delivery; and
(d) NO DEFAULT: no Default shall have occurred and be continuing
on Delivery or could reasonably be expected to result from
the leasing of the Aircraft to Lessee under the Lease.
PART B - LESSEE CONDITIONS PRECEDENT
The conditions precedent to Lessee's obligation to accept and to commence the
leasing of the Aircraft are as follows. All documents delivered to Lessee
pursuant to this Schedule 3 will be in English.
(a) FINAL DOCUMENTS: Lessee shall receive on or before the
Delivery Date for the Aircraft each of the following:
(i) LEASE SUPPLEMENT NO. 1: Lease Supplement No. 1,
dated and executed by Lessor and filed for
recording at the FAA (together with the CTA); and
(ii) ACKNOWLEDGEMENT RE QUIET ENJOYMENT: if Lessee is
required to deliver an acknowledgement of or
agreement with respect to the assignment by Lessor
of the Lease to Owner or Financing Parties'
Representative, an agreement by each such Person
(Owner, Financing Parties' Representative or both,
as the case may be) as to itself to the effect set
forth in Section 7.1;
3-3
(iii) REPRESENTATIONS/WARRANTIES: the representations
and warranties of Lessor in Schedule 2 shall be
true and correct in all material respects, and
would be true and correct in all material respects
if repeated on Delivery; and
(iv) DELIVERY CONDITION REQUIREMENTS: tender by Lessor
of delivery of the Aircraft in compliance with the
Delivery Condition Requirements.
3-4
SCHEDULE 4
PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION
REQUIREMENTS - PART 1 (NEW AIRCRAFT)
1. Licenses
(a) It is the responsibility of Lessee to obtain all licenses,
permits or approvals necessary to export or transport the
Aircraft from the Delivery Location.
(b) Lessor will provide Lessee with any required data and
information for the purposes of obtaining any such licenses,
permits or approvals.
2. INSPECTION
Except as otherwise provided in the Aircraft Lease Agreement:
(a) Subject to any applicable purchase agreement, Lessee may
inspect the Aircraft (including such rights as Lessor has to
be present and inspect, on an ongoing basis, the manufacture
of the Aircraft and including a demonstration flight at no
expense to Lessee with up to two (2) representatives of Lessee
on the Aircraft as observers) to ensure that the Aircraft
fulfils the Delivery Condition Requirements.
(b) If Lessee's inspection of the Aircraft shows that the Aircraft
does not fulfil the Delivery Condition Requirements, Lessor
will correct any defects and make the Aircraft available for
re-inspection by Lessee provided that, in Lessor's reasonable
opinion, it is not impracticable or prohibitively expensive to
correct the defect.
(c) If Lessor notifies Lessee that it does not intend to correct
the defect, either party may terminate the Lease, and upon
such termination neither party shall have any further
liability to any party under this Lease, except that Lessor
shall promptly return to Lessee the Deposit and/or the Letter
of Credit, if any, to Lessor.
3. INDEMNITY
Lessee is responsible for and will indemnify each Indemnitee against
all Losses arising from death or injury to any observer or any employee
of Lessee in connection with the inspection of the Aircraft.
4-1
SCHEDULE 4
PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION
REQUIREMENTS - PART 2 (USED AIRCRAFT)
1. LICENSES
(a) It is the responsibility of Lessee to obtain all licenses,
permits or approvals necessary to export or transport the
Aircraft from the Delivery Location.
(b) Lessor will provide Lessee with any required data and
information for the purposes of obtaining any such licenses,
permits or approvals.
2. INSPECTION
Except as otherwise provided in the Aircraft Lease Agreement:
(a) Subject to any applicable purchase agreement or prior lease,
Lessee may inspect the Aircraft (including a demonstration
flight at no expense to Lessee with up to two (2)
representatives of Lessee on the Aircraft as observers) to
ensure that the Aircraft fulfils the Delivery Condition
Requirements.
(b) If Lessee's inspection of the Aircraft shows that the Aircraft
does not fulfil the Delivery Condition Requirements, Lessor
will correct any defects and make the Aircraft available for
re-inspection by Lessee provided that, in Lessor's reasonable
opinion, it is not impracticable or prohibitively expensive to
correct the defect.
(c) If Lessor notifies Lessee that it does not intend to correct
the defect, either party may terminate the Lease, and upon
such termination neither party shall have any further
liability to any party under this Lease, except that Lessor
shall promptly return to Lessee the Deposit and/or the Letter
of Credit, if any, to Lessor.
3. INDEMNITY
Lessee is responsible for and will indemnify each Indemnitee against
all Losses arising from death or injury to any observer or any employee
of Lessee in connection with the inspection of the Aircraft.
4-2
SCHEDULE 5
CERTIFICATE OF TECHNICAL ACCEPTANCE - PART 1 (NEW AIRCRAFT)
This Certificate of Technical Acceptance is delivered, on the date set out
below by ("Lessee") to ____________ ("Lessor") pursuant to the Aircraft Lease
Agreement dated _____________ between Lessor and Lessee (the "Lease"). The
capitalized terms used in this Certificate shall have the meaning given to
such terms in the Lease.
DETAILS OF ACCEPTANCE
Lessee hereby confirms to Lessor that Lessee has at [ ] o'clock on this
________ day of ____________, at __________, technically accepted the
following, in accordance with the provisions of the Lease:
___________ Aircraft, Manufacturer's Serial Number ____________ ;
____________ Engines:
Engine Number Manufacturer's Serial Number
[To be completed at Delivery]
(each of which has 750 or more rated take off horsepower or the equivalent of
such horsepower)
Fuel Status: Kilos/lbs ______________; and
Loose Equipment Check List: in accordance with the list signed by Lessor and
Lessee and attached hereto.
Aircraft Documents and Records: in accordance with the list signed by Lessor
and Lessee and attached hereto.
LOPA drawing attached.
HOURS AND CYCLES DATA (AS OF DELIVERY DATE)
Airframe:
Time Since New:______________ Cycles Since New:_____________
Landing Gear (Main and Nose)
Time Since New: [, Center] Cycles Since New: _____________
Engines
Position: Time Since New: _______________
Cycles Since New: _____________
_______________________________
Auxiliary Power Unit:
Number of Flight Hours/APU Hours
(as applicable) since New: _________________
5-1
ACCEPTANCE:
Lessee hereby confirms that the Aircraft, Engines, Parts and Aircraft Documents
and Records are technically acceptable to it, satisfy all of the Delivery
Condition Requirements and are in the condition for delivery and acceptance as
required under the Lease.
IN WITNESS WHEREOF, Lessee and Lessor have, by their duly authorized
representative, executed this Certificate of Technical Acceptance on the date
in paragraph I above.
LESSEE: _________________________
By: _____________________________
Title: __________________________
LESSOR: _________________________
By: _____________________________
Title: __________________________
5-2
SCHEDULE 5
CERTIFICATE OF TECHNICAL ACCEPTANCE - PART 2 (USED AIRCRAFT)
This Certificate of Technical Acceptance is delivered, on the date set out
below by ___________ ("Lessee") to ____________ ("Lessor") pursuant to the
Aircraft Lease Agreement dated _____________ between Lessor and Lessee
(the "Lease"). The capitalized terms used in this Certificate shall have the
meaning given to such terms in the Lease.
DETAILS OF ACCEPTANCE
Lessee hereby confirms to Lessor that Lessee has at [ ] o'clock on this
__________ day of ____________, at _____, technically accepted the following,
in accordance with the provisions of the Lease:
__________ Aircraft, Manufacturer's Serial Number _________;
__________ Engines:
Engine Number Manufacturer's Serial Number
[to be completed at Delivery]
(each of which has 750 or more rated take off horsepower or the equivalent of
such horsepower)
Fuel Status: Kilos/lbs _________; and
Loose Equipment Check List: in accordance with the list signed by Lessor and
Lessee and attached hereto.
Aircraft Documents and Records: in accordance with the list signed by Lessor
and Lessee and attached hereto.
HOURS AND CYCLES DATA (as of Delivery Date)
Airframe:
Number of Hours since last Airframe Structural Check: ________ hours
"C" Check (or Equivalent)
Interval: __________________________
Time Since: ________________________
Landing Gear Overhaul:
Number of Cycles Since Last Overhaul:
5-3
[____] Gear ___________________________ cycles
Interval: _____________________________
Engines:
Number of Hours Since Last Engine Refurbishment:
S/N ___________:______________ hours
Hot Section Inspection:
Interval: ________________________________
Time Since (S/N ________________):_________________
Time Remaining to First Restriction:
Engine SIN:
Hours:__________________ Restriction:_______________
Cycles:_________________ Restriction:_______________
Average Cycles in Life Limited Parts (see attached Schedule):________________
Auxiliary Power Unit:
Number of APU Hours since Last Heavy Shop Visit:
______________ hours Date accomplished ____________________
Hot Section Inspection:
Interval:__________________________
Time Since: ___________________________
Interior Equipment:
LOPA - attached ___________________________
Emergency drawing - attached __________________________
Galley Equipment __________________________
5-4
ACCEPTANCE:
Lessee hereby confirms that the Aircraft, Engines, Parts and Aircraft Documents
and Records are technically acceptable to it, satisfy all of the Delivery
Condition Requirements and are in the condition for delivery and acceptance as
required under the Lease.
IN WITNESS WHEREOF, Lessee and Lessor have, by their duly authorized
representative, executed this Certificate of Technical Acceptance on the date
in paragraph 1 above.
LESSEE:
By: _______________________________
Title: ____________________________
LESSOR:
By:________________________________
Title:_____________________________
By:________________________________
Title:_____________________________
5-5
SCHEDULE 6
[NOT APPLICABLE]
6-1
SCHEDULE 7
INSURANCE REQUIREMENTS
1.1 TYPES OF INSURANCE
The Insurances required to be maintained are as follows:
(a) HULL ALL Risks of loss or damage while flying, taxiing and
on the ground with respect to the Aircraft on an agreed
value basis for not less than the Agreed Value and not more
than 110% of the Agreed Value and with a deductible not
exceeding the Deductible Amount;
(b) HULL WAR AND ALLIED PERILS, being such risks excluded from
the Hull All Risks Policy, to the fullest extent available
from the leading international insurance markets for the
Agreed Value; provided that, when the Aircraft is being
operated in or over the United States or Canada, coverage
may be limited to such coverage as is usual and customary
for comparable airlines, operating similar equipment in
similar circumstances, namely subject to the North American
buy-back;
(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
for like kind and quality value and including engine test
and running risks; and
(d) COMPREHENSIVE 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 for 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 in line with prudent market practice for
comparable airlines, operating similar equipment in similar
circumstances.
1.2 TERMS OF HULL AND SPARES INSURANCE
All required hull and spares insurance, so far as it relates to the Aircraft,
will:
(a) LOSS PAYEE: name Lessor, as loss payee (without imposing on
Lessor any obligation imposed on the insured, including the
liability to pay any calls, commissions or premiums);
(b) PAYMENT OF LOSSES: Losses will be payable in Dollars to
Lessor for all amounts up to the Agreed Value and to Lessee
for any excess above the Agreed Value (which excess shall
not exceed 10% of the Agreed Value), except where the
insurance payment does not
7-1
exceed the Damage Notification Threshold, and no Default
is in existence, in which case the loss will be settled
with and paid to Lessee;
(c) 50/50 PROVISION: if separate Hull "all risks" and "war
risks" insurances are arranged, include a 50/50 provision in
accordance with market practice (AVS. 103 is the current
London market language); and
(d) NO OPTION TO REPLACE: confirm that the insurers are not
entitled to replace the Aircraft in the event of an insured
Event of Loss and are not entitled to replace any Engine in
the event of an Engine Event of Loss with respect to such
Engine.
1.3 TERMS OF LIABILITY INSURANCE
All required liability insurances will:
(a) ADDITIONAL INSUREDS: include each Indemnitee, as additional
insureds for its respective rights and interests, warranted,
each as to itself only, no operational interest (without
imposing on any such Person any obligation imposed on the
insured, including the liability to pay any calls,
commissions or premiums);
(b) SEVERABILITY: include a severability of interests clause
which provides that the insurance, except for the limit of
liability, will operate to give each insured the same
protection as if there were a separate policy issued to each
insured; and
(c) PRIMARY POLICY: 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, any Indemnitee or Lessee has the
benefit so as to reduce the amount payable to the additional
insureds under such policies.
