<DOCUMENT>
<TYPE>EX-10.55
<SEQUENCE>38
<FILENAME>a2069410zex-10_55.txt
<DESCRIPTION>EXHIBIT 10.55
<TEXT>
<PAGE>
EXHIBIT 10.55
CERTIFIED COPY - TO BE RETURNED
AIRCRAFT LEASE AGREEMENT
BETWEEN
AJET, INC.
(LESSOR)
AND
ALOHA AIRLINES, INC.
(LESSEE)
DATE: MAY 31, 1995
RECORDED
Federal Aviation Administration
Date 6-8-95 Time
--------- ------
Conveyance Number 2A266908
------------
By /s/ [Illegible]
--------------------
Conveyances Examiner
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I hereby certify that I have compared the foregoing with the original and it
is a true and correct copy thereof.
By /s/ [Illegible]
-----------------------
<PAGE>
AIRCRAFT LEASE AGREEMENT
BETWEEN
AJET, INC.
(LESSOR)
AND
ALOHA AIRLINES, INC.
(LESSEE)
DATE: MAY 31, 1995
<PAGE>
LEASE AGREEMENT
TABLE OF CONTENTS
SECTION 1. DEFINITIONS.
SECTION 2. LEASE AND DELIVERY OF THE AIRCRAFT: CERTAIN LESSEE EXPENSES.
(a) LEASE, OBLIGATIONS, AND CONDITIONS PRECEDENT.
(i) EXECUTION OF OPERATIVE DOCUMENTS.
(ii) EVIDENCE OF LEGAL AUTHORITY TO IMPORT, LEASE AND OPERATE THE
AIRCRAFT.
(iii) EVIDENCE OF LEGAL AUTHORITY TO PAY RENT.
(iv) EVIDENCE OF CORPORATE AUTHORITY.
(v) EVIDENCE OF INSURANCE.
(vi) EVIDENCE OF REGISTRATION OF THE AIRCRAFT AND PROTECTION OF LESSOR
OWNERSHIP.
(vii) OPINION OF COUNSEL.
(viii) EVIDENCE OF LESSOR'S AUTHORITY TO DEREGISTER AND EXPORT THE
AIRCRAFT.
(ix) EVIDENCE OF LESSOR'S AUTHORITY TO INQUIRE AS TO FEE AND TAX
PAYMENTS.
(x) PAYMENT OF BASIC RENT AND SECURITY DEPOSIT.
(b) INSPECTION PRIOR TO ACQUISITION: DELIVER CONDITION: DELIVERY
(c) LESSOR AUTHORITY.
(d) LESSEE OBLIGATIONS AFTER DELIVERY.
(e) CERTAIN LESSEE EXPENSES.
SECTION 3. TERM, RENT AND MAINTENANCE RESERVES.
(a) TERM.
(b) BASIC RENT.
(c) METHOD OF PAYMENT.
(d) SUPPLEMENTAL RENT.
(e) SECURITY DEPOSIT.
(f) MAINTENANCE RESERVES.
(g) USE OF MAINTENANCE RESERVES
(h) DRAWDOWN BY LESSEE
(i) TITLE TO MAINTENANCE RESERVES
(j) ASSIGNMENT OF MAINTENANCE RESERVES
(k) AIRCRAFT INDUCTION ALLOWANCE
(l) LEASE RENEWAL OPTION
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SECTION 4. REPRESENTATIONS, WARRANTIES AND MISCELLANEOUS COVENANTS.
(a) THE LESSEE'S REPRESENTATIONS AND WARRANTIES.
(i) ORGANIZATION AND QUALIFICATION.
(ii) AIR CARRIER.
(iii) CORPORATE AUTHORIZATION.
(iv) GOVERNMENT APPROVAL.
(v) VALID AND BINDING AGREEMENTS.
(vi) LITIGATION.
(vii) COMMERCIAL ACTIVITIES: NO IMMUNITY.
(viii) TAXES.
(ix) LESSOR'S QUALIFICATIONS: PROTECTION OF LESSOR'S OWNERSHIP OF THE
AIRCRAFT.
(x) FINANCIAL CONDITION.
(xi) ACCURACY AND DISCLOSURE OF INFORMATION.
(b) REPRESENTATIONS AND WARRANTIES OF THE LESSOR.
(i) DUE ORGANIZATION.
(ii) DUE AUTHORIZATION: ENFORCEABILITY.
(iii) NO VIOLATION.
(iv) OWNERSHIP OF AIRCRAFT.
(v) LITIGATION.
(vi) FINANCIAL CONDITION.
(vii) ACCURACY AND DISCLOSURE OF INFORMATION.
(viii) NO AIRCRAFT LIENS.
(c) DISCLAIMER AND ACKNOWLEDGEMENT OF DISCLAIMER: WAIVER OF CONSEQUENTIAL
DAMAGES.
(d) LESSEE'S MISCELLANEOUS COVENANTS.
(i) MAINTENANCE OF CORPORATE STATUS: NO MERGER OR CONSOLIDATION.
(ii) NOTICE OF DEFAULT OR ADVERSE OCCURRENCE.
(iii) MAINTENANCE OF CONSENTS AND APPROVALS.
(iv) CHANGE OF LOCALE.
(v) FINANCIAL INFORMATION AND REPORTS.
(e) LESSOR'S COVENANT OF QUIET ENJOYMENT.
SECTION 5. REGISTRATION, USE, OPERATION, MAINTENANCE, POSSESSION.
(a) TITLE AND REGISTRATION.
(b) GENERAL.
(c) USE.
(d) OPERATION.
(e) LESSEE TO PAY ALL COSTS.
(f) MAINTENANCE IN GENERAL.
(g) SPECIFIC ITEMS OF MAINTENANCE.
(h) PARTS.
(i) AIRWORTHINESS DIRECTIVES.
(j) SERVICE BULLETINS.
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(k) CORROSION CONTROL.
(l) MODIFICATIONS.
(m) REPORTS.
(n) RIGHT TO INSPECT.
(o) REPAIRS.
(p) AIRCRAFT DOCUMENTS.
(q) LESSOR'S DISCLAIMER.
(r) POSSESSION.
(s) INSIGNIA.
(t) TEMPORARY SUBSTITUTIONS.
SECTION 6. RETURN OF THE AIRCRAFT.
(a) RETURN.
(b) LEASE CONTINUES.
(c) RETURN OF ENGINES.
(d) CONDITION OF AIRCRAFT.
(i) OPERATING CONDITION: MINIMUM LIFE REMAINING.
(ii) CLEANLINESS STANDARDS.
(iii) CERTIFICATE OF AIRWORTHINESS.
(iv) COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS.
(v) DEFERRED MAINTENANCE.
(vi) CORROSION TREATMENT.
(vii) CONFIGURATION AND CONDITION.
(e) CONDITION OF AIRFRAME.
(i) C CHECK.
(ii) D CHECK.
(iii) PARTS.
(iv) FUSELAGE, WINDOWS AND DOORS.
(v) WINGS AND EMPENNAGE.
(vi) INTERIOR.
(vii) COCKPIT.
(viii) CARGO COMPARTMENT.
(f) CONDITION OF LANDING GEAR.
(g) CONDITION OF AUXILIARY POWER UNIT ("APU").
(h) CONDITION OF ENGINES.
(i) HISTORICAL RECORDS: TREND MONITORING DATA.
(j) INSPECTIONS.
(k) ACCEPTANCE.
(l) DEFERRED DISCREPANCY CORRECTION.
(m) AIRCRAFT DOCUMENTS.
(n) SERVICE BULLETIN KITS.
(o) LESSEE'S SPECIAL EXTERIOR MARKINGS.
(p) STORAGE OF AIRCRAFT UPON RETURN.
(q) ASSIGNMENT OF RIGHTS.
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(r) FINANCIAL SETTLEMENT IN LIEU OF LIFE REMAINING: NO LESSOR OBLIGATIONS.
(s) OVERFLIGHT AND OTHER FEES
(t) STAGE III NOISE ATTENUATION MODIFICATION.
SECTION 7. LIENS.
SECTION 8. TAXES
(a) TAX INDEMNITY.
(b) WITHHOLDING.
(c) AFTER-TAX PAYMENT.
SECTION 9. RISK OF LOSS: EVENT OF LOSS: REQUISITION FOR USE.
(a) RISK OF LOSS
(b) AIRFRAME EVENT OF LOSS
(c) ENGINE EVENT OF LOSS.
(d) REQUISITION.
SECTION 10. INSURANCE
(a) ALL-RISK INSURANCE.
(b) WAR RISK INSURANCE.
(c) LIABILITY INSURANCE.
(d) DEDUCTIBLES AND SELF INSURANCE.
(e) ADDITIONAL REQUIREMENTS: LOSS PAYMENT.
(f) NO SET-OFF
(g) NOTICE OF MATERIAL ALTERATION OR CANCELLATION.
(h) RENEWAL.
(i) APPLICATION OF HULL INSURANCE PROCEEDS.
(j) INSURANCE FOR OWN ACCOUNT.
(k) REPORTS: CERTIFICATES.
(l) CHANGES IN INDUSTRY PRACTICE.
SECTION 11. THE LESSOR'S RIGHT TO PERFORM FOR THE LESSEE.
SECTION 12. FURTHER ASSURANCES.
SECTION 13. EVENTS OF DEFAULT.
(a) FAILURE TO PAY BASIC RENT.
(b) FAILURE TO PAY SUPPLEMENTAL RENT.
(c) FAILURE TO MAINTAIN INSURANCE.
(d) MISREPRESENTATION OR BREACH OF WARRANTY.
(e) BANKRUPTCY, ETC.
(f) GENERAL DEFAULT.
(g) LOSS OF AIRLINE OR CORPORATE AUTHORITY.
(h) OTHER OBLIGATIONS.
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SECTION 14. REMEDIES.