1.4 TERMS OF ALL INSURANCES
All Insurances will:
(a) INDUSTRY PRACTICE: be in accordance with standard industry
practice for airlines operating similar aircraft in similar
circumstances;
(b) DOLLARS: provide cover denominated in Dollars;
(c) WORLDWIDE: operate on a worldwide basis subject to such
limitations and exclusions as are in line with industry
practice obtained by prudent United States-based
international air carriers;
(d) BREACH OF WARRANTY: 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
assureds seeking protection and shall
7-2
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;
(e) SUBROGATION: provide that the insurers will hold harmless
and waive any rights of recourse or subrogation against the
additional insureds to the extent Lessee has waived its
rights against the additional insureds in the Lease;
(f) PREMIUMS: provide that the additional insureds 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 set-off, counter claim or other deduction, by
attachment or otherwise, in respect of any premium due
against the respective interests of the additional insureds
other than outstanding premiums relating to the Aircraft,
any Engine or Part the subject of the relevant claim;
(g) Cancellation/Change: provide that the Insurances will
continue unaltered for the benefit of the additional
insureds for at least 30 days after written notice by
registered mail or telex of any cancellation, change, event
of non-payment of premium or installment thereof has been
sent by insurer(s) to Lessor, or where an insurance broker
is appointed to the insurance broker who shall promptly send
on such notice to Lessor, 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; and
(h) [NOT APPLICABLE]
(i) [INTENTIONALLY OMITTED.]
(j) INDEMNITIES: accept and insure the indemnity provisions of
the Lease to the extent of the risks covered by the
policies.
1.5 DEDUCTIBLES
Lessee shall be responsible for any and all deductibles under the Insurances.
1.6 APPLICATION OF INSURANCE PROCEEDS
The Insurances will be endorsed to provide for payment of proceeds as follows:
(a) EVENT OF LOSS: all insurance payments up to the Agreed Value
received as the result of an Event of Loss occurring during
the Term will be paid to Lessor as loss payee and any amount
in excess of the Agreed Value (which excess shall not exceed
10% of the Agreed Value) shall be paid to Lessee;
7-3
(b) EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance
proceeds of any 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 the appropriate repair facility,
and applied in payment (or paid to Lessee and/or Lessor as
reimbursement) for repairs or replacement property upon
Lessor being satisfied that the repairs or replacement have
been effected in accordance with the Lease.
(c) BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in
amounts below the Damage Notification Threshold shall be
paid by the insurer directly to Lessee;
(d) LIABILITY PROCEEDS: all insurance proceeds in respect of
third party liability will be paid by the insurers to the
relevant third party in satisfaction of the relevant
liability or to Owner, Lessor, Financing Partners'
Representative or Lessee, as the case may be, in
reimbursement of any payment so made;
(e) DEFAULT: notwithstanding any of the foregoing paragraphs, 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 Lessor, Owner or Financing Parties'
Representative, as the case may be, or retained to be
applied toward payment of any amounts which may be or become
payable by Lessee in such order as Lessor or Owner, as the
case may be, may elect until such time as no Default is
continuing and then applied as described above; and to the
extent that insurance proceeds are paid to Lessee, Lessee
agrees to hold such proceeds in trust and comply with the
foregoing provisions and apply or pay over such proceeds as
so required.
1.7 UNITED STATES GOVERNMENTAL INDEMNITY
Notwithstanding any of the foregoing paragraphs, in the event of a Permitted
Sub-Lease to, or a requisition of use by, the United States or any
Governmental Entity whose obligations have the full faith and credit of the
federal Government of the United States, Lessor agrees to accept in lieu of
insurance required hereunder indemnification or insurance from the United
States or such a Governmental Entity in a form reasonably acceptable to
Lessor and Owner and against such risks and in such amounts and on such terms
such that when added to the Insurance maintained by Lessee, Lessee is in full
compliance with the requirements of Section 9 and this Schedule.
7-4
SCHEDULE 8
FORM OF LESSEE'S AND GUARANTOR'S LEGAL OPINION
[Lessor]
[Owner]
[Financing Parties' Representative]
Ladies and Gentlemen:
1. You have asked us to render an opinion in connection with the
transaction governed by or subject to, inter alia, the following
documents.
(a) the Lease as defined below;
(b) the [Articles/Certificate of Incorporation and By-laws]* of
Lessee; and
[*Counsel should amend this reference as necessary to
describe the actual constitutional documents of Lessee].
(c) all other documents, approvals and consents of whatever
nature and wherever kept which it was, in our judgement and
to our knowledge, necessary or appropriate to examine to
enable us to give the opinion expressed below.
Words and expressions used and not otherwise defined herein will
bear the same meanings as defined in an Aircraft Lease Agreement
dated _______, ____ between _______ ("Lessor") and ______
("Lessee") in respect of one _______ aircraft with manufacturer's
serial number _______ together with the _______ installed _______
engines (the "Aircraft"). As used herein the term "Lease" means and
includes the Aircraft Lease Agreement which incorporates the Common
Terms Agreement (as defined therein) and Lease Supplement No. ____.
Also, for the purposes of this opinion, the term "Lease" includes
the Acknowledgment and Agreement dated as of the date hereof
executed by Lessee in favor of Owner and Financing Parties'
Representative.
2. Having considered the documents listed in paragraph 1 above, and
having regard to the relevant laws of we are pleased to advise that in
our opinion: -
(a) Lessee is a company duly incorporated and in good
standing under the laws of _______, and is qualified to
do business as a foreign corporation in each jurisdiction
where failure to so qualify would have a materially
adverse effect on Lessee's business or its ability to
perform its obligations under the Lease;
(b) Lessee has the corporate power to enter into and perform,
and has taken all necessary corporate action to authorize
the entry into, and the execution, delivery and performance
by it of, the Lease and the transactions contemplated by the
Lease;
8-1
(c) the entry into and performance by Lessee of, and the
transactions contemplated by, the Lease do not and will not
(x) conflict with any laws binding on Lessee, (y) conflict
with the [Articles/Certificate of Incorporation or By-laws]
of Lessee; or (z) conflict with or result in default under
any agreement or instrument which is binding upon Lessee or
any of its assets or result in the creation of any Security
Interest on any of its assets;
(d) no authorizations, consents, licenses, approvals and
registrations (other than those which have been obtained and
of which copies are attached hereto) are necessary or
desirable to be obtained from any governmental or other
regulatory authorities in the United States or any other
jurisdiction having jurisdiction over Lessee, its operations
or its properties to enable Lessee (x) to enter into and
perform the transactions contemplated by the Lease, (y) to
operate the Aircraft in the United States and on
international flights for the transport of fare-paying
passengers, or (z) to make the payments provided for in the
Lease;
(e) except for the filing and recordation of
[a ▇▇▇▇ of sale in favor of the Owner,] the Financing
Documents and the Lease with the FAA (which filing has
been duly made on or before this date) and the filing of
Financing Statements in _______, it is not necessary or
desirable, to ensure the priority, validity and
enforceability of all the obligations of Lessee under the
Lease, as against Lessee and all third parties, or to
perfect the interests of Lessor, Owner or Financing
Parties' Representative in and to the Aircraft or the
Lease, that the Lease be filed, registered, recorded or
notarized in any public office or elsewhere or that any
other instrument be signed, delivered, filed, registered
or recorded, that any tax or duty be paid or that any
other action whatsoever be taken;
(f) the Lease has been duly executed and delivered on behalf of
Lessee and constitutes the legal, valid and binding
obligation of Lessee, enforceable against Lessee in
accordance with its terms;
(g) [NOT APPLICABLE];
(h) there is no applicable usury or interest limitation law in
_______ applicable to payments in accordance with the Lease;
(i) there are no registration, stamp or other taxes or duties
of any kind payable in _______ in connection with the
execution, performance or enforcement by legal
proceedings of the Lease or the Guaranty;
(j) the choice of New York law to govern the Lease will be
upheld as a valid choice of law in any action in the
courts of _______;
(k) the consent to the jurisdiction by Lessee contained in the
Lease is valid and binding on Lessee;
8-2
(l) Lessee is a Certificated Air Carrier;
(m) Lessee is a "citizen of the United States" as defined in 49
U.S.C. Section 40102(a)(15);
(n) Lessee's "chief executive office" (as referenced in the
Uniform Commercial Code adopted in the State of _______)
is _______;
(o) Lessor will not violate any law or regulation of the
States of _______ or New York or any federal laws or
regulations of the United States of America and Lessor
will not become liable to income tax in the State of
_______ solely by reason of Lessor entering into the
Lease with Lessee or performing its obligations
thereunder or enforcement of its rights thereunder;
(p) It is not necessary for Lessor to establish a place of
business or be licensed or qualified to do business in the
State of _______ or New York in order for Lessor to
enforce any provisions of the Lease; and
(q) Lessor is entitled to the benefits of Section 1110 of Title
11 of the U.S.C. with respect to the Aircraft and the Lease.