(a) RETURN AND REPOSSESSION.
(b) SALE, USE, ETC.
(c) LIQUIDATED DAMAGES: FAIR MARKET RENTAL.
(d) LIQUIDATED DAMAGES: STIPULATED LOSS VALUE.
(e) CANCELLATION. TERMINATION. AND RESCISSION.
(f) OTHER REMEDIES.
(g) ATTORNEY-IN-FACT.
SECTION 15. GENERAL INDEMNITY AND EXPENSES.
(a) GENERAL INDEMNITY.
(b) LEGAL FEES AND EXPENSES.
SECTION 16. ASSIGNMENT AND ALIENATION.
SECTION 17. NOTICES.
SECTION 18. NO SET-OFF. COUNTERCLAIM, ETC.
SECTION 19. GOVERNING LAW
(a) WAIVER OF IMMUNITY. CONSENT TO JURISDICTION.
(b) GOVERNING LAW
(c) SERVICE OF PROCESS
(d) VENUE AND JURISDICTION
(e) TRIAL BY JURY
(f) ARBITRATION
SECTION 20. MISCELLANEOUS.
EXHIBIT A: FORM OF LEASE SUPPLEMENT AND RECEIPT
EXHIBIT B: FORM OF OPINION OF COUNSEL
EXHIBIT C: FORM OF CERTIFICATE OF COMPLIANCE
EXHIBIT D: APPOINTMENT AS ATTORNEY-IN-FACT
EXHIBIT E: DELIVERY RECEIPT
EXHIBIT F: APPROVED LIST OF MAINTENANCE PROVIDERS
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(THIS PAGE INTENTIONALLY LEFT BLANK)
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AIRCRAFT LEASE AGREEMENT
This AIRCRAFT LEASE AGREEMENT dated as of May 31, 1995 between Ajet, Inc.,
with its principal place of business at 5718 Westheimer, Suite 1700, Houston,
Texas 77057 ("Lessor"), and Aloha Airlines, Inc., incorporated under the laws
of Hawaii as a Hawaii corporation and having its registered office at P.O.
Box 30008, Honolulu, Hawaii 96800 ("Lessee"),
WHEREAS, the Lessee desires to lease from the Lessor and the Lessor is
willing to lease to the Lessee the aircraft described and referred to herein
upon and subject to the terms and conditions of this Lease;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the Lessee and Lessor agree as follows:
SECTION 1. DEFINITIONS. The following terms shall have the following
meanings for all purposes of this Lease:
"AIRCRAFT" means the Airframe, the Engines, and the Aircraft Documents.
Such Engines shall be deemed part of the "Aircraft" whether or not from time
to time attached to the Airframe or to another airframe or on the ground.
"AIRCRAFT DOCUMENTS" has the meaning given such term in Section 5(p) hereof.
"AIRFRAME" means the Boeing model 737-2X6QC airframe, manufacturer serial
number 23122, registration mark N816AL, together with any and all Parts
(including, but not limited to, landing gear and auxiliary power units but
excluding Engines or engines) so long as such Parts shall be either
incorporated or installed in or attached to the Airframe or required to be
subject to this Lease as provided in Section 5 hereof.
"AIRWORTHINESS DIRECTIVES" means (i) any airworthiness directive or other
mandatory regulation, directive or instruction that the Aviation Authority
may from time to time issue and that is required to be carried out on
airframes or engines of the same type as the Airframe or Engines; and (ii)
any service bulletin issued by the Airframe, Engine, or any Part manufacturer
that is deemed "alert" or "mandatory" by such manufacturer.
"APPLICABLE LAW" means, without limitation, all applicable laws, treaties,
international agreements, decisions and orders of any court, arbitration or
governmental agency or authority and rules, regulations, orders, directives,
licenses and permits of any governmental body, instrumentality, agency or
authority, including, without limitation, the Uniform Commercial Code of New
York, and such laws of the United States which
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prohibit trade with enemies of the United States.
"APPROVED MAINTENANCE PROGRAM" means a maintenance program applicable to
the Aircraft, approved by the Aviation Authority, encompassing scheduled
maintenance, condition monitored maintenance, and on-condition maintenance of
airframe, engines and components of the Aircraft, including, but not limited
to, servicing, testing, preventive maintenance, repairs, structural
inspections, systems checks, approved modifications, service bulletins,
engineering orders, Airworthiness Directives, corrosion control inspections
and treatments, and which meets the Aviation Law requirements for commercial
airline passenger operations and is approved by the appropriate Aviation
Authority officer having responsibility for Lessee's operations and
maintenance of the Aircraft.
"AVIATION AUTHORITY" the Federal Aviation Administration or a successor
agency and the United States Department of Transportation or a successor
agency, and such other governmental authorities from time to time vested with
the control and supervision of the Aviation Law, or having jurisdiction over
the registration, airworthiness, operation of or other matters relating to
the Aircraft or civil aviation in the United States.
"AVIATION LAW" means 49 U.S.C. ss. 40101 AT SEQ (Title 49, subtitle VII
of the United States Code), as amended from time to time.
"BASIC RENT" means the rent payable for the Aircraft pursuant to Section
3(b) hereof.
"BUSINESS DAY" means a day of the year in which banks are not authorized or
required to close in Houston, Texas, New York, Now York, or Honolulu, Hawaii.
"D CHECK" means the inspection, overhaul, repair, presentation and
replacement of Parts, including preventive maintenance, identified as a full
block D Check under Lessee's Approved Maintenance Program. Such full block D
Check shall include all structural inspections, corrosion control and other
work normally completed in conjunction with such block D Check.
"DEFAULT" means an event which with the passage of time or the giving of
notice, or both, would constitute an Event of Default.
"DELIVERY DATE" has the meaning given such term in Section 2(b) hereof,
except as set forth on the Rider attached hereto at page 8A.
"DELIVERY LOCATION" has the meaning given such term in Section 2(b) hereof.
"ENGINE" or "Engines" means two Pratt & Whitney model JTBD-17A engines,
serial numbers P709457B and P709430B, each of which is 750 or more rated
takeoff horsepower or the equivalent thereof, or any other engine which may
from time to time replace an Engine leased hereunder in accordance with the
terms hereof, together with,
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RIDER
For purposes of Lessee's obligations under Section 6 hereof, the Delivery
Date shall mean the date of completion, in accordance with the DynAir Tech of
Arizona workscope dated May 10, 1995 and any Lessor approved revisions
thereto, of the D Check to which the Induction Allowance, as defined herein,
applies and the certification of the Aircraft as airworthy by DynAir Tech of
Arizona.
8A
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in the case of each engine referred to above, any and all Parts so long as
the same shall be either incorporated or installed in or attached to such
Engine or required to be subject to this Lease as provided in Section 5
hereof. An Engine shall remain leased hereunder whether or not from time to
time attached to the Airframe or attached to any other airframe or on the
ground.
"EVENT OF DEFAULT" has the meaning given such term in Section 13 hereof.
"EVENT OF LOSS" shall mean any of the following events with respect to any
property:
(i) loss of such property due to theft, disappearance, destruction,
damage beyond economic repair or rendition of such property permanently unfit
for normal use for any reason;
(ii) any damage to such property which results in an insurance
settlement with respect to such property on the basis of a constructive,
agreed, arranged, or compromised total loss;
(iii) the condemnation, confiscation or seizure of, or requisition of
title to or use of, such property by private persons or by any governmental
or purported governmental authority (but excluding requisition for use or
hire not involving requisition of title, provided such requisition for use or
hire does not continue for more than 180 consecutive days); or
(iv) as a result of any rule, regulation, order, or other action by the
Aviation Authority, the use of such property in the normal course of air
transportation is prohibited for a period of six months.
"EXPIRY" shall mean any of the following: (i) expiration of the Term
through the passage of time in accordance with the terms of this Lease, or
(ii) termination, cancellation, or rescission of the Lease in accordance with
its terms and in accordance with Applicable Law.
"FAA" means the Federal Aviation Administration of the United States
Department of Transportation or any successor agency.
"INDEMNITEE" means (i) the Lessor, (ii) Jetlease, Inc. parent of Lessor and
its affiliates, (iii) Lender and its affiliates, and (iv) their respective
successors, assigns, representatives, employees, officers, directors and
agents, and each of them. Provided that any of the foregoing persons or
entities shall not be considered an Indemnitee hereunder for any acts or
omissions of such person in its capacity as (x) a manufacturer of the
Aircraft or any part thereof, (y) an operator of the Aircraft or (z) any
maintenance facility that performed maintenance on the Aircraft.
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"LEASE" shall mean this Aircraft Lease Agreement, as supplemented by the
Lease Supplement and Receipt, and as may be amended in accordance with
Section 20 hereof.
"LEASE SUPPLEMENT AND RECEIPT" shall mean a Lease Supplement and Receipt,
substantially in the form of Exhibit A hereto.
"LENDER" shall mean The CIT Group/Equipment Financing, Inc., and its
successors and assigns.
"LESSOR LIENS" means Liens which result from claims against or affecting
the Lessor that are unrelated to the Operative Documents or the transactions
contemplated thereby.
"LIEN" means any mortgage, security interest, lease or other charge or
encumbrance or claim or right of others, including, without limitation, rights
of others under any airframe or engine interchange or pooling agreement.
"LIFE LIMITED COMPONENT" means any Part that is required either by the
Airframe, Engine, or Part manufacturer or by the Aviation Authority or by
the Approved Maintenance Program to be overhauled or replaced after a certain
number of hours, calendar time, cycles, or landings, including both rotable
and consumable Parts.
"MAINTENANCE PROVIDER" means Lessee or an internationally recognized
service, overhaul and repair agency authorized by the Aviation Authority and
fully qualified to service, repair and overhaul the Airframe and Engines and
Parts, as selected by Lessee from the approved list attached hereto as
Exhibit F.
"OPERATIVE DOCUMENTS" means this Lease (including a Lease Supplement and
Receipt), and any ancillary documents executed in connection therewith.
"OVERDUE PAYMENT RATE" means Chemical Bank, New York, prime rate plus 3 per
annum.
"PARTS" means all appliances, components, parts, instruments,
appurtenances, accessories, furnishings or other equipment of whatever nature
(other than complete Engines or engines) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine and
includes replacement parts.
"PERMITTED LIENS" means: (i) Lessor Liens; (ii) Liens for Taxes; (iii)
materialmen's, mechanics', workmen's, repairmen's, employees' or other like
Liens arising in the ordinary course of business, including (without
limitation) Liens in respect of airport user and en route charges; and (iv)
Liens arising out of judgments or awards; and with respect to foregoing
clauses (ii), (iii), and (iv), the payments associated with the Liens
described therein are either not yet due or being contested in good faith
(and for the payment of
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which adequate reserves have been provided) by appropriate proceedings and
such proceedings in the reasonable opinion of the Lessor do not involve any
danger of the sale, forfeiture, confiscation, seizure or loss of the Airframe
or any Engine or interest therein.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
joint venture or other entity, or a foreign state or political subdivision
thereof or any agency of such state or subdivision.
"RENT" means Basic Rent and Supplemental Rent.
"RENT COMMENCEMENT DATE" HAS the meaning given to such term in Section 3(a)
hereof.
"RENT PAYMENT DATE" means the Delivery Date and the day of each calendar
month following the month in which the Rent Commencement Date occurs which
corresponds to the Rent Commencement Date (or, if any such month does not
have such a corresponding day then the last day of such month) during the
Term.
"RETURN DATE" has the meaning given to such term in Section 6(a) hereof.
"RETURN LOCATION" has the meaning given to such term in Section 6(a) hereof.
"SECURITY DEPOSIT" has the meaning given to such term in Section 3(e)
hereof.
"STIPULATED LOSS VALUE" has the meaning given to such term in Section 10(a)
hereof.
"SUPPLEMENTAL RENT" means all amounts, including Maintenance Reserves,
liabilities, indemnifications and obligations of any kind whatsoever (other
than Basic Rent but including any payment of Stipulated Loss Value or any
amount calculated by reference thereto) which the Lessee is obligated to pay
in accordance with the terms of this Lease.
"TAX" has the meaning given to such word in Section 8(a) hereof.
"TERM" has the meaning given to such word in Section 3(a) hereof.
"U.S.$ AND DOLLARS" means the lawful currency of the United States.
SECTION 2. LEASE AND DELIVERY OF THE AIRCRAFT: CERTAIN LESSEE EXPENSES.
(a) Lease, Obligations, and Conditions Precedent.
The Lessor agrees to lease to the Lessee and the Lessee agrees to lease from
the
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Lessor, the Aircraft, on the terms and conditions of this Lease. The Lessor's
obligation to lease the Aircraft shall be conditioned upon the absence of any
Default hereunder, the absence of any materially adverse change in the
Lessee's financial condition or prospects from March 31, 1995 to the Delivery
Date, the acquisition of the Aircraft by the Lessor on terms satisfactory to
Lessor in its sole discretion, and the performance by Lessee of each of the
following obligations on or before the Delivery Date (unless a sooner date is
specified), all in form and substance satisfactory to Lessor and its counsel:
(i) EXECUTION OF OPERATIVE DOCUMENTS. The Lessee shall have executed and
delivered this Lease, the Lease Supplement and Receipt (dated the Delivery
Date), and each other Operative Document to which it is a party.
(ii) EVIDENCE OF LEGAL AUTHORITY TO IMPORT, LEASE AND OPERATE THE
AIRCRAFT. [INTENTIONALLY OMITTED];
(iii) EVIDENCE OF LEGAL AUTHORITY TO PAY RENT. [INTENTIONALLY OMITTED];
(iv) EVIDENCE OF CORPORATE AUTHORITY. The Lessee shall have delivered to
the Lessor certified resolutions of the board of directors of the Lessee duly
authorizing the execution, delivery and performance of this Lease, the other
Operative Documents to which the Lessee is a party, and other satisfactory
evidence as may be requested by Lessor that the Lessee has taken all
corporate action necessary to authorize the Operative Documents and the
transactions contemplated hereby, together with an incumbency certificate as
to the person or persons authorized to execute and deliver the same;
(v) EVIDENCE OF INSURANCE. The Lessee shall have delivered to the Lessor
and Lender reports and certificates of insurance in compliance with the
requirements of the Aviation Authority and Section 10 hereof;
(vi) EVIDENCE OF REGISTRATION OF THE AIRCRAFT AND PROTECTION OF LESSOR'S
OWNERSHIP. The Lessor shall provide an application to the Aviation Authority
for a certificate of registration for the Aircraft in the name of Lessor; and
(vii) OPINION OF COUNSEL. AT Lessee's expense, the Lessor shall receive
a favorable opinion addressed to Lessor from Char, Sakamoto, Ishii & Lum,
counsel to Lessee, substantially in the form attached hereto as Exhibit B and
otherwise satisfactory to the Lessor.
(viii) EVIDENCE OF LESSOR'S AUTHORITY TO DEREGISTER AND EXPORT THE
AIRCRAFT [INTENTIONALLY OMITTED];
(ix) EVIDENCE OF LESSOR'S AUTHORITY TO INQUIRE AS TO FEE AND TAX
PAYMENTS. Lessee shall, during the Lease Term, upon written request by
Lessor, furnish to Lessor
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evidence satisfactory to Lessor that all charges incurred by Lessee with
respect to the Aircraft, including without limitation all payments due to the
relevant air traffic control authorities, have been paid and discharged in
full (a certificate of Lessee's Chief Financial Officer as to the payment of
such charge will suffice so long as no Event of Default has occurred and is
continuing). Upon written request by Lessor, Lessee also will provide a
letter from Lessee addressed to any relevant air traffic control authority
pursuant to which Lessee authorizes the addressee to issue to Lessor, a
statement of account reflecting all sums due by Lessee to the authority in
respect of all aircraft (including without limitation, the Aircraft) operated
by Lessee.
(x) PAYMENT OF BASIC RENT AND SECURITY DEPOSIT. Lessor shall have
received the first payment of Basic Rent, and. payment of the Security
Deposit.
(xi) OFFICER'S CERTIFICATE. Lessee's representations and warranties
shall be true, and no Default or Event of Default shall exist, and the Lessor
shall receive an Officer's Certificate from the Lessee to that effect.
(b) INSPECTION PRIOR TO ACQUISITION: DELIVERY CONDITION: DELIVERY. For
purposes of this Lease, Lessee shall inspect the Aircraft and approve
of its condition, as agent for Lessor, prior to Lessor's acquisition of it.
(i) The Lessee's obligation to accept delivery of the Aircraft shall be
subject to the following:
a. The Aircraft being in the condition set forth in Exhibit A.
b. A purchase agreement signed by the Lessor on or before May 31,
1995.
c. A loan commitment letter for the purchase of the Aircraft signed
on or before May 31, 1995.
d. Delivery of the Aircraft on or before May 31, 1995.
e. Receipt of the opinion of Lessor's counsel as to the due
authorization of this Lease on or before the Delivery Date.
f. The Aircraft being on United States registry.
(ii) Lessee shall accept delivery of the Aircraft "AS IS," "WHERE IS,"
AND SUBJECT TO EACH AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS
SET FORTH IN SECTIONS 4(c) HEREOF, in the Western United States, or such
other place as may be mutually agreed upon in writing by the Lessor and
Lessee (the "Delivery Location") on or before May 31, 1995 but no later than
June 9, 1995, or such other date
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as may be mutually agreed upon in writing by the Lessor and Lessee (the
"Delivery Date", which date shall be the date of the Lease Supplement and
Receipt). Upon tender of delivery of the Aircraft in the condition set forth
in Exhibit A, Lessee shall immediately accept delivery of the Aircraft. Upon
acceptance of the Aircraft, the Lessee shall execute and deliver the Lease
Supplement and Receipt to the Lessor, which shall constitute, without further
act, unconditional and irrevocable acceptance by the Lessee of the Aircraft
under, and for all purposes of, this Lease and as being airworthy, in
accordance with specifications, in good working order and repair. The
provisions of this Section 2(b)(ii) and of the Lease Supplement and Receipt
shall not be construed to expand the Lessee's obligations under Sections 5
and 6 hereof.
(c) LESSOR AUTHORITY. On the Delivery Date, and if requested by Lessee,
the Lessor shall furnish to the Lessee satisfactory evidence that the Lessor
has taken all corporate action necessary to authorize this Lease and the
transactions contemplated hereby, together with an Incumbency certificate as
to the person or persons authorized to execute and deliver the same, in each
case in form and substance SATISFACTORY to the Lessee.
(d) LESSEE OBLIGATIONS AFTER DELIVERY.
(i) Upon delivery of the Aircraft, Lessee shall forthwith cause to
have performed upon the Aircraft, a full block D Check, in
accordance with Lessee's Approved Maintenance Program. Such
full block D Check shall include all structural inspections,
corrosion control and other work normally completed in
conjunction with such block D Check.
(e) CERTAIN LESSEE EXPENSES. INTENTIONALLY OMITTED.
SECTION 3. TERM AND RENT.
(a) TERM. The Delivery Date shall be the "Rent Commencement Date." The term
for which the Aircraft is leased hereunder (the "Term") shall begin on the
Delivery Date and end ninety-six (96) months from the Rent Commencement Date
unless Expiry occurs sooner pursuant to the express provisions of this Lease.
(b) BASIC RENT. The Lessee shall pay to the LESSOR monthly rental for the
Aircraft the ("Basic Rent"), payable in advance on each Rent Payment Date
during the Term, in the amount One Hundred Ten Thousand United States Dollars
(US$110,000).