Very truly yours,
[If there is a Guarantor/Guarantee the opinion must also include paragraphs
(a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (o) and (p) revised to be
applicable to the Guarantor/Guarantee]
8-3
SCHEDULE 9
EVENTS OF DEFAULT
Each of the following events or conditions constitutes an Event of Default:
(a) NON-PAYMENT: Lessee fails to make any payment of Rent,
Supplemental Rent or any other amount payable under the
Lease on the due date and such failure continues for three
(3) Business Days or more; or
(b) INSURANCE: Lessee fails to comply with any provision of
Section 9 (other than the requirement to provide Lessor with
evidence of renewal of any policy on or before the renewal
date where the policy has actually been renewed on or prior
to such date) or Schedule 7, or any insurance required to be
maintained under the Lease is cancelled or terminated, or a
notice of cancellation is given in respect of any such
insurance; or
(c) BREACH: (i) Lessee fails to provide Lessor with evidence of
renewal of any insurance policy on or before the renewal
date for that policy where the policy has actually been
renewed on or prior to such date and such failure continues
for 24 hours after notice from Lessor to Lessee of such
failure to comply; or (ii) Lessee fails to comply with any
other provision of the Lease not referenced in this Schedule
9 and, if such failure is in the opinion of Lessor capable
of remedy, such failure continues for 30 days after notice
from Lessor to Lessee; or
(d) REPRESENTATION: any representation or warranty made (or
deemed to be repeated) by Lessee in or pursuant to the Lease
or in any document executed by Lessee in connection with or
pursuant to the Lease or in any document or in any
certificate is or proves to have been incorrect in any
material respect when made or deemed to be repeated; or
(e) CROSS-DEFAULT:
(i) any amount in respect of Financial Indebtedness of
Lessee or any Lessee Affiliate having a principal
amount in excess of Five Hundred Thousand Dollars
($500,000) is not paid when due;
(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
becomes due as a result of an event of default or
termination event, howsoever described, on the
part of Lessee or any other Person prior to the
date when it would otherwise have become due; or
(iii) the security for any such Financial Indebtedness
becomes enforceable; or
9-1
(iv) any event of default or termination event, howsoever
described, occurs under any Other Agreement, or any
other lease, hire purchase, conditional sale or
credit sale agreement of Lessee or any Lessee
Affiliate; or
(f) APPROVALS: any consent, authorization, license, certificate
or approval of or registration with or declaration to any
Government Entity required to be obtained or maintained by
Lessee in connection with the Lease and/or the operation of
the Aircraft (including any airline license or air transport
license including authority to operate the Aircraft under
Part 121 of the FARs, a Certificate of Convenience and
Necessity issued under the Act and any air carrier operating
certificate issued under the Act) is modified in a
materially prejudicial manner 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 Lessee Affiliate consents to the
appointment of a custodian, receiver, trustee or
liquidator of itself or all or a material part of
its property or its consolidated property, or
Lessee or any Lessee Affiliate 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 Lessee Affiliate files a
voluntary petition in bankruptcy or voluntary
petition seeking reorganization in a proceeding
under any bankruptcy or insolvency laws (as now or
hereafter in effect), or an answer admitting the
material allegations of a petition filed against
Lessee in any such proceeding, or Lessee or any
Lessee Affiliate 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
debtors, or provides for an agreement,
composition, extension or adjustment with its
creditors, or any board of directors or
shareholder action is taken by Lessee or any
Lessee Affiliate in furtherance of any of the
foregoing, whether or not the same is fully
effected or accomplished; or
(ii) An order, judgement or decree is entered by any
court appointing, without the consent of Lessee or
any Lessee Affiliate, a custodian, receiver,
trustee or liquidator of or sequestering any of
Lessee's or any Lessee Affiliate's property, and
any such order, judgement 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
(iii) An involuntary petition against Lessee or any
Lessee Affiliate or other 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
9-2
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 debtors which may
apply to Lessee or any Lessee Affiliate, any court
of competent jurisdiction assumes jurisdiction
over, or custody or control of, Lessee or any
Lessee Affiliate or of all or any material part of
Lessee's or Lessee Affiliates' 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) SUSPENSION OF BUSINESS: Lessee suspends or ceases or takes
substantive steps to suspend or cease to carry on all or a
material part of its business as a Certificated Air Carrier
(other than as a result of a labor dispute with Lessee's
employees); or
(i) RIGHTS AND REMEDIES: Lessee or any other Person claiming by
or through Lessee challenges the existence, validity,
enforceability or priority of the Lease or the rights of
Lessor as lessor or of Owner as owner in respect of the
Aircraft or Financing Parties' Representative as holder of a
first priority Security Interest in the Aircraft and the
Lease; or
(j) CHANGE OF CONTROL: any single person or group of persons
acquire control of Lessee or Guarantor without the previous
consent in writing of Lessor; or
(k) DELIVERY: Lessee fails to comply with its obligation under
Section 4 to accept delivery of the Aircraft or Lessee fails
to comply with its obligations under Section 2 of Part III
of Schedule A to the Aircraft Lease Agreement; or
(l) ADVERSE CHANGE: any event or series of events occurs which,
in the reasonable opinion of Lessor, could be expected to
have a material adverse effect on the financial condition or
operations of Lessee or Guarantor or on the ability of
Lessee to comply with its obligations under the Lease or on
the ability of Guarantor to comply with its obligations
under the Guarantee; or
(m) Letter of Credit:
(i) the issuer of the Letter of Credit (if any) fails
to make any payment under that Letter of Credit
when due; or
(ii) any such Letter of Credit is not in full force or,
for any reason ceases to constitute the legal,
valid and binding obligation of the issuer; or
(iii) any of the events listed in paragraph (g) above
applies to such issuer (references in those
sub-paragraphs to Lessee being deemed to be to the
issuer); or
9-3
(iv) where applicable, any Letter of Credit is not
renewed, extended or reissued within the time, or
replaced when, required by Section 5.14; or
(v) any consent, authorization, license, certificate
or approval of or registration with or declaration
to any Governmental Entity required to be obtained
or maintained by the issuer of the Letter of
Credit in connection with the Letter of Credit is
modified in a materially prejudicial manner or is
withheld, revoked, suspended, cancelled,
withdrawn, terminated or not renewed, or otherwise
ceases to be in full force; or
(vi) and each reference in this paragraph (m) to "the
issuer" shall include a reference to any
confirming bank for the Letter of Credit
(n) REDELIVERY: Lessee falls to return the Aircraft to Lessor on
the Expiry Date in accordance with Section 12; or
(o) LITIGATION: a judgement for the payment of money not covered
by insurance in excess of Six Hundred Fifty Thousand Dollars
($650,000) (or the equivalent thereof in other currencies)
shall be rendered against Lessee or any Lessee Affiliate and
the same shall remain undischarged for a period of 30 days,
unless during such period, execution of such judgement shall
have been effectively stayed by agreement of the parties
involved or by court order or such judgement shall have been
adequately bonded; or
(p) GUARANTEE:
(i) any representation or warranty made by Guarantor
is or proves to have been incorrect in any
material respect when made or deemed to be
repeated or Guarantor fails to make any payment or
comply with any other obligation under the
Guarantee when due; or
(ii) the Guarantor repudiates, revokes or claims that
it has no further obligations under the Guarantee
or the Guarantee ceases to be in full force or,
for any reason, ceases to be the legal, valid and
binding obligation of Guarantor; or
(iii) any of the events listed in paragraph (f)(i) or
(g) above occurs in respect of Guarantor (and
for purposes of this paragraph(s), references
in those paragraphs to Lessee shall be deemed
to be references to Guarantor); or
(q) UNLAWFUL: it becomes unlawful for Lessee to perform any of
its obligations under the Lease or the Lease becomes wholly
or partly invalid or unenforceable; or
(r) TRANSFER/LESSEE REQUIREMENTS: Lessee makes or permits any
assignment or transfer of the Lease, or any interest herein,
or of the right to possession of the Aircraft, the
9-4
Airframe, or any Engine, or any obligations under the Lease,
or Lessee subleases the Aircraft, in any case except as
expressly permitted in the Lease; or Lessee breaches any
provision of Section 8.7; or
(s) ENGINE LOSS: Lessee fails to timely comply with its
obligations under Sections 8.11(a) and 8.11(b) with
respect to an Engine Event of Loss.
(t) OTHER: Such other events, if any, as may be specified in the
Aircraft Lease Agreement.
9-5
SCHEDULE 10
[NOT APPLICABLE]
10-1
SCHEDULE 11
FORM OF LEASE TERMINATION CERTIFICATE
The undersigned hereby certify that the Aircraft Lease Agreement dated as of
__________, _______ between the undersigned Lessor and undersigned Lessee,
and as further described in the Appendix attached hereto, has terminated
(except as described in Section 15.1 of the Common Terms Agreement
incorporated therein) and the aircraft and aircraft engines covered thereby
are no longer subject to the terms thereof. This certificate may be executed
in one or more counterparts each of which when taken together shall
constitute one and the same instrument.
DATED this _______ day of __________, _______
LESSOR LESSEE
[ INSERT LESSOR'S NAME ] [ INSERT LESSEE'S NAME ]
---------------------------------- ------------------------------------
By: By:
------------------------------- ---------------------------------
Title: Title:
------------------------------- ---------------------------------
11-1
SCHEDULE 12
FORM OF LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. 1, dated _______, _______, between
____________, [a corporation organized under the laws of _______]
[, not in its individual capacity, but solely as owner trustee]("Lessor"),
and ______________, a corporation organized under the laws of the __________
("Lessee").
Lessor and Lessee have previously entered into that certain
Aircraft Lease Agreement dated as of _________________. including the Common
Terms Agreement as defined therein (collectively, herein referred to as the
"Agreement" and the defined terms therein being hereinafter used with the
same meaning). The Agreement provides for the execution and delivery from
time to time of a Lease Supplement substantially in the form hereof for the
purpose of leasing the aircraft described below under the Agreement as and
when delivered by Lessor to Lessee in accordance with the terms thereof.
The Agreement and this Lease Supplement relate to the Aircraft,
Engines and Parts as more precisely described below and in the Certificate of
Technical Acceptance. A counterpart of the Agreement is attached hereto and this
Lease Supplement and the Agreement shall form one document.
In consideration of the premises and other good and sufficient
consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under and pursuant to the
Agreement and Lessee hereby accepts, acknowledges receipt of possession and
leases from Lessor under and pursuant to the Agreement, that certain ________
aircraft, and the _______ (___) _______ Engines (each of which Engines has
750 or more rated takeoff horsepower or the equivalent of such horsepower)
described in Schedule 1 hereto, together with the Aircraft Documents and
Records described in the Agreement (the "Delivered Aircraft").
2. The Delivery Date of the Delivered Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof.
3. The Term for the Delivered Aircraft shall commence on the Delivery Date and
shall end on the Expiry Date, with respect to which the Scheduled Expiry Date
shall be [insert date].
4. The amount of Rent for the Delivered Aircraft is set forth in Schedule B to
the Agreement.
12-1
5. Lessee hereby confirms to Lessor that (i) the Delivered Aircraft and each
delivered Engine have been duly marked in accordance with the terms of Section
8.6(a) of the Agreement, (ii) the Aircraft is insured as required by the
Agreement, (iii) the representations and warranties of Lessee referred to in
Section 2.1 of the Agreement are hereby repeated with effect as of the date
first above written, (iv) having inspected the Delivered Aircraft, Lessee
acknowledges that the Delivered Aircraft satisfies all conditions required for
Lessee's acceptance of delivery as set forth in the Agreement, and (v) the
execution and delivery of this Lease Supplement signifies absolute and
irrevocable acceptance by Lessee of the Delivered Aircraft for all purposes
hereof and of the Agreement.
6. All of the terms and provisions of the Agreement are hereby incorporated by
reference in this Lease Supplement to the same extent as if fully set forth
herein.
7. This Lease Supplement may be executed in any number of counterparts; each of
such counterparts, shall for all purposes be deemed to be an original; and all
such counterparts shall together constitute but one and the same Lease
Supplement.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement No. 1 to be duly executed as of the day and year first above written.
LESSOR, LESSEE,
[INSERT LESSOR'S NAME] [INSERT LESSEE'S NAME]
By: By:
------------------------------- --------------------------------
Name: Name:
------------------------------- --------------------------------
Title: Title:
------------------------------- --------------------------------
12-2
SCHEDULE 13
FORM OF LETTER OF CREDIT
IRREVOCABLE STANDBY LETTER OF CREDIT
BENEFICIARY:
Aviation Financial Services, Inc.
Attention: ______________
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
We hereby establish our irrevocable Standby Letter of Credit No.
S/B _________ dated February ____________, 2000 (this "Letter of Credit") in
your favor in connection with the leasing of one Boeing 737-700 aircraft by
Aviation Financial Services Inc. ("Beneficiary") to Aloha Airlines, Inc.
("Customer"). All bank charges relating to this Letter of Credit are for the
account of Customer.
At the request of Customer for account of same, we hereby establish
this Irrevocable Standby Letter of Credit No. S/B ___________ (this "Letter
of Credit") to authorise you to draw on First Hawaiian Bank, Honolulu, Hawaii
an amount or amounts not exceeding in aggregate US$________ (_________ United
States Dollars upon receipt by us of the following demand certificate from
Beneficiary, accompanied by a copy of this Letter of Credit (which
certificate and copy may be presented to us by telecopy at telecopy
no.______________):
"The undersigned are two authorised signatories of Aviation
Financial Services Inc. ("Beneficiary"). Beneficiary hereby
draws upon the Irrevocable Standby Letter of Credit No.
S/B ____________ of first Hawaiian Bank, Honolulu, Hawaii
dated ______________. Beneficiary hereby instructs you to
transfer US$___________ (__________United States Dollars)
to Bankers Trust Company, New York, ABA 021 001033, For the
account of: Aviation Financial Services Inc., Account
Number: ▇▇-▇▇▇-▇▇▇, immediately, with telex confirmation to
us of such payment."
We hereby agree with you that drawings drawn under and in
compliance with the terms of this Letter of Credit received on or prior to
the first anniversary of the date of this Letter of Credit (as the same may
be extended pursuant to the terms hereof, the "Expiration Date") will be duly
honoured upon receipt by us of such a demand certificate. Partial drawings
are permitted. This Letter of Credit shall be automatically renewed for
successive one year periods until at least _______________, unless at least
thirty (30) business days prior to the then current Expiration Date, we
notify you in writing by certified mail, return receipt requested, at the
address set forth above or such other address as Beneficiary may have
notified to us in writing, of our election not to renew this Letter of Credit
beyond the then current Expiration Date. In the event of such non
13-1
renewal, the full amount of this Letter of Credit may be drawn down upon
presentation of a demand certificate as provided above.
If a drawing by you hereunder does not, in any instance, conform to
the provisions of this Letter of Credit, we shall give you prompt notice that
the purported drawing was not effected in accordance with such provisions,
stating the reasons therefor, and that we are holding any documents presented in
connection therewith at your disposal or are returning the same to you, as we
may elect.
This Letter of Credit is transferable and constitutes an obligation to
make payment against documents. Except to the extent the express provisions
hereof conflict, this Letter of Credit is issued subject to the Uniform Customs
and Practice for Documentary Credits (1993 Revision) International Chamber of
Commerce Publication No. 500 ("Uniform Customs").
Sincerely,
FIRST HAWAIIAN BANK
---------------------------------- ------------------------------
Authorised Signature Authorised Signature
▇▇-▇
▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ Limited
Repair Station #ANZZ188C
Christchurch
Aviation Management Systems
Repair Station #ZM7R567Y
Sky Harbor Int'l Airport
Aviation Management Systems
Repair Station #D8LR566Y
Goodyear, AZ
BFGoodrich Aerospace MRO
Repair ▇▇▇▇▇▇▇ #▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇
Conair Aviation Ltd.
Repair Station #AMO 10-75
Abbotsford, B.C.