(c) METHOD OF PAYMENT. All Rent hereunder shall be paid by the Lessee not
later than 2:00 P.M., New York City time, on the date due thereof in U.S.
Dollars and in immediately available funds to the Lessor by deposit to:
Bank Chemical Bank
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ABA# 021-0001-28
Account name: The CIT Group
Acct.# 116-003855
Ref: Aloha N816AL
or to such other account as the Lessor shall specify to the Lessee in
writing. Any Rent due on a day which is not a Business Day shall be due on
the next Business Day.
(d) SUPPLEMENTAL RENT. The Lessee also agrees to pay to the Lessor any and
all Supplemental Rent promptly as the same shall become due and owing. In the
event of any failure on the part of the Lessee to pay any Supplemental Rent,
the Lessor shall have all rights, powers and remedies provided for herein or
by law or equity in the case of nonpayment of Basic Rent. The Lessee will
also pay, on demand, as Supplemental Rent, an amount equal to interest at the
Overdue Payment Rate on any part of any payment of Rent not paid on the date
it becomes due for any period for which the same shall be overdue.
(e) SECURITY DEPOSIT. Upon the execution of this Lease, Lessee shall make a
deposit, in cash, with Lessor in the amount of Two Hundred Fifty Thousand
United States Dollars (US$250,000) to serve as security for Lessee's full
and faithful performance of all of its obligations under this Lease (the
"Security Deposit").
(i) The Security Deposit shall remain in effect until the Aircraft
is returned in the condition required by this Lease. Lessee shall not be
entitled to off-set any Rent against the Security Deposit. After the return
of the Aircraft in the condition required by this Lease, Lessor shall return
the Security Deposit, without interest, provided that Lessee has otherwise
fulfilled all its obligations hereunder.
(f) MAINTENANCE RESERVES. INTENTIONALLY OMITTED.
(g) USE OF MAINTENANCE RESERVES. INTENTIONALLY OMITTED.
(h) DRAWDOWN BY LESSEE. INTENTIONALLY OMITTED.
(i) TITLE TO MAINTENANCE RESERVES. INTENTIONALLY OMITTED.
(j) ASSIGNMENT OF MAINTENANCE RESERVES. INTENTIONALLY OMITTED.
(k) AIRCRAFT INDUCTION ALLOWANCE. The Lessor will provide a $450,000
allowance to Lessee to be applied to the cost of a "D" check and other direct
costs of placing the Aircraft on Lessee's operating certificate.
(l) LEASE RENEWAL OPTION. Provided Lessee is not in default hereunder,
Lessee may extend the Term of this Agreement for up to two (2) Lease Renewal
Periods of
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twelve (12) months each by delivering written notice to Lessor at least six
(6) months prior to the Expiry of any term. During any Lease Renewal Period,
the rental rate shall be equal to the Basic Rent, Supplemental Rent and other
sums then payable under this Agreement. All other terms and conditions of this
Agreement shall remain in full force and effect during any and all Lease
Renewal Periods.
SECTION 4. REPRESENTATIONS, WARRANTIES & MISCELLANEOUS COVENANTS.
(a) THE LESSEE'S REPRESENTATIONS AND WARRANTIES. The Lessee
represents and warrants as follows:
(i) ORGANIZATION AND QUALIFICATION. The Lessee is duly incorporated
in and validly existing under the laws of the State of Hawaii, possessing
perpetual corporate existence, having the capacity to sue and be sued in its
own name, has full power, legal right and authority (corporate and otherwise)
to carry on its business as currently conducted, to own and hold under lease
its properties and to execute, deliver and perform and observe the provisions
of this Lease and other Operative Documents to which it is a party, and is
duly qualified to do business in good standing wherever the nature of its
business makes such qualification necessary.
(ii) AIR CARRIER. The Lessee is a citizen of the United States (as
defined in 49 U.S.C. ss.40102) holding an air carrier operating certificate
issued under 49 U.S.C. chapter 447 for aircraft capable of carrying 10 or
more individuals. Lessee is duty licensed by all Governmental authorities
whose license or approval may be required to conduct its operations and to
operate the Aircraft in air commerce under Part 121 of the Federal Aviation
Administration Air Regulations, 14 C.F.R. 121, and using an air carrier
aircraft radio station under Part 87 of the Federal Communications Commission
Aviation Services Regulations, 47 C.F.R. 87, and to the best of the knowledge
of Lessee there is no pending or threatened action or proceeding to revoke,
modify or suspend any such license.
(iii) CORPORATE AUTHORIZATION. The execution, delivery, and
performance by the Lessee of this Lease and each of the other Operative
Documents to which it is or will be a party (A) have been duty authorized by
all necessary corporate action on behalf of the Lessee, (B) do not require
the consent or approval of the Lessee's stockholders or of any trustee or the
holders of any indebtedness or obligations of the Lessee (except such as have
been obtained, and certified copies of which have been furnished to the
Lessor), (C) do not contravene any existing Applicable Law to which the
Lessee is subject, (D) do not conflict with or result in any breach of any of
the terms or constitute a default under any document, instrument, or
agreement to which the Lessee is a party or is subject or by which it or any
of its assets are bound, (E) do not contravene the Lessee's charter or
by-laws, or any other provisions of Lessee's constitutive documents, and (F)
do not and will not result in the creation or imposition of or oblige Lessee
to
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create any Lien on or over the Aircraft other than any Permitted Lien.
(iv) GOVERNMENT APPROVAL. Every consent, authorization, and approval
required by the Lessee to enable it to carry on its business or required by
it to authorize or in connection with the execution, delivery, legality,
validity, priority, enforceability, admissibility in evidence, or
effectiveness of this Lease and the other Operative Documents to which Lessee
is or will be a party or the performance by it of any of its obligations
under this Lease and each of the other Operative Documents to which it is or
will be a party has been duly obtained or made and is in full force and
effect and there has been no default in observance or performance of any of
the conditions, restrictions (if any), imposed on or in connection with any
such consent or approval or sanction. On the Delivery Date, the Lessee will
have and will thereafter maintain valid all necessary certificates and
licenses for the operation of (a) its business as an airline operating
scheduled and charter flights for the carriage of passengers and cargo and
(b) the Aircraft on such flights; the Lessee is not exempt from the obtaining
of any such certificates or licenses usually required by commercial airline
operators.
(v) VALID AND BINDING AGREEMENTS. This Lease constitutes the legal,
valid and binding obligations of the Lessee enforceable against the Lessee in
accordance with its terms, subject to bankruptcy, insolvency, moratorium and
similar laws affecting creditors generally and subject also to general
equitable principles (regardless of whether enforcement is sought in a
proceeding in equity or at law). Without limitation of the foregoing, a court
in the State of Hawaii, given a proper presentation of evidence, would
recognize and give full force and effect to the Lessor's title to and
ownership of the Aircraft, to the rights of the Lessor under this Lease, and
to the terms of Section 19(b) hereof providing that this Lease will be
governed by the laws of the State of New York. Accordingly, to the extent
that the remedies provided for in Section 14 hereof are enforceable under New
York law, a court in the State of Hawaii will give effect to the terms of
said Section 14 and enable the Lessor to exercise the same remedies against
the Lessee and with respect to the Aircraft as if the Aircraft were then in
New York (including the right to repossess the Aircraft and to export such
Aircraft from the State of Hawaii without the necessity of obtaining an
export license and without the necessity of obtaining any other governmental
approval), irrespective of any bankruptcy, reorganization, insolvency or
similar proceeding then in effect in the State of Hawaii involving the
Lessee. Save as may be specified in the Lessor's legal opinion, there are no
laws in the State of Hawaii which will or may adversely affect or limit the
rights of the Lessor under the Lease or any Operative Document.
(vi) LITIGATION. There are no unsatisfied judgements against Lessee,
and there is no pending or, to the best of the Lessee's knowledge, threatened
action or proceeding affecting the Lessee before any court, tribunal,
governmental agency or arbitrator which, if determined against the Lessee,
would materially adversely affect the financial condition or operations of
the Lessee or the ability of the Lessee to perform its obligations under the
Lease.
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(vii) COMMERCIAL ACTIVITIES: NO IMMUNITY.
INTENTIONALLY OMITTED
(viii) TAXES. Under Applicable Law, no Taxes (other than Taxes to
which Lessee's indemnity does not extend pursuant to the provisions of
Section 8) will be imposed by the State of Hawaii or any taxing authority or
governmental subdivision thereof upon or with respect to (a) the ownership of
the Aircraft by the Lessor, or the delivery of the Aircraft by the Lessor to
the Lessee, or the possession, operation or return of the Aircraft to the
Lessor by the Lessee; (b) the payments of Rent or other amounts pursuant to
this Lease; (c) the occurrence of an Event of Loss, sale, or other
disposition of the Aircraft; or (d) the execution and delivery of the
Operative Documents. The Lessee has filed all material tax returns which are
required to be filed by it, and has paid all Taxes required to be shown to be
due or payable on said returns or any assessment received by the Lessee,
except any Taxes that are being contested diligently and in good faith by
appropriate proceedings and for which adequate provision for payment has been
made. The Lessee warrants (i) that, if the same is obtainable, Lessee shall
promptly apply for and obtain an exemption from any withholding taxes (other
than Taxes to which Lessee's indemnity does not extend pursuant to the
provisions of Section 8) on Rent; (ii) that Lessor shall not be liable for
any unpaid withholding taxes (other than Taxes to which Lessee's indemnity
does not extend pursuant to the provisions of Section 8); and that any unpaid
withholding taxes (other than Taxes to which Lessee's indemnity does not
extend pursuant to the provisions of Section 8) shall not, and under state
law could not, become a Lien on the Aircraft and that Lessee shall indemnify
and hold Lessor harmless from any such taxes which may be imposed by the
State of Hawaii or any taxing authority or governmental subdivision thereof.
(ix) LESSOR'S QUALIFICATIONS: PROTECTION OF LESSOR'S OWNERSHIP OF
THE AIRCRAFT. The qualification at any time of the Lessor to do business
under the laws of the State of Hawaii does not constitute a condition to, and
the failure to so qualify does not affect, the exercise by the Lessor of any
right, privilege or remedy accorded it in, under or in connection with this
Lease or the enforcement of such right, privilege or remedy; and the
performance by the Lessor of any action required under, or contemplated by,
this Lease or the exercise of the remedies hereunder will not violate any
Applicable Law of the State of Hawaii or any political subdivision thereof or
result in any liability for Tax (other than Taxes to which Lessee's indemnity
does not extend pursuant to the provisions of Section 8) to the Lessor
pursuant to Applicable Law of the State of Hawaii. To ensure the legality,
validity and enforceability of this Lease, and/or to fully protect the
Lessor's title to, interest in and property rights with respect to the
Aircraft as against the Lessee or any third party, and/or to ensure that the
property rights of the Lessor therein will have priority in all respects over
all claims of all creditors of the Lessee, it is not necessary or advisable
that this Lease or any other document be filed or recorded with any court or
other authority in the State of Hawaii or that any stamp or similar Tax be
paid on or in respect of the Lease, except for the registration of the
Aircraft with the FAA. in the name of the Lessor
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<Page>
as owner.
(x) FINANCIAL CONDITION. The Lessee is not in default in the
performance of any of its obligations (A) for the payment of indebtedness for
borrowed money or any interest or premium thereon or (B) for the payment of
rent under any lease or agreement to lease real, personal or mixed property.
The Lessee has not taken nor proposes to take any corporate action nor have
any other steps or administrative or legal proceedings been taken or started
or threatened against it for the winding-up, dissolution, reorganization or
amalgamation of the Lessee or for the appointment of a liquidator,
administrator, receiver, administrative receiver, trustee or similar officer
of the Lessee or all or any of its revenues or assets nor has the Lessee
sought any other relief under any applicable insolvency or bankruptcy law.
(xi) ACCURACY AND DISCLOSURE OF INFORMATION. All information
furnished by the Lessee to the Lessor in connection with this Lease and the
Operative Documents and the transactions contemplated hereby and thereby, was
and remains true and correct in all respects and there are no other facts or
considerations the omission of which would render any such information
misleading. The Lessee has fully disclosed in writing to the Lessor all facts
relating to the Lessee which the Lessee knows or should reasonably know and
which might reasonably be expected to influence the Lessor in deciding
whether or not to enter into this Lease and to lease the Aircraft to the
Lessee hereunder.
(b) REPRESENTATIONS AND WARRANTIES OF THE LESSOR. The Lessor makes the
following representations and warranties:
(i) DUE ORGANIZATION. The Lessor is duly organized and validly
existing in good standing under the laws of the State of Delaware and has the
power and authority to enter into and perform its obligations under this
Lease and the Lease Supplement and Receipt.
(ii) DUE AUTHORIZATION: ENFORCEABILITY. This Lease has been, and the
Lease Supplement and Receipt to which the Lessor is a party will be, duly
authorized, executed and delivered by the Lessor, and, assuming due
authorization, execution and delivery thereof by the other parties hereto and
thereto, are, or in the case of the Lease Supplement and Receipt will be,
legal, valid and binding obligations of the Lessor, enforceable in accordance
with their respective terms.
(iii) NO VIOLATION. The execution and delivery by the Lessor of this
Lease are not, and the execution and delivery by the Lessor of the Lease
Supplement and Receipt will not be, and the performance by the Lessor of its
obligations under each of the foregoing documents will not be, inconsistent
with its Articles of Incorporation or by-laws, do not and will not contravene
any law, governmental rule or regulation, judgment or order applicable to it,
and do not and will not contravene any provision of, or constitute a default
under, any indenture, mortgage, contract or other instrument to which the
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Lessor is a party or by which it is bound or require the consent or approval
of, the giving of notice to, the registration with or the taking of any
action in respect of or by, any Federal, state or local governmental
authority or agency or other Person, except such as have been obtained, given
or accomplished.
(iv) OWNERSHIP OF AIRCRAFT. On the Delivery Date, the Lessor shall
have full legal and beneficial title to the Aircraft, free and clear of all
Liens except any Lien which Lessor caused to be placed on the Aircraft as
permitted pursuant to Section 16 hereof.
(v) LITIGATION. There are no unsatisfied judgements against Lessor
or Jetlease, Inc. and there is no pending or, to the best of the Lessor's
knowledge, threatened action or proceeding affecting the Lessor before any
court, tribunal, governmental agency or arbitrator which, if determined
against the Lessor, would materially adversely affect the financial condition
or operations of the Lessor or the ability of the Lessor to perform its
obligations under the Lease.
(vi) FINANCIAL CONDITION. Neither the Lessor nor Jetlease, Inc. are
in default in the performance of any of its obligations for the payment of
indebtedness for borrowed money or any interest premium thereon. The Lessor
has not taken nor proposes to take any corporate action nor have any other
steps or administrative or legal proceedings been taken or started or
threatened against it for the winding-up, dissolution, reorganization or
amalgamation of the Lessor or for the appointment of a liquidator,
administrator, receiver, administrative receiver, trustee or similar officer
of the Lessor or all or any of its revenues or assets nor has the Lessor
sought any other relief under any applicable insolvency or bankruptcy law.
(vii) ACCURACY AND DISCLOSURE OF INFORMATION. All information
furnished by the Lessor to the Lessee in connection with this Lease and the
Operative Documents and the transactions contemplated hereby and thereby, was
and remains true and correct in all respects and there are no other facts or
considerations the omission of which would render any such information
misleading. The Lessor has fully disclosed in writing to the Lessee all facts
relating to the Lessor which the Lessor knows or should reasonably know and
which might reasonably be expected to influence the Lessee in deciding
whether or not to enter into this Lease and to lease the Aircraft from the
Lessor hereunder.
(viii) NO AIRCRAFT LIENS. On the Delivery Date, the Aircraft shall
be free and clear of all Liens, except for a lien in favor of The CIT
Group/Equipment Financing, Inc.
(ix) ENGINE SUBSTITUTION. As soon as reasonably practicable
following the Delivery Date, Lessor shall make available to Lessee for
installation on the Aircraft, two Pratt & Whitney Model JT8D-9A Engines
("Replacement Engines") in a condition reasonably satisfactory to Lessee.
Within a reasonable period of time following delivery to Lessee of such
Replacement Engines, Lessee shall return to Lessor the two Pratt & Whitney
Model JT8D-17A Engines, bearing Serial Numbers P709457B and P709430B
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("Original Engines") which were installed on the Aircraft on the Delivery
Date. Following the return of the Original Engines to Lessor, the Replacement
Engines shall be deemed to be the Engines, as that term is otherwise defined
in this Lease.
(c) DISCLAIMER AND ACKNOWLEDGEMENT OF DISCLAIMER: WAIVER OF CONSEQUENTIAL
DAMAGES. The Aircraft is being leased by the Lessor to the Lessee hereunder
ON A COMPLETELY "AS IS,""WHERE IS," BASIS, WHICH IS ACKNOWLEDGED AND AGREED
TO BY THE LESSEE. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN (b) ABOVE
ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES
WHATSOEVER, EXPRESS OR IMPLIED, AND LESSOR HAS NOT MADE AND SHALL NOT BE
CONSIDERED OR DEEMED TO HAVE MADE (WHETHER BY VIRTUE OF HAVING LEASED THE
AIRCRAFT UNDER THIS LEASE, OR HAVING ACQUIRED THE AIRCRAFT, OR HAVING DONE OR
FAILED TO DO ANY ACT, OR HAVING ACQUIRED OR FAILED TO ACQUIRE ANY STATUS
UNDER OR IN RELATION TO THIS LEASE OR OTHERWISE ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR TO
ANY PART THEREOF, AND SPECIFICALLY, WITHOUT LIMITATION, IN THIS RESPECT
DISCLAIMS AS TO THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, MERCHANTABILITY,
COMPLIANCE WITH SPECIFICATIONS, CONSTRUCTION AND CONDITION OF THE AIRCRAFT,
OPERATION, OR FITNESS FOR A PARTICULAR USE OF THE AIRCRAFT AND AS TO THE
ABSENCE OF LATENT AND OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE
ABSENCE OF ANY INFRINGEMENT OR THE LIKE, HEREUNDER OF ANY PATENT, TRADEMARK
OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN
TORT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT OR
ANY PART THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY 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 OR
ANY PART THEREOF.
THE LESSEE HEREBY WAIVES, RELEASES, DISCLAIMS AND RENOUNCES ALL
EXPECTATION OF OR RELIANCE UPON ANY SUCH AND OTHER WARRANTIES, OBLIGATIONS
AND LIABILITIES OF LESSOR (SAVE AS IS EXPRESSLY STATED IN THIS LEASE OR IN
ANY OTHER OPERATIVE DOCUMENT) AND RIGHTS, CLAIMS AND REMEDIES OF THE LESSEE
AGAINST LESSOR, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, INCLUDING
BUT NOT LIMITED TO (i) ANY IMPLIED WARRANTY OF MERCHANTABILITY OF FITNESS FOR
ANY PARTICULAR USE, (ii) ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, (iii) ANY OBLIGATION,
LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR NOT ARISING FROM
NEGLIGENCE OF LESSOR, ACTUAL OR IMPUTED, AND (iv) ANY OBLIGATION LIABILITY,
RIGHT, CLAIM OR REMEDY FOR LOSS OF OR DAMAGE TO THE AIRCRAFT, FOR LOSS OF
USE, REVENUE OR PROFIT WITH RESPECT TO THE AIRCRAFT, OR FOR ANY OTHER DIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES.