Spar Aerospace Limited
Repair Station #AMO 03-57
Canada
14-1
SCHEDULE 15
FORM OF TECHNICAL REPORT
AIRCRAFT SPECIFICATIONS
WORKSHEET
GENERAL WEIGHTS
Registration: __________ Max. Taxi Weight: __________
Manufacturer: __________ Max. Take Off Weight: __________
Aircraft Type: __________ Max. Landing Weight: __________
Serial Number: __________ Max. Zero Fuel Weight: __________
Line Number: __________ Operating Empty Weight: __________
Date of Manufacture: __________ Fuel Capacity: __________
Aircraft TT: __________ __________
Aircraft TC: __________ UTILIZATION __________
Data as of: __________ Hours: __________
Cycles: __________
INSPECTIONS
-------------------------------------------------------------------------------
TYPE OF CHECK LAST ACCOMPLISHED TIME
DATE TIME CYCLE INTERVAL REMAINING
-------------------------------------------------------------------------------
C
-------------------------------------------------------------------------------
__ Any major checks coming due in the next 3 months.
ENGINES MFG: ___________
TYPE: ___________
-------------------------------------------------------------------------------
POSITION S/N TT ▇▇ ▇▇▇ ICO
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
15-1
AIRCRAFT SPECIFICATIONS
WORKSHEET
REGISTRATION: _________________
AUXILIARY POWER UNIT
MFG: ___________
TYPE: ___________
S/N TT ▇▇ ▇▇▇
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
LANDING GEAR
OVERHAUL INTERVAL
MAIN: ___________
NOSE: ___________
-----------------------------------------------------------------------
S/N TT ▇▇ ▇▇▇ CSO TIME CYCLES
REMAINING REMAINING
TO O/H TO LIFE
-----------------------------------------------------------------------
NLG
-----------------------------------------------------------------------
LMG
-----------------------------------------------------------------------
RMG
-----------------------------------------------------------------------
INTERIOR EQUIPMENT
QTY LOCATION & TYPE
-----------------------------------------------
Galleys:
-----------------------------------------------
Lavatories:
-----------------------------------------------
Air Stairs:
-----------------------------------------------
Psgr. Seats:
-----------------------------------------------
15-2
AIRCRAFT LEASE NOVATION
AND AMENDMENT AGREEMENT
DATED AS OF FEBRUARY 28, 2001
AVIATION FINANCIAL SERVICES INC.
AS EXISTING LESSOR
ALOHA AIRLINES, INC.
AS LESSEE
CASTLE HARBOUR LEASING INC.
AS NEW LESSOR
IN RESPECT OF
AIRCRAFT LEASE AGREEMENT DATED AS OF MAY 12, 2000
RELATING TO BOEING 737-700 AIRCRAFT BEARING MSN 28641
EXECUTION VERSION
THIS AGREEMENT is made as of February 28, 2001
BETWEEN:
AVIATION FINANCIAL SERVICES INC., a corporation incorporated under the laws of
the State of Delaware having its principal place of business and chief
executive office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
("EXISTING LESSOR");
ALOHA AIRLINES, INC., a corporation incorporated under the laws of the State
of Delaware with its principal place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and its chief executive office at 500 Ala Moana Blvd.,
Two ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ("LESSEE"); and
CASTLE HARBOUR LEASING INC., a corporation incorporated under the laws of the
State of Delaware and having its principal office at c/o GE Capital Aviation
Services, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇.▇.▇. ("NEW
LESSOR").
WHEREAS:
(A) By Aircraft Lease Agreement, dated as of May 12, 2000, between
Lessee and Existing Lessor which incorporates by reference that
certain Aircraft Lease Common Terms Agreement dated as of May 12,
2000 executed by General Electric Capital Corporation and Lessee, as
the same has been amended by that certain letter agreement dated May
12, 2000 entered into between Existing Lessor and Lessee
(collectively, and as amended, the "LEASE"), Existing Lessor has
agreed to lease to Lessee and Lessee has agreed to take on lease one
Boeing Model 737-700 aircraft identified in such Lease as having
manufacturer's serial number 28641 (the "AIRCRAFT") on the terms and
subject to the conditions contained in the Lease.
(B) The parties have agreed that New Lessor should assume the rights,
liabilities and obligations of Existing Lessor under the Lease, and
that Existing Lessor should be released from its liabilities and
obligations under the Lease on the terms and conditions set out
herein.
NOW THEREFORE in consideration of the provisions and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS: In this Agreement, the following expressions shall have
the following meanings:
"EFFECTIVE TIME" bears the meaning ascribed to it in Clause 5; and
"NOVATED LEASE" means an agreement between New Lessor and Lessee on
the same terms as the Lease, subject to the amendments specified in
this Agreement.
1.2 DEFINED TERMS IN LEASE: Capitalised terms used, but not defined, in
this Agreement shall have the respective meanings assigned to them in
the Lease.
1.3 INTERPRETATION: In this Agreement, unless the context otherwise
requires:
(a) a reference to a Clause or a Schedule is a reference to a
clause of or schedule to this Agreement;
(b) a reference to a person includes its successors and permitted
assigns;
(c) words importing the plural shall include the singular, and
vice versa; and
(d) headings are to be ignored in construing this Agreement.
2. NOVATION
2.1 RELEASES, ASSIGNMENTS AND ASSUMPTIONS: As of and with effect from
the Effective Time, and subject to the provisions of Clauses 2.2
and 2.3:
(a) Existing Lessor releases Lessee from Lessee's obligations,
duties and liabilities under the Lease, and Lessee agrees that
it has no further rights against Existing Lessor under the
Lease;
(b) Lessee releases Existing Lessor from Existing Lessor's
obligations, duties and liabilities under the Lease, and
Existing Lessor agrees that it has no further rights against
Lessee under the Lease;
(c) Existing Lessor assigns to New Lessor, and New Lessor assumes,
the rights and obligations, duties and liabilities of Existing
Lessor under the Lease, and New Lessor agrees to perform the
obligations of the Lessor under the Novated Lease;
(d) Lessee consents to and accepts the assumption by New Lessor of
Existing Lessor's rights and obligations, duties and
liabilities under the Lease and New Lessor's agreement to
perform the obligations of the Lessor under the Novated Lease;
(e) Lessee agrees that it will not assert against New Lessor any
claim or defence which it may have or have had against
Existing Lessor under the Lease prior to the Effective Time;
and
(f) Lessee acknowledges that its obligations, duties and
liabilities under the Novated Lease are to New Lessor, and
agrees with New Lessor to perform the obligations of Lessee
under the Novated Lease.
Each of the foregoing events and agreements is conditional upon the
happening of the others and shall occur simultaneously.
2.2 EFFECT: Existing Lessor, New Lessor and Lessee accordingly agree
that, as and with effect from the Effective Time, the Lease is
novated and constitutes an agreement between New Lessor as lessor and
Lessee as lessee on the terms and conditions of the Novated Lease.
2.3 PRE-EFFECTIVE TIME RIGHTS AND REMEDIES: Without prejudice to the
rights of New Lessor under the Novated Lease and in consideration of
the payment by Existing Lessor to Lessee of US$5 (receipt and
sufficiency of which are hereby acknowledged), New Lessor, Lessee and
Existing Lessor agree that Existing Lessor and Lessee shall have the
same rights and remedies against each other pursuant to this Clause
2.3 as each would have had under the Lease in respect of any losses,
liabilities or claims suffered or incurred or brought against or
payments due to each other in respect of or attributable to the
period of the Term prior to the Effective Time as if Existing Lessor
had remained the Lessor under the Lease, and New Lessor shall not be
responsible to Lessee in respect of any such losses, liabilities or
claims, nor shall Lessee exercise any set-off or counterclaim in
respect of any such losses, liabilities or claims against New Lessor.
3. LEASE AMENDMENTS
3.1 AMENDMENTS: As of, and with effect from, the Effective Time the Lease
shall be (and it is hereby) amended as follows:
(a) the expressions THIS LEASE and THE LEASE shall be construed, wherever
they appear in the Lease and wherever the context so permits, as if
they referred to the Novated Lease;
(b) the expression LESSOR shall be construed, wherever it appears in the
Lease, as if it referred to New Lessor in place of Existing Lessor
(other than Recital B to the Aircraft Lease Agreement, in which case
the expression LESSOR shall be construed to mean General Electric
Capital Corporation, a New York corporation);
(c) Clause 3.4 of the Aircraft Lease Agreement shall be amended and
restated in its entirety as follows:
LESSOR'S BANK ACCOUNT: For the purposes of Clause 5.5 of the Common
Terms Agreement, Lessor's bank account and wire transfer particulars,
to which all payments to Lessor shall be made, are at the date hereof:
Bankers Trust Company
New York
ABA 021 001 033
For the account of:
Castle Harbour Leasing Inc
Account Number: ▇▇-▇▇▇-▇▇▇
3.2 REFERENCES IN OTHER DOCUMENTS: With effect from the Effective Time,
all references to the Lease contained in any documents delivered
under or pursuant to the Lease shall be construed as references to
the Novated Lease (as it may be further amended from time to time).
4. DEPOSIT
As of the Effective Time the portion of the Deposit actually paid by
Lessee as of the date hereof ($286,400) shall be transferred by
Existing Lessor to New Lessor, and:
(a) New Lessor acknowledges and agrees with Lessee, with effect from
the Effective Time, that such moneys have been paid by Lessee in
accordance with the Novated Lease and further acknowledges and
agrees that Lessee shall have no further obligation to make any
payment in respect of the Deposit which have become due and
payable before the Effective Time and in respect of which Lessee
has made payment in favour of Existing Lessor;
(b) each of New Lessor, Lessee and Existing Lessor agrees that any
amounts in respect of the Deposit which become due and payable at
or after the Effective Time shall be payable by Lessee to New
Lessor in accordance with the Novated Lease;
(c) Existing Lessor acknowledges that it has released and has no
continuing security or other interest in the moneys and amounts
transferred to New Lessor under this clause.
5. EFFECTIVE TIME
This Agreement shall become effective at the time (the "EFFECTIVE
TIME") at which this Agreement shall have been executed by all of the
parties hereto, and such signatures shall have been delivered to New
Lessor. New Lessor shall notify each of Existing Lessor and Lessee in
writing of the Effective Time promptly upon its determination of the
same. Filing of this Agreement with the FAA shall evidence that the
Effective Time has occurred.
6. MISCELLANEOUS
6.1 CONTINUING EFFECT: Save as provided for herein, the Novated Lease and
all provisions thereof shall continue in full force and effect as the
legal, valid and binding rights and obligations of each of New Lessor
and Lessee enforceable in accordance with their respective terms. All
representations, warranties and agreements contained in this
Agreement shall continue in full force and effect after the Effective
Time.
6.2 VARIATION: The provisions of this Agreement shall not be varied
otherwise than by an instrument in writing executed by or on behalf
of all the parties; provided that New Lessor and Lessee shall be
entitled to amend, modify or vary the terms of the Novated Lease
after the Effective Time without reference to Existing Lessor.
6.3 NOTICES: Every notice, request, demand or other communication under
this Agreement shall be made in accordance with Clause 15.7 of the
Novated Lease and shall be sent to Existing Lessor and Lessee to the
addresses for notices set forth in Clause 6 of the Aircraft Lease
Agreement and every notice, request, demand or other communication to
New Lessor under this Agreement and the Novated Lease shall be sent
to:
c/o GE Capital Aviation Services, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Contracts Leader
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
6.4 COUNTERPARTS: This Agreement may be executed in any number of counterparts
and by any party hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which, when taken
together, shall constitute one and the same agreement.
6.5 LEASE PROVISIONS: The provisions of Clauses 14 (Assignment), 15.2 (Waivers,
Remedies Cumulative), 15.4 (Severability), and 15.8 (Governing Law;
Jurisdiction; WAIVER OF JURY TRIAL) of the Lease shall apply to this
Agreement as if set out in fall herein.
6.6 NAMEPLATES: New Lessor hereby advises Lessee that the Nameplate Inscription
on the Nameplates installed on the Aircraft in accordance with the
requirements of Clause 8.6(a) shall read as follows:
"This Aircraft/Engine is owned by Castle Harbour Leasing Inc., and is
leased to Aloha Airlines, Inc. and may not be operated by any other
person without the prior written consent of Castle Harbour Leasing Inc."