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<PAGE>
SAVE AS IS EXPRESSLY STATED IN THIS LEASE OR IN ANY OTHER OPERATIVE
DOCUMENT, THE LESSOR SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY TO THE
LESSEE OR ANY OTHER PERSON WHETHER ARISING IN CONTRACT OR TORT, OUT OF ANY
NEGLIGENCE OR STRICT LIABILITY OF LESSOR OR OTHERWISE, AND LESSEE HEREBY
DISCLAIMS AND WAIVES ANY RIGHT IT WOULD OTHERWISE HAVE AGAINST LESSOR TO
RECOVER 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 DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN
CONNECTION THEREWITH AND THIS LEASE,
(ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR
ANY RISKS RELATING THERETO,
(iii) ANY CONSEQUENTIAL DAMAGES, INCLUDING THOSE FOR INTERRUPTION OF
SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS, HEREUNDER FOR CONSEQUENTIAL
DAMAGES AS A RESULT OF ANY BREACH OR ALLEGED BREACH BY THE LESSOR OF ANY OF.
THE AGREEMENTS, REPRESENTATION OR WARRANTIES OF THE LESSOR CONTAINED IN THIS
LEASE, OR
(iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR
IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT.
(d) LESSEE'S MISCELLANEOUS COVENANTS.
(i) MAINTENANCE OF CORPORATE STATUS: NO MERGER OR CONSOLIDATION.
Lessee will preserve and maintain its corporate existence and such of its
rights, privileges, licenses and franchises in any jurisdiction where failure
to obtain such licensing or qualification would have a material adverse
effect upon Lessee. The Lessee shall not consolidate or merge with or into
any other corporation (without the prior written consent of the Lessor, which
consent shall not be unreasonably withheld) or sell, convey, transfer, lease
or otherwise dispose of, whether in one transaction or a series of related
transactions, any of its assets if the aggregate value thereof represents all
or substantially all of its assets to any Person. Lessee shall not (A)
voluntarily suspend its certificated operations; or (B) voluntarily or
involuntarily permit to be revoked, canceled or otherwise terminated all or
substantially all of the franchises, concessions, permits rights or
privileges required for the conduct of business and operations of Lessee or
the free and continued use and exercise thereof; or (c) cease to have the
status described in Section 4(a)(ii).
(ii) NOTICE OF DEFAULT OR ADVERSE OCCURRENCE. The Lessee shall
promptly inform the Lessor of any occurrence of which it becomes aware which
Lessee reasonably
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expects to adversely affect its ability to perform any of its obligations
under this Lease and the other Operative Documents to which the Lessee is a
party and, without prejudice to the generality of the foregoing, it will
inform the Lessor of the occurrence of or the existence of a Default
forthwith upon becoming aware of such Default.
(iii) MAINTENANCE OF CONSENTS AND APPROVALS. The Lessee shall obtain
or cause to be obtained, maintain in full force and effect and comply in all
material respects with the conditions and restrictions (if any) imposed on,
or in connection with, every consent, license, authorization, approval,
filing and registration obtained or effected in connection with this Lease
and the Operative Documents, including without limitation foreign exchange
and transfer permits regarding Dollar amounts due hereunder or thereunder, or
which may from time to time be necessary under Applicable Law for the
continued due performance of all obligations of the Lessee under this Lease,
including without limitation qualifications to operate the Aircraft in
accordance with Aviation Law, and under the other Operative Documents. Where
it is required under Applicable Law with respect to this Lease or under any
Operative Document, to obtain consent, approval, or sanction for, or to
stamp, file, register or attend to, any act, matter or thing, Lessee will do
so promptly and within any applicable prescribed time period in respect
thereof.
(iv) CHANCE OF LOCALE. Lessee will not, without prior written notice
to Lessor, change its principal place of business or chief executive office.
(v) FINANCIAL INFORMATION AND REPORTS. The Lessee shall provide the
Lessor (i) as soon as available and in any event within 120 days after the
end of each fiscal year of the Lessee, its consolidated audited annual
financial statements prepared in accordance with generally accepted
accounting principles certified as being so prepared by a "Big 6" firm of
independent public auditors (or successor thereto), (ii) within sixty (60)
days after the end of each quarter, its quarterly consolidated financial
statements in a form consistent with generally accepted accounting
principles, certified as to their correctness by its duly authorized chief
financial officer, together with a certificate signed by its duly authorized
chief financial officer to the effect that, based upon due inquiry and
investigation, during such financial quarter no Default occurred, and (iii)
with such other information respecting the Lessee's financial condition or
operations as the Lessor may from time to time reasonably request. The
Lessee's fiscal year ends December 31 of each year.
(e) LESSOR'S COVENANT OF QUIET ENJOYMENT. The Lessor agrees that, so long as
no Event of Default shall have occurred and be continuing, neither the
Lessor, the Lessor's lender nor any person claiming by or through Lessor or
Lessor's lender will take (or fail to take) any action, the taking (or
failure to take) of which causes interference with the Lessee's peaceful and
quiet use, operation and possession of the Aircraft under this Lease.
SECTION 5. REGISTRATION, USE, OPERATION, MAINTENANCE, POSSESSION
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(a) TITLE AND REGISTRATION. Lessee acknowledges that title to the Aircraft
shall remain vested in Lessor, and the Lessee undertakes, to the extent
permitted by Applicable Law, to do all such further acts, deeds, assurances
or things as may, in the reasonable opinion of the Lessor, be necessary or
desirable in order to protect or preserve Lessor's title to the Aircraft
against all claims arising by or through Lessee. As to any claims arising by
or through Lessor or Lender, Lessee shall reasonably cooperate with Lessor in
protecting and preserving Lessor's title to the Aircraft. Throughout the
Term, the Aircraft shall remain registered at the FAA, and the Lessee shall
use all reasonable efforts to ensure that no third party claiming by or
through Lessee does any act or thing which might prejudice such registration.
As to any act or thing done by any party claiming by or through Lessor or
Lender, Lessee shall reasonably cooperate with Lessor in protecting such
registration. Lessee shall promptly furnish the Lessor such information as
may be required to enable the Lessor to file any reports required by any
governmental authority as a result of Lessor's ownership of the Aircraft.
(b) GENERAL. Unless otherwise provided herein, Lessee, at its own cost and
expense, shall (i) service, repair, maintain and overhaul the Airframe and
each Engine under the Approved Maintenance Program so as to keep the Airframe
and each Engine in as good operating condition as when delivered to Lessee
hereunder, ordinary wear and tear excepted, and in such operating condition
as may be necessary to enable the airworthiness certification of the Aircraft
and any aircraft on which any Engine might be installed to be maintained in
good standing at all times under Aviation Law, and (ii) maintain the Aircraft
Documents in the English language in accordance with the Aviation Law and the
Approved Maintenance Program; and (iii) at a minimum, give the Aircraft the
same level of attention and maintenance as the Lessee affords to the other
aircraft in its fleet, including improvements, repairs, cleanliness, and
correction of items of a cosmetic nature (such as hail damage), except where
the terms of this Lease dictate higher standards, it being understood that
this clause (iii) shall neither require Lessee to return the Aircraft in a
condition in excess of the return conditions set forth in Section 6 of this
Lease or expand Lessee's obligations thereunder, nor after or expand any of
Lessee's obligations under Section 5(l) hereof.
(c) USE. Lessee agrees not to operate or locate the Airframe or any Engine,
or permit the Airframe or any Engine to be operated or located, in any area
(i) excluded from coverage by any insurance policy in effect or required to
be maintained hereunder with respect to the Airframe or Engines or (ii) in
any war zone or in any recognized or, in Lessor's reasonable judgment,
threatened area of hostilities unless fully covered by war risk insurance
meeting the terms of Section 10 hereof. Lessee agrees not to operate the
Aircraft, or permit the Aircraft to be operated during the Term (1) unless
the Aircraft is covered by insurance as required by the provisions of Section
10 hereof or (2) contrary to the terms of such insurance as required by the
provisions of Section 10 hereof.
(d) OPERATION, Lessee agrees not to (i) operate the Airframe or any Engine
or permit the Airframe or any Engine to be operated during the Term except
(in the case of the Airframe) in a passenger or cargo configuration, in
commercial or other operations for which Lessee is duly authorized by the
Aviation Authority; or (ii) use or permit the Aircraft to be used for a
purpose for which the Aircraft is not designed or reasonably
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suitable. Lessee will not permit the Airframe or any Engine to be maintained,
used or operated during the Term in violation of any Applicable Law, or
contrary to any manufacturer's operating manuals or instructions.
(e) LESSEE TO PAY ALL COSTS. Save as expressly provided in this Lease,
Lessee shall pay all costs incurred in the operation of the Aircraft,
including but not limited to flight crews, cabin personnel, fuel, oil,
lubricants, maintenance, insurance, overflight landing and navigation fees,
airport charges, passenger service and any and all other expenses of any kind
or nature, arising directly or indirectly in connection with or related to
the use, movement and operation of the Aircraft by Lessee during the Term.
The obligations of Lessee under this provision shall survive the end of the
Term. The Lessee shall be under no obligation to pay (and the Lessor shall
indemnify the Lessee against) any such costs and expenses, including in
particular but without limitation, landing and navigation fees and airport
charges, unless such costs and expenses are incurred during the Term.
(f) MAINTENANCE IN GENERAL.