6.7 EXPENSES: New Lessor hereby agrees that it will, upon written request from
Lessee accompanied by written evidence as to the amount of such fees and
expenses reasonably satisfactory to New Lessor, reimburse Lessee, or cause
Lessee to be reimbursed, for the reasonable fees and disbursements of
Lessee's outside legal counsel relating to the review, negotiation and
execution of this Agreement.
6.8 ENTIRE AGREEMENT: The Novated Lease and this Agreement together constitute
the sole and entire agreement between Lessee and New Lessor in relation to
the leasing of the Aircraft, and supersede all previous agreements in
relation to that leasing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first herein written.
SIGNED for and on behalf of AVIATION FINANCIAL SERVICES INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
SIGNED for and on behalf of ALOHA AIRLINES, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
SIGNED for and on behalf of CASTLE HARBOUR LEASING INC.,
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first herein written.
SIGNED for and on behalf of AVIATION FINANCIAL SERVICES INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
SIGNED for and on behalf of ALOHA AIRLINES, INC.
By: /s/ ▇.▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Title: President & CEO
--------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Title: SR VP Planning & Business Dev.
--------------------------------
SIGNED for and on behalf of CASTLE HARBOUR LEASING INC.,
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EXECUTION VERSION
March 20, 2001
Aloha Airlines, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Executive Vice President and Chief Financial Officer
Re: Aircraft Lease Agreement dated as of May 12, 2000 between
Aviation Financial Services Inc. ("AFSI"), as lessor, and Aloha
Airlines, Inc., as Lessee ("LESSEE"), in respect of One Boeing
737-700 Aircraft Bearing MSN 28641 and U.S. Reg. No. N741AL,
which incorporates the terms of that certain Common Terms
Agreement dated as of May 12, 2000 between General Electric
Capital Corporation and Aloha Airlines, Inc. (i) as modified
by that certain Letter Agreement dated May 12, 2000 between
AFSI and Lessee, and (ii) as assigned and novated by that
certain Aircraft Lease Novation and Amendment Agreement among
AFSI, as existing lessor, Castle Harbour Leasing Inc., as new
lessor ("Lessor"), and Lessee (collectively, and as amended or
supplemented from time to time, the "LEASE")
Ladies and Gentlemen:
We refer to the Lease, as defined above, and capitalized terms used
without definition herein have the meanings assigned to them in the Lease.
Lessor and Lessee desire to enter into this Letter Agreement in order to
document their mutual understanding in respect of certain additional changes in
the specifications for the Aircraft to be completed prior to Delivery.
1. SCOPE OF CHANGES TO DELIVERY CONDITIONS. Lessor and Lessee hereby
acknowledge and agree that, notwithstanding anything to the contrary set
forth in the Lease, at Delivery under the Lease, (i) the engine thrust
capacity of the Aircraft shall have been modified from the level currently
specified in the GECAS Detail Specification D6-38808-34 (Revision D) as
incorporated in the Purchase Agreement No. 1905 dated as of April 1996 (the
"PURCHASE AGREEMENT") between General Electric Capital Corporation, as buyer,
and The Boeing Company, as seller, to include 26,000 lbs. Engine thrust bump
option (the "ENGINE THRUST BUMP UPGRADE"), and (ii) the Aircraft shall be
modified to include partial provisions for the installation of the Honeywell
SATCOM system (the "SATCOM PROVISIONS"). Completion of the Engine Thrust Bump
Upgrade and the installation of the
SATCOM Provisions shall each be deemed one of the "Delivery Condition
Requirements" for all purposes of the Lease.
2. COST OF CHANGES AND EFFECT ON RENT.
[This provision has been omitted as confidential information, and
is separately filed with the Commission.]
3. LIMITATION ON AMENDMENT. Except as expressly modified by this
Letter Agreement, all of the terms and provisions of the Lease remain in full
force and effect and are hereby ratified and confirmed by the parties.
Please indicate your acceptance of and agreement with the terms set
forth in this Letter Agreement by signing in the space provided below and
return one fully-executed counterpart of this Letter Agreement to Lessor.
Very truly yours,
CASTLE HARBOUR LEASING INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Title: Vice President
--------------------------------
ACKNOWLEDGED AND AGREED.
ALOHA AIRLINES, INC.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Please indicate your acceptance of and agreement with the terms set
forth in this Letter Agreement by signing in the space provided below and
return one fully-executed counterpart of this Letter Agreement to Lessor.
Very truly yours,
CASTLE HARBOUR LEASING INC.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
ACKNOWLEDGED AND AGREED.
ALOHA AIRLINES, INC.
By: /s/ ▇. ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Title: President & CEO
--------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Title: SR VP Planning & Business Dev
--------------------------------
LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. 1, dated March 29, 2001 between Castle Harbour
Leasing Inc., a corporation organized under the laws of the State of Delaware
("Lessor"), and Aloha Airlines, Inc., a corporation organized under the laws of
the State of Delaware ("Lessee").
Lessor and Lessee have previously entered into that certain Aircraft
Lease Agreement dated as of May 12, 2000, including the Common Terms Agreement
as defined therein (collectively, herein referred to as the "Agreement" and the
defined terms therein being hereinafter used with the same meaning). The
Agreement provides for the execution and delivery from time to time of a Lease
Supplement substantially in the form hereof for the purpose of leasing the
aircraft described below under the Agreement as and when delivered by Lessor to
Lessee in accordance with the terms thereof.
The Agreement and this Lease Supplement relate to the Aircraft,
Engines and Parts as more precisely described below and in the Certificate of
Technical Acceptance. A counterpart of the Agreement is attached hereto and
this Lease Supplement and the Agreement shall form one document.
In consideration of the premises and other good and sufficient
consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under and pursuant to
the Agreement and Lessee hereby accepts, acknowledges receipt of possession and
leases from Lessor under and pursuant to the Agreement, that certain Boeing
737-76N aircraft, and the two (2) CFM56-7B26 Engines (each of which Engines has
750 or more rated takeoff horsepower or the equivalent of such horsepower)
described in Schedule 1 hereto, together with the Aircraft Documents and
Records described in the Agreement (the "Delivered Aircraft").
2. The Delivery Date of the Delivered Aircraft is the date of this
Lease Supplement set forth in the opening paragraph hereof.
3. The Term for the Delivered Aircraft shall commence on the Delivery
Date and shall end on the Expiry Date, with respect to which the Scheduled
Expiry Date shall be March 29, 2016.
4. The amount of Rent for the Delivered Aircraft is set forth in
Schedule B to the Agreement.
5. Lessee hereby confirms to Lessor that (i) the Delivered Aircraft
and each delivered Engine have been duly marked in accordance with the terms of
Section 8.6(a) of the Agreement, (ii) the Aircraft is insured as required by
the Agreement, (iii) the representations and warranties of Lessee referred to
in Section 2.1 of the Agreement are hereby repeated with effect as of the date
first above written, (iv) having inspected the Delivered Aircraft, Lessee
acknowledges that the Delivered Aircraft satisfies all conditions required for
Lessee's acceptance of delivery as set forth
in the Agreement, and (v) the execution and delivery of this Lease Supplement
signifies absolute and irrevocable acceptance by Lessee of the Delivered
Aircraft for all purposes hereof and of the Agreement.
6. All of the terms and provisions of the Agreement are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
7. This Lease Supplement may be executed in any number of counterparts;
each of such counterparts, shall for all purposes be deemed to be an original;
and all such counterparts shall together constitute but one and the same Lease
Supplement.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement No. 1 to be duly executed as of the day and year first above
written.
LESSOR, LESSEE,
CASTLE HARBOUR LEASING INC. ALOHA AIRLINES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By:___________________________
------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name:_________________________
----------------------
Title: Vice President Title: _______________________
---------------------
By: __________________________
Name:_________________________
Title:________________________
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement No. 1 to be duly executed as of the day and year first above
written.
LESSOR, LESSEE,
CASTLE HARBOUR LEASING INC. ALOHA AIRLINES, INC.
By:___________________________ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Name:_________________________ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Title:________________________ Title: EXEC. V.P. & C.F.O.
------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Title: SENIOR V.P. PLANNING & BUS DEV.
--------------------------------
SCHEDULE 1
Airframe Manufacturer: Boeing
Aircraft Model and Series: 737-76N
Registration ▇▇▇▇: N741AL
Manufacturer's Serial Number: 28641
Engine Manufacturer and Model: CFMI Model CFM56-7B26
Engine Serial Numbers: 889274 and 888281
March 29, 2001
Aloha Airlines, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Executive Vice
President and Chief Financial Officer
Re: Aircraft Lease Agreement dated as of May 12, 2000 between
Aviation Financial Services Inc. ("AFSI"), as lessor, and
Aloha Airlines, Inc., as Lessee ("LESSEE"), in respect of One
Boeing 737-700 Aircraft Bearing MSN 28641 and U.S. Reg. No.
N741AL, which incorporates the terms of that certain Common
Terms Agreement dated as of May 12, 2000 between General
Electric Capital Corporation and Aloha Airlines, Inc. (i) as
modified by that certain Letter Agreement dated May 12, 2000
between AFSI and Lessee, (ii) as assigned and novated by that
certain Aircraft Lease Novation and Amendment Agreement among
AFSI, as existing lessor, Castle Harbour Leasing Inc., as new
lessor ("Lessor"), and Lessee, (iii) as modified by that
certain Letter Agreement dated March 20, 2001 (collectively,
and as amended or supplemented from time to time, the "LEASE")
Ladies and Gentlemen:
We refer to the Lease, as defined above, and capitalized terms used
without definition herein have the meanings assigned to them in the Lease.
Lessor and Lessee desire to enter into this Letter Agreement in order to
document their mutual understanding in respect of the determination of the
actual amount of Rent pursuant to Part III of Schedule B to the Lease as well
as in respect of an undertaking by Lessee with respect to a legal opinion.
1. RENT. [This provision has been omitted as confidential information,
and is separately filed with the Commission.]
2. UNDERTAKING BY LESSEE. Lessee hereby covenants and undertakes to
obtain, and to deliver to Lessor on or before April 23, 2001 an updated legal
opinion from ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Lessee's regulatory counsel, which
shall be in form and substance reasonably satisfactory to Lessor, as to (i)
Lessee's possession of an air carrier operating certificate issued by the
Secretary of Transportation
pursuant to Chapter 447 of Title 49 of the United States Code for aircraft
capable of carrying 10 or more individuals or 6,000 pounds or more of cargo and
(ii) Lessee's possession of a Certificate of Public Convenience and Necessity
issued by the U.S. Department of Transportation authorizing Lessee to engage in
both interstate and foreign carriage of passengers and cargo. Lessee and Lessor
mutually agree and acknowledge that, if Lessee fails to deliver the foregoing
updated legal opinion to Lessor within the period specified in the preceding
sentence, such failure shall constitute an "Event of Default" for all purposes
of the Lease and Lessor shall be entitled to any and all rights and remedies
available to Lessor under the Lease and applicable Law.
3. LIMITATION ON AMENDMENT. Except as expressly modified by this
Letter Agreement, all of the terms and provisions of the Lease remain in full
force and effect and are hereby ratified and confirmed by the parties.
Please indicate your acceptance of and agreement with the terms set
forth in this Letter Agreement by signing in the space provided below and
return one fully-executed counterpart of this Letter Agreement to Lessor.
Very truly yours,
CASTLE HARBOUR LEASING INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------
Title: Vice President
-------------------------
ACKNOWLEDGED AND AGREED.
ALOHA AIRLINES, INC.
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
Please indicate your acceptance of and agreement with the terms set
forth in this Letter Agreement by signing in the space provided below and
return one fully-executed counterpart of this Letter Agreement to Lessor.
Very truly yours,
CASTLE HARBOUR LEASING INC.
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
ACKNOWLEDGED AND AGREED.
ALOHA AIRLINES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
Title: EXECUTIVE Vice President & CFO
----------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------
Title: Senior Vice President
----------------------------
Planning & Business Development
EXECUTION VERSION
-----------------
AMENDMENT TO
AIRCRAFT LEASE COMMON TERMS AGREEMENT
Dated December 14, 2001
between
GENERAL ELECTRIC CAPITAL CORPORATION
as Lessor
and
ALOHA AIRLINES, INC.
as Lessee
THIS AMENDMENT TO AIRCRAFT LEASE COMMON TERMS AGREEMENT is made on
December 14, 2001 (this "AGREEMENT")
BETWEEN:
GENERAL ELECTRIC CAPITAL CORPORATION, a company incorporated under the laws of
Delaware whose principal office is at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
▇.▇.▇. ("GE CAPITAL"); and
ALOHA AIRLINES, INC., a company incorporated under the laws of Delaware whose
principal place of business is at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇.▇.▇.
and its chief executive office at 500 Ala Moana Blvd., Two ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇.▇.▇. ("ALOHA").
WHEREAS:
(A) GE Capital and Aloha have previously entered into that certain Aircraft
Lease Common Terms Agreement dated as of May 12, 2000 (the "CTA");
(B) GE Capital and Aloha desire to amend the CTA on the terms set forth in
this Agreement.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS: From and after the effective date of this Agreement
(as notified to Lessee pursuant to the Notice), all references herein
to the "Lease" mean the integrated agreement consisting of the various
documents comprising the Lease as defined in Schedule 1 to the CTA as
the same is amended by this Agreement and all references in the Lease
to "the Lease," the "Aircraft Lease Agreement," "hereunder" or the like
shall mean the Lease as amended by this Agreement. Capitalized terms
used herein but not defined shall have the respective meanings ascribed
to such terms in the Lease.
1.2 CONSTRUCTION: The provisions of Clause 1.2 (Construction) of the CTA
shall apply to this Agreement as if the same were set out in full
herein.
2. AMENDMENT TO CTA
2.1 Schedule 7 to the CTA is hereby amended to read in its entirety as set
forth on Schedule 7 attached to this Agreement.
3. MISCELLANEOUS
3.1 FURTHER ASSURANCES: Aloha agrees from time to time to do and perform
such other and further acts and execute and deliver any and all such
other instruments as may be required by law or reasonably requested by
GE Capital to establish, maintain and protect the rights and remedies
of GE Capital and to carry out and effect the intent and purpose of
this Agreement and of any Lease in which the CTA as amended by this
Agreement may be incorporated.
1
3.2 COUNTERPARTS: This Agreement may be executed in any number of separate
counterparts, and each counterpart shall when executed and delivered be
an original document, but all counterparts shall together constitute
one and the same instrument.
3.3 GOVERNING LAW: The provisions of Clause 15.8 (Governing Law;
Jurisdiction; WAIVER OF JURY TRIAL) of the CTA shall apply to this
Agreement as if the same were set out in full herein.
3.4 VARIATION: The provisions of this Agreement shall not be varied
otherwise than by an instrument in writing executed by or on behalf of
GE Capital and Aloha.
3.5 INVALIDITY OF ANY PROVISION: If any provision of this Agreement becomes
invalid, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions shall
not in any way be affected or impaired.
3.6 COSTS AND EXPENSES: Aloha shall pay to GE Capital on demand all fees,
costs and expenses incurred or payable by GE Capital in connection with
the preparation, negotiation and completion of this Agreement and
performance of the transactions contemplated hereby.
4. CONTINUATION OF COMMON TERMS AGREEMENT
Save as expressly amended by this Agreement, the CTA shall continue in
full and unvaried force and effect as the legal, valid and binding
rights and obligations of each of GE Capital and Aloha enforceable in
accordance with their respective terms.
2
IN WITNESS WHEREOF the parties hereto have executed this Agreement the
day and year first above written.
Signed for and on behalf of
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇
----------------------------
Title: Vice President
----------------------------
Signed for and on behalf of
ALOHA AIRLINES, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
IN WITNESS WHEREOF the parties hereto have executed this Agreement the
day and year first above written.
Signed for and on behalf of
GENERAL ELECTRIC CAPITAL CORPORATION
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Signed for and on behalf of
ALOHA AIRLINES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
Title: Exec. Vice President & CFO
----------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------
Title: SENIOR VICE PRESIDENT
PLANNING & BUSINESS DEVELOPMENT
----------------------------
SCHEDULE 7
INSURANCE REQUIREMENTS
1.1 TYPES OF INSURANCE
The Insurances required to be maintained are as follows:
(a) HULL ALL RISKS of loss or damage while flying, taxiing and on
the ground with respect to the Aircraft on an agreed value
basis for not less than the Agreed Value and not more than
110% of the Agreed Value and with a deductible not exceeding
the Deductible Amount;
(b) HULL WAR Risks AND ALLIED PERILS in accordance with LSW555B or
its equivalent form reasonably acceptable to Lessor (or an
agreement of the United States Government to insure against or
indemnify for substantially the same risks) in an amount not
less than 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 for
like kind and quality value and including engine test and
running risks; and
(d) COMPREHENSIVE 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
for 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 in line with prudent market practice for comparable
airlines, operating similar equipment in similar
circumstances. In addition, without limitation of the
requirements of the preceding sentence (and notwithstanding
anything to the contrary contained in the preceding sentence),
the Lessee shall in all events maintain war risk and allied
perils liability insurance in accordance with London form
AVN52C (as in effect on September 1, 2001) or its equivalent
form reasonably acceptable to Lessor (or an agreement of the
United States Government to insure against or indemnify for
substantially the same risks), from time to time, with respect
to the Aircraft in an amount not less than the Minimum
Liability Coverage.
1.2 TERMS OF HULL AND SPARES INSURANCE
All required hull and spares insurance, so far as it relates to the Aircraft,
will:
(a) LOSS PAYEE: name Lessor, as loss payee (without imposing on
Lessor any obligation imposed on the insured, including the
liability to pay any calls, commissions or premiums);
(b) PAYMENT OF LOSSES: Losses will be payable in Dollars to Lessor
for all amounts up to the Agreed Value and to Lessee for any
excess above the Agreed Value
4
(which excess shall not exceed 10% of the Agreed Value),
except where the insurance payment does not exceed the Damage
Notification Threshold, and no Default is in existence, in
which case the loss will be settled with and paid to Lessee;
(c) 50/50 PROVISION: if separate Hull "all risks" and "war risks"
insurances are arranged, include a 50/50 provision in
accordance with market practice (AVS. 103 is the current
London market language); and
(d) NO OPTION TO REPLACE: confirm that the insurers are not
entitled to replace the Aircraft in the event of an insured
Event of Loss and are not entitled to replace any Engine in
the event of an Engine Event of Loss with respect to such
Engine.
1.3 TERMS OF LIABILITY INSURANCE
All required liability insurances will:
(a) ADDITIONAL INSUREDS: include each Indemnitee, as additional
insureds for its respective rights and interests, warranted,
each as to itself only, no operational interest (without
imposing on any such Person any obligation imposed on the
insured, including the liability to pay any calls, commissions
or premiums);
(b) SEVERABILITY: include a severability of interests clause which
provides that the insurance, except for the limit of
liability, will operate to give each insured the same
protection as if there were a separate policy issued to each
insured; and
(c) PRIMARY POLICY: 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, any Indemnitee or Lessee has the benefit so as
to reduce the amount payable to the additional insureds under
such policies.
1.4 TERMS OF ALL INSURANCES
All Insurances will:
(a) INDUSTRY PRACTICE: be in accordance with standard industry
practice for airlines operating similar aircraft in similar
circumstances;
(b) DOLLARS: provide cover denominated in Dollars;
(c) WORLDWIDE: operate on a worldwide basis subject to such
limitations and exclusions as are in line with industry
practice obtained by prudent United States-based international
air carriers;
(d) BREACH OF WARRANTY: 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 assureds 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;
5
(e) SUBROGATION: provide that the insurers will hold harmless and
waive any rights of recourse or subrogation against the
additional insureds to the extent Lessee has waived its rights
against the additional insureds in the Lease;
(f) PREMIUMS: provide that the additional insureds 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 set-off, counter-claim or other deduction, by
attachment or otherwise, in respect of any premium due against
the respective interests of the additional insureds other than
outstanding premiums relating to the Aircraft, any Engine or
Part the subject of the relevant claim;
(g) CANCELLATION/CHANGE: provide that the Insurances will continue
unaltered for the benefit of the additional insureds for at
least 30 days after written notice by registered mail or telex
of any cancellation, change, event of non-payment of premium
or installment thereof has been sent by insurer(s) to Lessor,
or where an insurance broker is appointed to the insurance
broker who shall promptly send on such notice to Lessor,
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; and
(h) [NOT APPLICABLE]
(i) [INTENTIONALLY OMITTED.]
(j) INDEMNITIES: accept and insure the indemnity provisions of
the Lease to the extent of the risks covered by the policies.
1.5 DEDUCTIBLES
Lessee shall be responsible for any and all deductibles under the Insurances.
1.6 APPLICATION OF INSURANCE PROCEEDS
The Insurances will be endorsed to provide for payment of proceeds as follows:
(a) EVENT OF LOSS: all insurance payments up to the Agreed Value
received as the result of an Event of Loss occurring during
the Term will be paid to Lessor as loss payee and any amount
in excess of the Agreed Value (which excess shall not exceed
10% of the Agreed Value) shall be paid to Lessee;
(b) EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance
proceeds of any 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 the appropriate repair facility, and applied
in payment (or paid to Lessee and/or Lessor as reimbursement)
for repairs or replacement property upon Lessor being
satisfied that the repairs or replacement have been effected
in accordance with the Lease.
(c) BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in
amounts below
6
the Damage Notification Threshold shall be paid by the insurer
directly to Lessee;
(d) LIABILITY PROCEEDS: all insurance proceeds in respect of
third party liability will be paid by the insurers to the
relevant third party in satisfaction of the relevant liability
or to Owner, Lessor, Financing Partners' Representative or
Lessee, as the case may be, in reimbursement of any payment so
made;
(e) DEFAULT: notwithstanding any of the foregoing paragraphs, 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 Lessor, Owner or Financing Parties' Representative,
as the case may be, or retained to be applied toward payment
of any amounts which may be or become payable by Lessee in
such order as Lessor or Owner, as the case may be, may elect
until such time as no Default is continuing and then applied
as described above; and to the extent that insurance proceeds
are paid to Lessee, Lessee agrees to hold such proceeds in
trust and comply with the foregoing provisions and apply or
pay over such proceeds as so required.
1.7 UNITED STATES GOVERNMENTAL INDEMNITY
Notwithstanding any of the foregoing paragraphs, in the event of a Permitted
Sub-Lease to, or a requisition of use by, the United States or any Governmental
Entity whose obligations have the full faith and credit of the federal
Government of the United States, Lessor agrees to accept in lieu of insurance
required hereunder indemnification or insurance from the United States or such
a Governmental Entity in a form reasonably acceptable to Lessor and Owner and
against such risks and in such amounts and on such terms such that when added
to the Insurance maintained by Lessee, Lessee is in full compliance with the
requirements of Section 9 and this Schedule.
7
EXECUTION VERSION
AGREEMENT AND AMENDMENT TO AIRCRAFT LEASE AGREEMENT
DATED DECEMBER 14, ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LEASING INC.
AS LESSOR
AND
ALOHA AIRLINES, INC.
AS LESSEE
AGREEMENT AND AMENDMENT TO AIRCRAFT LEASE AGREEMENT
IN RESPECT OF
AIRCRAFT LEASE AGREEMENT DATED AS OF MAY 12, 2000
RELATING TO BOEING MODEL 737-700 AIRCRAFT MANUFACTURER'S SERIAL NUMBER 28641
THIS AGREEMENT is made on December 14,2001 ("AGREEMENT")
BETWEEN:
CASTLE HARBOUR LEASING INC., a company incorporated under the laws of
Delaware whose principal office is at c/o GE Capital Aviation Services, Inc.,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇.▇.▇. ("LESSOR"); and
ALOHA AIRLINES, INC., a company incorporated under the laws of Delaware whose
principal place of business is at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
▇.▇.▇. and its chief executive office at 500 Ala Moana Blvd., Two ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇.▇.▇. ("LESSEE").
WHEREAS:
(A) By an Aircraft Lease Agreement dated as of May 12, 2000 ("ORIGINAL
LEASE") between Lessee, as lessee, and Aviation Financial Services
Inc. ("AFSI"), as lessor, which incorporates by reference that
certain Aircraft Lease Common Terms Agreement dated as of May 12,
2000 executed by General Electric Capital Corporation and Lessee (the
"CTA"), as the same has been amended by (i) that certain letter
agreement dated May 12, 2000 entered into between AFSI and Lessee,
(ii) that certain Aircraft Lease Novation and Amendment Agreement
dated as of February 28, 2001 (the "NOVATION AGREEMENT") among AFSI,
as existing lessor, Lessor, as new lessor and Lessee, (iii) that
certain letter agreement dated March 20, 2001 entered into between
Lessor and Lessee, (iv) that certain letter agreement dated March 29,
2001 entered into between Lessor and Lessee, and (v) Lease Supplement
No. 1 dated March 29, 2001 entered into between Lessor and Lessee
(collectively, and as amended or supplemented from time to time, the
"LEASE") Lessor leased to Lessee and Lessee took on lease one Boeing
model 737-700 aircraft with manufacturer's serial number 28641 (the
"AIRCRAFT") on the terms and subject to the conditions contained
therein.