(i) Lessee shall maintain and repair the Airframe and the Engines so
as to keep them in good condition during the Term and until the Aircraft is
redelivered to Lessor, pursuant to Section 6 hereof, under the Approved
Maintenance Program. Lessee shall deliver to Lessor a technical summary of
such Approved Maintenance Program prior to the Delivery Date. At any time,
Lessor may request of Lessee and Lessee shall provide a listing of any
significant changes (including without limitation, time limit changes) which
may be made to such Approved Maintenance Program, and a copy of such proposed
changes shall be delivered to Lessor for its prior written approval (such
approval not to be unreasonably withheld) before such change is submitted to
the Aviation Authority for approval. If Lessor fails to object to such
proposed changes within fifteen days following written notification by
Lessee, such proposed changes shall be deemed acceptable to Lessor. Included
within the obligation of maintenance and repair is the obligation and
affirmative undertaking by Lessee to timely replace all unserviceable or
defective Parts, to the extent required to cause the Aircraft to be in an
airworthy condition in all respects, and covered by an effective commercial
passenger transport category certificate of airworthiness at all times except
during those periods when the Aircraft is undergoing maintenance or repairs
as required by this Lease.
(ii) All maintenance (other than routine flight line maintenance)
shall be performed by the Maintenance Provider.
(g) SPECIFIC ITEMS OF MAINTENANCE. Lessee agrees that maintenance and
repairs shall include, but shall not be limited to, the following
specific items:
(i) to perform or have performed in accordance with manufacturer's
recommendations and the Approved Maintenance Program all routine maintenance
work,
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including on-line maintenance on the Aircraft, and to ensure that all such
maintenance shall be in accordance with the regulations and directives of
the Aviation Authority. Lessee shall have all maintenance and repairs
performed at repair facilities approved by the Aviation Authority;
(ii) to correct diligently deficiencies revealed at any time by any
inspection of Lessor which under the Approved Maintenance Program reasonably
require proper repair, replacement, overhaul and adjustment;
(iii) to notify the Airframe or Engine or any Part manufacturers
promptly (with a copy to Lessor) OF any modifications or configuration
changes to the Aircraft which would have a material effect on or be a
material change to the detail specification and/or the manuals relating to
the Aircraft (such as flight, operations and maintenance);
(iv) upon Lessor's written request, to furnish Lessor promptly, by
mail, with copies of any written communications with manufacturers with
respect to defects or malfunctions of the Aircraft or such other matters;
(v) upon Lessor's written request, to furnish Lessor with a copy OF
Lessee's most recent Approved Maintenance Program summary, with copies of any
amendments or additions made thereto;
(vi) to ensure that a trend monitoring system complying with the
standards of the Approved Maintenance Program is implemented and followed
with respect to each Engine, and to furnish Lessor, upon its written request,
on the first day of each calendar quarter, with copies of the trend
monitoring log maintained with respect to each Engine; and
(vii) upon Lessor's written request, to furnish Lessor with a
complete and current Airframe manufacturer maintenance manual on microfilm;
provided however that Lessee shall not be required to provide revisions to
the airframe manufacturer's maintenance manual on microfilm.
(h) PARTS.
(i) Unless the Airframe or an Engine has suffered an Event of Loss,
Lessee, at its own cost and expense, will during the Term promptly replace
all Parts that may from time to time become unserviceable, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
unfit for use for any reason whatsoever. In addition, in the ordinary course
of maintenance, service, repair, overhaul or testing, Lessee may remove any
Parts, whether or not unserviceable, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered unfit for use,
provided that Lessee shall replace such Parts as promptly as practicable with
replacement Parts owned by Lessee. All replacement Parts shall be made by the
same
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manufacturer and of the same model number and modification status, shall be
free and clear of all Liens except Permitted Liens and shall be in as good
operating condition as, and shall have a value and utility at least equal to,
the Parts replaced assuming such replaced Parts were in the condition and
repair required to be maintained by the terms hereof.
(ii) All Parts at any time removed from the Airframe or any Engine
shall remain the property of Lessor and subject to this Lease, no matter
where located, until such time as such Parts shall be replaced by Parts that
have been incorporated or installed in or attached to such Airframe or Engine
and that meet the requirements for replacement Parts specified in this
Section 5. Immediately upon any replacement Part becoming incorporated or
installed in or attached to such Airframe or Engine, without further act, (i)
title to such replacement Part shall, to the fullest extent permitted by
Applicable Law, thereupon vest in Lessor; (ii) such replacement Part shall
become subject to this Lease and be deemed part of such Airframe or Engine,
as the case may be, for all purposes hereof to the same extent as the Parts
originally incorporated or installed in or attached to such Airframe or
Engine; and (iii) title to the replaced Part shall, to the fullest extent
permitted by Applicable Law, thereupon vest in Lessee, free and clear of all
rights of Lessor, including Lessor Liens, and shall no longer be deemed a
Part hereunder.
(iii) Title to all Parts incorporated or installed in or attached or
added to the Airframe or any Engine as the result of any alteration,
modification or addition effected by or on behalf of Lessee or any sublessee,
shall, without further act vest in Lessor and become subject to this Lease.
(i) AIRWORTHINESS DIRECTIVES.
The Lessee shall be solely responsible for the cost of complying with
all Airworthiness Directives mandated for the Aircraft for the first five
years of the Term. During the sixth, seventh and eighth years of the Term and
any extension thereof, Lessee shall be responsible for all Airworthiness
Directives costing less than $50,000. In the event an individual
Airworthiness Directive must be complied with after the fifth year of the
lease Term and Lessee's actual cost of compliance exceeds $50,000, the cost
in excess of said sum shall be shared by the Lessor and Lessee in accordance
with the following table:
Year Lessor Lessee
---- ------ ------
6 30% 70%
7 40% 60%
8 50% 50%
All Airworthiness Directives shall be accomplished in strict compliance with
all issuing agency's specific instructions. Lessee shall include within the
Aircraft Documents all
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documentation necessary to establish the source data, method of compliance,
verification of accomplishment, quality assurance, and all schedules of
recurring action of any Airworthiness Directive.
(j) SERVICE BULLETINS. Lessee shall, at its sole cost and expense,
incorporate into the Aircraft all those Airframe and Engine manufacturer and
other vendor service bulletins (other than "alert" or "mandatory" service
bulletins, it being understood that "alert" or "mandatory" service bulletins
are an Airworthiness Directive) which Lessee plans to adopt during the Term
for a minimum of one-third (1/3) of its Boeing 737 aircraft fleet. The
Aircraft, with respect to the rest of Lessee's fleet, shall not be
discriminated against in service bulletin compliance or other maintenance
matters, provided, however, that Lessee shall not be required to return the
Aircraft in a condition in excess of the return conditions set forth in
Section 6 of this Lease and Lessee's obligations under Section 5(l) hereof
shall not be altered or expanded hereby; provided further, however, that
notwithstanding the foregoing, all service bulletins incorporated in the
Aircraft shall remain a part of the Aircraft and shall not be removed by
Lessee, unless directed to do so, in writing, by Lessor.
(k) CORROSION CONTROL. Lessee shall adopt and incorporate in the Approved
Maintenance Program specific measures for the control of corrosion in
conformance with the Airframe manufacturer's corrosion prevention manual, and
shall carry out such work as may be required to comply therewith, including
without limitation, periodic inspections by penetration of fuel tanks,
periodic inspection and clean-up under galleys, forward and aft cargo pit
areas and lavatories, periodic treatment of all mild and moderate corrosion
and correcting of all severe or exfoliated corrosion in accordance with the
Approved Maintenance Program.
(l) MODIFICATIONS.
(i) Except for Stage III noise abatement requirements, Lessee at its
own expense, shall make such alterations and modifications in and additions
to the Airframe or any Engine as may be required to be made from time to time
by Aviation Law during the Term regardless upon whom such requirements are,
by their terms, nominally imposed, including, without limitation, any
modifications required to enable the Aircraft to comply with environmental,
noise, air pollution, and other standards ("Required Modifications").
(ii) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NO
OPTIONAL MODIFICATION SHALL BE MADE WHICH HAS THE EFFECT OF DECREASING THE
UTILITY OR VALUE OR REMAINING USEFUL LIFE OF THE AIRCRAFT OR ADVERSELY
AFFECTS ITS AIRWORTHINESS OR USE FOR TRANSPORTING PASSENGERS OR CARGO IN
COMMERCIAL SERVICE.
(iii) Lessee shall not, without Lessor's prior written consent,
which shall not be
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unreasonably withheld, make any major modifications, alterations, or
additions (collectively, "Optional Modifications") to the Aircraft. For
purposes of this Section 5, the term Optional Modifications shall include,
but shall not be limited to, (i) changes which materially affect the Aircraft
structure or performance, (ii) changes which could adversely affect spare
parts, interchangeability or replaceability, and shall exclude Required
Modifications. All Optional Modifications, except as otherwise provided
herein, shall be accomplished by Lessee at its own expense. Lessee shall
provide advance copies of all drawings and data to be used by Lessee in
accomplishing such Optional Modifications for Lessor's approval prior to such
work. In the event Lessor does not consent to certain Optional Modifications
to the Aircraft desired by Lessee, Lessor may give its qualified consent in
writing to Lessee to accomplish such modifications which are unacceptable to
Lessor on the condition that Lessee agrees to remove all such unacceptable
modifications accomplished by Lessee and to reconstruct the modified areas to
their original configuration in a good and workmanlike manner prior to return
of the Aircraft to Lessor. In the event of Lessor's granting such qualified
consent in writing, Lessee shall, at Lessee's sole expense, accomplish all
such Optional Modifications, removal of such modifications and required
reconstruction necessary to return the Aircraft to Lessor in its original
configuration at the end of the Term. At the end of the Term and any
extensions thereof, all Optional Modifications shall be the property of
Lessee, provided that Lessee is not in default hereunder. Lessee shall be
permitted to remove such Optional Modifications provided Lessee restores the
Aircraft to its condition prior to the installation of any such modification.