(B) The Original Lease, together with the Novation Agreement and Lease
Supplement No. 1 thereto, have been recorded by the FAA and assigned
conveyance numbers by the FAA as set forth on Schedule I hereto.
(C) Lessee has requested Lessor to permit Lessee to defer the payment of
a portion of the Rent and to amend the Lease to change certain
provisions therein subject to the terms and conditions of this
Agreement.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS: Capitalised terms used herein but not defined shall have
the respective meanings ascribed to such terms in the Lease.
1.2 CONSTRUCTION: The provisions of Clause 1.2 (Construction) of the CTA
shall apply to this Agreement as if the same were set out in full
herein. From and after the effective date of this Agreement (as
notified to Lessee pursuant to the Notice), all references in the
Lease to "the Lease," the "Aircraft Lease Agreement," "hereunder" or
the like shall mean the Lease as amended by this Agreement.
1
2. REPRESENTATIONS AND WARRANTIES
Lessee hereby repeats the representations and warranties in Clause 2.1
of the CTA as if made with reference to the facts and circumstances
existing as at the date hereof and as if the references in such
representations and warranties to the "Lease" referred to the Lease as
amended by this Agreement.
3. DEFERRAL OF RENT
3.1. DEFINITION OF DEFERRED AMOUNT: The term "Deferred Amount" is defined
in Clause 2 of Schedule 2 hereto.
3.2 TERMS OF RENT DEFERRAL: Each Deferred Amount shall be deferred as set
forth in Clause 3 of Schedule 2 hereto.
4. LETTER OF CREDIT
4.1 DEFINITION OF LETTER OF CREDIT PROCEEDS: The term "Letter of Credit
Proceeds" is defined in Clause 2 of Schedule 2 hereto.
4.2 APPLICATION OF LETTER OF CREDIT PROCEEDS: The Letter of Credit
Proceeds shall be applied as set forth in Clause 4.1 of Schedule 2
hereto.
4.3 RESTORATION OF LETTER OF CREDIT: The Letter of Credit shall be
restored by Lessee as set forth in Clause 4.2 of Schedule 2 hereto.
4.4 REMAINING AMOUNTS AVAILABLE UNDER LETTER OF CREDIT: Lessor shall
continue to hold the Letter of Credit and shall be entitled to draw
the remaining amounts available for drawing in accordance with the
Lease, and Lessee shall ensure that the Letter of Credit complies with
all requirements of Section 5.14 of the CTA and Section 3.1 of the
Lease, except as set forth in Clause 4.2 of Schedule 2 hereto.
5. AMENDMENTS TO LEASE
5.1 AMENDMENT TO CLAUSE 1.1: The following new definition is hereby added,
to Clause 1.1 of the Lease:
DEFERRED AMOUNT has the meaning assigned to it in the Agreement and
Amendment to Aircraft Lease Agreement dated December 14, 2001
between Lessor and Lessee.
5.2 EVENTS OF DEFAULT:
(a) In lieu of paragraph (a) (NON-PAYMENT) of Schedule 9 to the CTA,
the following shall constitute an Event of Default:
NON-PAYMENT: Lessee fails to make any payment of Rent,
Supplemental Rent or any other amount payable under the Lease
(including, without limitation, any repayment of a Deferred
Amount due under the Agreement and Amendment to Aircraft Lease
Agreement dated December 14, 2001 between Lessor and Lessee) on
the due date and such failure continues for three (3) Business
Days or more.
2
(b) In addition to the Events of Default set forth in paragraph (m)
of Schedule 9 to the CTA, the following shall constitute an Event
of Default:
the Letter of Credit is not restored as set forth in Clause
4.3 of the Agreement and Amendment to Aircraft Lease
Agreement dated December 14, 2001 between Lessor and Lessee.
5.3 RIGHTS AND REMEDIES ON DEFAULT: In addition to the rights and remedies
set forth in Clause 13.2 of the CTA, the following shall be an
additional right of Lessor:
Upon the occurrence of an Event of. Default, the entire
outstanding Deferred Amounts, together with interest thereon
at the Interest Rate, shall become immediately due and
payable by Lessee.
5.4 AMENDMENT TO THE CTA. Lessor and Lessee hereby acknowledge and agree
that (i) the Amendment of Aircraft Lease Common Terms Agreement
attached hereto as Schedule 3 is hereby incorporated by this reference
and made an integral part of the Lease, and (ii) all references in the
Lease to the "CTA" or "Common Terms Agreement" shall mean the CTA as
amended by such amendment.
6. CONDITIONS PRECEDENT
6.1 CONDITIONS: This Agreement shall take effect upon issuance by Lessor
of a notice to Lessee (the "NOTICE") confirming the satisfaction of
each of the following conditions and receipt of the following
documents by Lessor on or prior to December 31, 2001:
(a) RESOLUTIONS: a copy of a resolution of the board of directors of
Lessee approving the terms of, and transactions contemplated by,
this Agreement, resolving that it enter into this Agreement, and
authorising a specified person or persons to execute this
Agreement;
(b) LEGAL OPINION: a legal opinion from Lessee's counsel in a form
reasonably satisfactory to Lessor, and
(C) OTHER: such other documents as Lessor may reasonably request.
6.2 FURTHER CONDITIONS PRECEDENT: Lessor's obligations under this
Agreement are subject to the further conditions precedent that as of
the date of issuance of the Notice:
(a) the representations and warranties of Lessee under Clause 2 of
this Agreement and under Clause 2.1 of the CTA shall be true and
correct; and
(b) no Default shall have occurred and be continuing or might result
from the leasing of the' Aircraft to Lessee under the Lease as
amended hereby.
6.3 WAIVER: The conditions specified in Clauses 6.1 and 6.2 are for the
sole benefit of Lessor and may be waived or deferred (in whole or in.
part and with or without conditions) by Lessor.
7. MISCELLANEOUS
7.1 FURTHER ASSURANCES: Lessee agrees from time to time to do and perform
such other and further acts and execute and deliver any and all such
other instruments as may be required by law or
3
reasonably requested by Lessor to establish, maintain and protect the
rights and remedies of Lessor and to carry out and effect the intent
and purpose of this Agreement.
7.2 COUNTERPARTS: This Agreement may be executed in any number of separate
counterparts, and each counterpart shall when executed and delivered
be an original document, but all counterparts shall together
constitute one and the same instrument.
7.3 GOVERNING LAW: The provisions of Clause 15.8 (Governing Law;
Jurisdiction; WAIVER OF JURY TRIAL) of the CTA shall apply to this
Agreement as if the same were set out in full herein.
7.4 VARIATION: The provisions of this Agreement shall not be varied
otherwise than by an instrument in writing executed by or on behalf of
Lessor and Lessee.
7.5 INVALIDITY OF ANY PROVISION: If any provision of this Agreement
becomes invalid, illegal or unenforceable in any respect under any
law, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired.
7.6 COSTS AND EXPENSES: Whether or not the conditions specified in Clause
6 are fulfilled, Lessee shall pay to Lessor on demand all fees, costs
and expenses incurred or payable by Lessor in connection with the
preparation, negotiation and completion of this Agreement and
performance of the transactions contemplated hereby.
8. CONTINUATION OF LEASE
Save as expressly amended by this Agreement, the Lease shall continue
in full and unvaried force and effect as the legal, valid and binding
rights and obligations of each of Lessor and Lessee enforceable in
accordance with their respective terms.
4
IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.
Signed for and on behalf of
CASTLE HARBOUR LEASING INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Title: Vice President
--------------------------------
Signed for and on behalf of
ALOHA AIRLINES, INC.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.
Signed for and on behalf of
CASTLE HARBOUR LEASING INC.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Signed for and on behalf of
ALOHA AIRLINES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Title: Exec. Vice President & CFO
--------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
SENIOR VICE PRESIDENT
Title: PLANNING & BUSINESS DEVELOPMENT
--------------------------------
SCHEDULE 1
Aircraft Lease Agreement dated as of May 12, 2000 between Aviation
Financial Services Inc., as lessor, and Aloha Airlines, Inc., as lessee,
which was recorded by the Federal Aviation Administration on May 1, 2001 and
assigned Conveyance No. H101899, as assigned and supplemented by the
following described instruments:
DOCUMENT FAA RECORDING DATE FAA CONVEYANCE NO.
-------- ------------------ ------------------
Aircraft Lease Novation and 05/01/01 H101899
Amendment Agreement among
Aviation Financial Services Inc.,
as existing lessor, Aloha Airlines,
Inc., as lessee, and Castle Harbour
Leasing Inc., as new lessor
Lease Supplement No. 1 05/01/01 H101899
Schedule 1-1
SCHEDULE 2
CERTAIN FINANCIAL TERMS
1. CONFIDENTIALITY
Lessor and Lessee understand that the commercial and financial information
contained in this Schedule 2 to this Agreement are considered by Lessor and
Lessee as proprietary and confidential. Lessor and Lessee each hereby agree,
and any of their assignees, upon becoming such shall agree that it will treat
this Schedule 2 as proprietary and confidential and will not without the
prior written consent of the other, disclose or cause to be disclosed, the
terms hereof to any person or entity, except to its employees, counsel,
underwriters and auditors as necessary or appropriate for the leasing
transaction which is the subject hereof, or except (a) as may be required by
applicable law or pursuant to an order, or a valid and binding request,
issued by any court or other Government Entity having jurisdiction over
Lessor, Lessee or the assignee of either of them, as the case may be, or (b)
as necessary to enable Lessor or its assignee to make transfers, assignments
or other dispositions to potential transferees, assignees or participants of
its interest in and to the Lease and this Agreement. In connection with any
such disclosure or any filing of the information contained herein pursuant to
any such applicable law, Lessor, Lessee or the assignee of either of them, as
the case may be, shall request and use its best reasonable efforts to obtain
confidential treatment of this Schedule 2 and the other party will cooperate
in making and supporting any such request for confidential treatment.
2. DEFINITIONS OF CERTAIN TERMS
[This provision has been omitted as confidential information, and
is separately filed with the Commission.]
3. TERMS OF RENT DEFERRAL
[This provision has been omitted as confidential information, and
is separately filed with the Commission.]
Schedule 2-1
4. LETTER OF CREDIT
4.1 [This provision has been omitted as confidential information, and
is separately filed with the Commission.]
4.2 [This provision has been omitted as confidential information, and
is separately filed with the Commission.]
Schedule 2-2
SCHEDULE 3
AMENDMENT TO
AIRCRAFT LEASE COMMON TERMS AGREEMENT
Schedule 2-4
EXECUTION VERSION
-----------------
AMENDMENT TO
AIRCRAFT LEASE COMMON TERMS AGREEMENT
Dated December 14, 2001
between
GENERAL ELECTRIC CAPITAL CORPORATION
as Lessor
and
ALOHA AIRLINES, INC.
as Lessee
THIS AMENDMENT TO AIRCRAFT LEASE COMMON TERMS AGREEMENT is made on December 14,
2001 (this "Agreement")
BETWEEN:
GENERAL ELECTRIC CAPITAL CORPORATION, a company incorporated under the laws of
Delaware whose principal office is at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
▇.▇.▇. ("GE CAPITAL"); and
ALOHA AIRLINES, INC., a company incorporated under the laws of Delaware whose
principal place of business is at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇.▇.▇.
and its chief executive office at 500 Ala Moana Blvd., Two ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇.▇.▇. ("ALOHA").
WHEREAS:
(A) GE Capital and Aloha have previously entered into that certain Aircraft
Lease Common Terms Agreement dated as of May 12, 2000 (the "CTA");
(B) GE Capital and Aloha desire to amend the CTA on the terms set forth in
this Agreement.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS: From and after the effective date of this Agreement
(as notified to Lessee pursuant to the Notice), all references herein
to the "Lease" mean the integrated agreement consisting of the various
documents comprising the Lease as defined in Schedule 1 to the CTA as
the same is amended by this Agreement and all references in the Lease
to "the Lease," the "Aircraft Lease Agreement," "hereunder" or the like
shall mean the Lease as amended by this Agreement. Capitalized terms-
used herein but not defined shall have the respective meanings ascribed
to such terms in the Lease.
1.2 CONSTRUCTION: The provisions of Clause 1.2 (Construction) of the CTA
shall apply to this Agreement as if the same were set out in full
herein.
2. AMENDMENT TO CTA
2.1 Schedule 7 to the CTA is hereby amended to read in its entirety as set
forth on Schedule 7 attached to this Agreement.
3. MISCELLANEOUS
3.1 FURTHER ASSURANCES: Aloha agrees from time to time to do and perform
such other and further acts and execute and deliver any and all such
other instruments as may be required by law or reasonably requested by
GE Capital to establish, maintain and protect the rights and remedies
of GE Capital and to carry out and effect the intent and purpose of
this Agreement and of any Lease in which the CTA as amended by this
Agreement may be incorporated.
1
3.2 COUNTERPARTS: This Agreement may be executed in any number of separate
counterparts, and each counterpart shall when executed and delivered be
an original document, but all counterparts shall together constitute
one and the same instrument.
3.3 GOVERNING LAW: The provisions of Clause 15.8 (Governing Law;
Jurisdiction; WAIVER OF JURY TRIAL) of the CTA shall apply to this
Agreement as if the same were set out in full herein.
3.4 VARIATION: The provisions of this Agreement shall not be varied
otherwise than by an instrument in writing executed by or on behalf of
GE Capital and Aloha.
3.5 INVALIDITY OF ANY PROVISION: If any provision of this Agreement becomes
invalid, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions shall
not in any way be affected or impaired.
3.6 COSTS AND EXPENSES: Aloha shall pay to GE Capital on demand all fees,
costs and expenses incurred or payable by GE Capital in connection with
the preparation, negotiation and completion of this Agreement and
performance of the transactions contemplated hereby.
4. CONTINUATION OF COMMON TERMS AGREEMENT
Save as expressly amended by this Agreement, the CTA shall continue in
full and unvaried force and effect as the legal, valid and binding
rights and obligations of each of GE Capital and Aloha enforceable in
accordance with their respective terms.
2
IN WITNESS WHEREOF the parties hereto have executed this Agreement the
day and year first above written.
Signed for and on behalf of
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇
-----------------------------
Title: Vice President
----------------------------
Signed for and on behalf of
ALOHA AIRLINES, INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
By: ______________________________
Name: ____________________________
Title: ___________________________
IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.
Signed for and on behalf of
GENERAL ELECTRIC CAPITAL CORPORATION
By: ______________________________
Name: ____________________________
Title: ___________________________
Signed for and on behalf of
ALOHA AIRLINES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
Title: Exec. Vice President & CFO
-----------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
SENIOR VICE PRESIDENT
Title: PLANNING & BUSINESS DEVELOPMENT
-----------------------------------
SCHEDULE 7
INSURANCE REQUIREMENTS
1.1 TYPES OF INSURANCE
The Insurances required to be maintained are as follows:
(a) HULL ALL RISKS of loss or damage while flying, taxiing and on
the ground with respect to the Aircraft on an agreed value
basis for not less than the Agreed Value and not more than
110% of the Agreed Value and with a deductible not exceeding
the Deductible Amount;
(b) HULL WAR RISKS AND ALLIED PERLIS in accordance with LSW555B or
its equivalent form reasonably acceptable to Lessor (or an
agreement of the United States Government to insure against or
indemnify for substantially the same risks) in an amount not
less than 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 for
like kind and quality value and including engine test and
running risks; and
(d) COMPREHENSIVE 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
for 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 in line with prudent market practice for comparable
airlines, operating similar equipment in similar
circumstances. In addition, without limitation of the
requirements of the preceding sentence (and notwithstanding
anything to the contrary contained in the preceding sentence),
the Lessee shall in all events maintain war risk and allied
perils liability insurance in accordance with London form
AVN52C (as in effect on September 1, 2001) or its equivalent
form reaonsably acceptable to Lessor (or an agreement of the
United States Government to insure against or indemnify for
substantially the same risks), from time to time, with respect
to the Aircraft in an amount not less than the Minimum
Liability Coverage.
1.2 TERMS OF HULL AND SPARES INSURANCE
All required hull and spares insurance, so far as it relates to the Aircraft,
will:
(a) LOSS PAYEE: name Lessor, as loss payee (without imposing on
Lessor any obligation imposed on the insured, including the
liability to pay any calls, commissions or premiums);
(b) PAYMENT OF LOSSES: Losses will be payable in Dollars to Lessor
for all amounts up to the Agreed Value and to Lessee for any
excess above the Agreed Value
4
(which excess shall not exceed 10% of the Agreed Value),
except where the insurance payment does not exceed the Damage
Notification Threshold, and no Default is in existence, in
which case the loss will be settled with and paid to Lessee;
(c) 50/50 PROVISION: if separate Hull "all risks" and "war risks"
insurances are arranged, include a 50/50 provision in
accordance with market practice (AVS. 103 is the current
London market language); and
(d) NO OPTION TO REPLACE: confirm that the insurers are not
entitled to replace the Aircraft in the event of an insured
Event of Loss and are not entitled to replace any Engine in
the event of an Engine Event of Loss with respect to such
Engine.
1.3 TERMS OF LIABILITY INSURANCE
All required liability insurances will:
(a) ADDITIONAL INSUREDS: include each Indemnitee, as additional
insureds for its respective rights and interests, warranted,
each as to itself only, no operational interest (without
imposing on any such Person any obligation imposed on the
insured, including the liability to pay any calls, commissions
or premiums);
(b) SEVERABILITY: include a severability of interests clause which
provides that the insurance, except, for the limit of
liability, will operate to give each insured the same
protection as if there were a separate policy issued to each
insured; and
(c) PRIMARY POLICY: 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, any Indemnitee or Lessee has the benefit so as
to reduce the amount payable to the additional insureds under
such policies.
1.4 TERMS OF ALL INSURANCES
All Insurances will:
(a) INDUSTRY PRACTICE: be in accordance with standard industry
practice for airlines operating similar aircraft in similar
circumstances;
(b) DOLLARS: provide cover denominated in Dollars;
(c) WORLDWIDE: operate on a worldwide basis subject to such
limitations and exclusions as are in line with industry
practice obtained by prudent United States based international
air carriers;
(d) BREACH OF WARRANTY: 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 assureds 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;
5
(e) SUBROGATION: provide that the insurers will hold harmless and
waive any rights of recourse or subrogation against the
additional insureds to the extent Lessee has waived its rights
against the additional insureds in the Lease;
(f) PREMIUMS: provide that the additional insureds 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 set-off, counter-claim or other deduction, by
attachment or otherwise, in respect of any premium due against
the respective interests of the additional insureds other than
outstanding premiums relating to the Aircraft, any Engine or
Part the subject of the relevant claim;
(g) Cancellation/Change: provide that the Insurances will
continue unaltered for the benefit of the additional insureds
for at least 30 days after written notice by registered mail
or telex of any cancellation, change, event of non-payment of
premium or installment thereof has been sent by insurer(s) to
Lessor, or where an insurance broker is appointed to the
insurance broker who shall promptly send on such notice to
Lessor, 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; and
(h) [NOT APPLICABLE]
(i) [INTENTIONALLY OMITTED.]
(j) INDEMNITIES: accept and insure the indemnity provisions of the
Lease to the extent of the risks covered by the policies.
1.5 DEDUCTIBLES
Lessee shall be responsible for any and all deductibles under the Insurances.
1.6 APPLICATION OF INSURANCE PROCEEDS
The Insurances will be endorsed to provide for payment of proceeds as follows:
(a) EVENT OF LOSS: all insurance payments up to the Agreed Value
received as the result of an Event of Loss occurring during
the Term will be paid to Lessor as loss payee and any amount
in excess of the Agreed Value (which excess shall not exceed
10% of the Agreed Value) shall be paid to Lessee;
(b) EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance
proceeds of any 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 the appropriate repair facility, and applied
in payment (or paid to Lessee and/or Lessor as reimbursement)
for repairs or replacement property upon Lessor being
satisfied that the repairs or replacement have been effected
in accordance with the Lease.
(c) BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in
amounts below
6
the Damage Notification Threshold shall be paid by the insurer
directly to Lessee;
(d) LIABILITY PROCEEDS: all insurance proceeds in respect of
third party liability will be paid by the insurers to the
relevant third party in satisfaction of the relevant liability
or to Owner, Lessor, Financing Partners' Representative or
Lessee, as the case may be, in reimbursement of any payment so
made;
(E) DEFAULT: notwithstanding any of the foregoing paragraphs, 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 Lessor, Owner or Financing Parties' Representative,
as the case may be, or retained to be applied toward payment
of any amounts which may be or become payable by Lessee in
such order as Lessor or Owner, as the case may be, may elect
until such time as no Default is continuing and then applied
as described above; and to the extent that insurance proceeds
are paid to Lessee, Lessee agrees to hold such proceeds in
trust and comply with the foregoing provisions and apply or
pay over such proceeds as so required.
1.7 UNITED STATES GOVERNMENTAL INDEMNITY
Notwithstanding any of the foregoing paragraphs, in the event of a Permitted
Sub-Lease to, or a requisition of use by, the United States or any Governmental
Entity whose obligations have the full faith and credit of the federal
Government of the United States, Lessor agrees to accept in lieu of insurance
required hereunder indemnification or insurance from the United States or such
a Governmental Entity in a form reasonably acceptable to Lessor and Owner and
against such risks and in such amounts and on such terms such that when added
to the Insurance maintained by Lessee, Lessee is in full compliance with the
requirements of Section 9 and this Schedule.
7
May 12, 2000
Aloha Airlines, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Executive Vice President and Chief Financial Officer
Re: Aircraft Lease Agreement dated as of May 12, 2000 between
Aviation Financial Services, Inc., as Lessor, and Aloha
Airlines, Inc., as Lessee, in respect of One Boeing 737-700
Aircraft Bearing MSN 28641, incorporating the terms of that
certain Common Terms Agreement dated as of May 12, 2000 (the
"CTA") between General Electric Capital Corporation and Aloha
Airlines, Inc. (collectively, the "Lease")
Ladies and Gentlemen:
We refer to the Lease, as defined above, and capitalized terms used without
definition herein have the meanings assigned to them in the Lease. This letter
will serve as the acknowledgment of Aviation Financial Services, Inc., as
lessor ("Lessor") under the Lease, that neither of the following situations
shall constitute an "Event of Default" under the Lease pursuant to Section (h)
of Schedule 9 to the CTA:
1. Cessation or temporary suspension of Lessee's trans-Pacific route
between Hawaii and California (or any other location within the
continental United States); or
2. Cessation or temporary suspension of any segment of Lessee's
business which accounted for ten percent (10%) or less of the
gross revenues of Lessee over the last three fiscal years
immediately preceding the date of suspension or cessation (which
calculation shall be made on a cumulative basis taking into
account any and all segments of Lessee's business suspended or
ceased within such three-year period).
For the avoidance of doubt, Lessor and Lessee expressly acknowledge and agree
that nothing in this letter agreement shall be deemed to derogate from or
modify any other provisions of the Lease. Without limiting the foregoing,
Lessee expressly acknowledges and agrees that, in the event that Lessee's
utilization of the Aircraft results in an operational ratio of less than one
Flight Hour per Cycle for a period of twelve (12) consecutive months, an "Event
of Default" shall arise pursuant to Part VIII of Schedule B to the Lease,
regardless of whether or not such operation arises out of or as a result of any
suspension of Lessee's trans-Pacific route.
Please indicate your acceptance of and agreement with the terms set forth in
this letter by signing in the space provided below and return one
fully-executed counterpart of this letter to Lessor.
Very truly yours,
AVIATION FINANCIAL SERVICES, INC.
By: /s/ ▇▇▇▇ ▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇
-------------------------------
Title: Vice President
------------------------------
ACKNOWLEDGED AND AGREED.
ALOHA AIRLINES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Please indicate your acceptance of and agreement with the terms set forth in
this letter by signing in the space provided below and return one
fully-executed counterpart of this letter to Lessor.
Very truly yours,
AVIATION FINANCIAL SERVICES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
ACKNOWLEDGED AND AGREED.
ALOHA AIRLINES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Title: Executive Vice President & CFO
------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Title: VP Planning & Development
------------------------------