(iv) During the period six (6) months prior to the end of the Term,
upon written request by Lessor, Lessee shall make the changes to the Aircraft
desired by Lessor during Lessee's lay-up of the Aircraft for maintenance
under the Approved Maintenance Program in those circumstances where such
changes are not otherwise required hereunder; provided always, that the
change can be accomplished without increasing the out-of-service time of the
Aircraft and provided also that the change does not adversely affect the
Lessee's subsequent utilization of the Aircraft in any way. Lessor, at its
expense, shall provide retrofit kits of Parts and installation instructions
to Lessee and Lessee, at Lessor's expense, shall install such kits in the
Aircraft to accomplish the changes desired by Lessor. Lessor shall reimburse
Lessee at Lessee's cost for accomplishment of such changes requested by
Lessor.
(m) REPORTS. In addition to the reports required by Section 5(g)(iii),
(iv), and (v), Lessee shall furnish to Lessor, upon written request, the
following reports on a monthly basis: (i) the hours and cycles operated by
the Airframe; (ii) the hours and cycles operated by each of the Engines
(noting their location); (iii) scheduled and unscheduled Engine changes; (iv)
monthly aircraft maintenance planning sheet; (v) monthly deferred items
carried forward; (vi) damage reports; (vii) a list of those service
bulletins, Airworthiness Directives and engineering modifications issued
during such month and applicable to the Aircraft, whether or not incorporated
on the Aircraft; and (viii) C Check, D Check, and Engine shop visit scheduled
dates. In addition, Lessee shall notify Lessor
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of all accidents, cases of significant theft or vandalism, extended periods
of Aircraft grounding for cause, and insured occurrences as promptly as
practicable.
(n) RIGHT TO INSPECT. Lessor and its agents shall have the right to inspect
the Aircraft or the Aircraft Documents at any reasonable time, and so as not
to disrupt the commercial operation of the Aircraft, upon giving Lessee
reasonable written notice, to ascertain the condition of the Aircraft and to
satisfy Lessor that the Aircraft is being properly repaired and maintained in
accordance with the requirements of this Lease. The cost of the inspection or
survey shall be paid by Lessee if the Aircraft, or any part thereof, is not
substantially in the condition required by this Lease but shall otherwise be
paid by the Lessor. All repairs which shall be shown by the inspection or
survey to be required shall be made at Lessee's expense in accordance with
the Approved Maintenance Program. All required repairs shall be performed as
soon as practicable after such inspection. In the event of a dispute between
Lessor and Lessee as to the proper performance by Lessee of the repairs
required hereunder, the decision of the manufacturer of the Airframe, Engines
or Part(s) (as applicable) shall control. Lessee shall be responsible for
payment of all expenses of the manufacturer incurred in connection with the
rendering of its decision if the manufacturer determines in favor of the
Lessor, but not otherwise. Lessor shall have no duty to make any such
inspection and shall not incur any liability or obligation by reason of not
making such inspection.
(o) REPAIRS. Any repair to the Aircraft accomplished during the Term shall
be accomplished pursuant to the applicable manufacturer's repair manual
instructions and (where applicable) the Approved Maintenance Program. Such
repairs shall be permanent, if the manufacturer's repair manual so requires,
and shall be made to a standard so as to keep the Aircraft at all times in
the condition required by the Approved Maintenance Program. For example,
repairs to the skin of the Aircraft shall be flush and not merely patched,
unless otherwise permitted in the Airframe manufacturer structural manual or
the Engine manufacturer maintenance manual. To ensure compliance with this
standard, Lessee shall notify Lessor and the manufacturer of any repair to
the structure or skin of the Aircraft or any other repair costing in excess
of Two Hundred Fifty Thousand Dollars (US$250,000) promptly after its being
made (but in any event no later than fifteen (15) calendar days thereafter);
provided, however, that Lessor shall have no liability to Lessee or third
parties with regard to such repair or the quality thereof and Lessee shall
indemnify and hold Lessor harmless with regard thereto. All technical and
engineering data, calculations, drawings, and documentation covering major
repairs shall become a permanent part of the Aircraft Documents. Any
disagreement between Lessor and Lessee as to what constitutes a "major"
repair or a "permanent' repair shall be referred to the applicable
manufacturer and the Aviation Authority.
(p) AIRCRAFT DOCUMENTS. Lessee, at its expense, will at all times maintain
and preserve, in the English language, all flight records, maintenance
records, historical records, modification records, overhaul records, manuals,
logbooks, authorizations, drawings and data required or recommended by the
Airframe, Engine, or any Part
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<PAGE>
manufacturer, or required from time to time by the Aviation Authority with
respect to the Aircraft, including without limitation shop records detailing
service checks, inspections, tests, repairs, or overhauls, which are accepted
by the Lessee at delivery (as evidenced by Schedule 2 to the Lease Supplement
and Receipt), and during the Term Lessee shall produce and maintain the
Aircraft Documents required by the Aviation Authority. All documentation of
any type referred to in the preceding sentence is herein individually and
collectively referred to as the "Aircraft Documents." All other aircraft
documents shall be retained by the Lessor. Records produced by electronic
data processing or other automated means are not acceptable, except as
summary documents accompanied by original, or manual, records, unless
specifically approved by the Lessor in writing. Aircraft Documents pertaining
to maintenance shall contain verification of accomplishment and quality
assurance by actual identifiable signature.. Except as expressly provided in
Section 6(m) hereof, Aircraft Documents for Life Limited Components shall
establish total service, origin, and authenticity "back-to-birth." All
Aircraft Documents shall be the property of the Lessor. All Aircraft
Documents shall be stored by Lessee during the Term at a secure facility, and
Lessee shall notify Lessor in writing of the location of such facility. All
Aircraft Documents will be at all times kept current and up to date in order
to facilitate Lessor's ability to inspect periodically the Aircraft, monitor
the maintenance of the Aircraft during the Term and to facilitate the sale or
re-lease of the Aircraft to a third party at the end of the Term. The Lessee
shall retain a revision service for all Airframe, Engine, and Part
manufacturer's manuals and documentation, and the Aircraft Documents shall at
all times contain the latest issued revisions and reflect the current
configuration and status of the Airframe, Engines, and Parts.
(q) LESSOR'S DISCLAIMER. Notwithstanding the rights of Lessor to inspect
the Aircraft and receive reports on its condition and maintenance contained
in this Section 5 and elsewhere in this Lease, Lessor shall have no
obligation to third parties or to any Person to ensure that Lessee maintains
the Aircraft in an airworthy condition or otherwise in accordance with the
terms hereof.
(r) POSSESSION. The Lessee will not, without the prior written consent of
the Lessor, which may be withheld in the reasonable discretion of Lessor,
assign any of its rights or obligations under this Lease or sublease or
otherwise in any manner deliver, transfer or relinquish possession or control
of, or transfer any right, title or interest in, the Airframe or any Engine
or Part (whether through pooling or interchange agreements or otherwise) or
install any Engine, or permit any Engine to be installed, on any airframe
other than the Airframe or permit any Part to be installed on an airframe or
engine other than the Airframe or an Engine, provided that the Lessee may,
without the prior written consent of the Lessor:
(i) deliver temporary possession and control of the Airframe or any
Engine or Part to the manufacturer thereof or any Maintenance Provider for
testing, service, maintenance, overhaul or repair or, to the extent permitted
by this Section 5, for modifications or additions;
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<PAGE>
(ii) install an Engine on an airframe owned by the Lessee free and
clear of all Liens except Permitted Liens;
(iii) install an Engine on an airframe leased to the Lessee or
owned by the Lessee and subject to a security agreement under which the
Lessee is the debtor, or acquired by the Lessee pursuant to a conditional
sales agreement, PROVIDED THAT (A) such airframe is free and clear of all
Liens except the rights of the parties to such lease or security agreement,
except Permitted Liens, and (B) such lessor or secured party agrees in
writing that it shall not acquire any right, title or interest in such Engine;
(iv) in the ordinary course of testing, servicing, maintenance,
repair or overhaul, remove any Part from the Airframe or any Engine, PROVIDED
that the Lessee replaces such Part as promptly as possible with a Part which
has a value and utility at least equal to the Part being replaced and is
owned by the Lessee free and clear of all Liens except Permitted Liens; and
any such replacement Part shall thereby become subject to this Lease without
necessity of further act; PROVIDED, however, that any Part removed from the
Airframe or any Engine for such purpose shall remain subject to this Lease
until replaced by a replacement Part as provided above in this clause (iv);
and
(v) enter into a wet lease or charter (defined as a lease of the
Aircraft and flight crew, during which Lessee maintains exclusive operational
control of the aircraft and during which lease or charter Lessee continues to
maintain the Aircraft in accordance with Lessee's Approved Maintenance
Program) for the Airframe and the Engines or engines then installed thereon
or for any Engine installed on any other airframe owned or operated by Lessee
with any third party PROVIDED, however, that the term of such wet lease or
charter shall not extend beyond the end of the Term.
No transfer of possession or control or other right afforded the Lessee
pursuant to this Section 5 shall in any manner affect any of the obligations
of the Lessee under this Lease or under the other Operative Documents, which
obligations shall remain primary and shall continue to the same extent as in
the absence of such transfer or other right. In the event that the Lessor
shall have received a written agreement or existing security agreement,
conditional sales agreement or lease complying with the terms of clause (iii)
of this Section 5(r), the Lessor hereby agrees for the benefit of the lessor
or secured party furnishing such agreement that the Lessor and Lessor's
lender will not acquire or claim, as against such lessor or secured party,
any right, title or interest in any engine owned by such lessor or in which
such secured party has a security interest by reason of such engine being
installed on the Airframe.
(s) INSIGNIA. The Lessee agrees, at its own cost and expense, to (i) cause
the Airframe and each Engine to be kept numbered with the manufacturer
serial number therefor; (ii) affix and maintain on the Airframe and each
Engine a metal nameplate
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bearing the manufacturer serial number, stating that such Airframe or Engine
is leased from Ajet, Inc. and financed by The CIT Group/Equipment Financing,
Inc. and bearing such other information as from time to time may be required
by law or otherwise necessary in order to protect the title of the Lessor to
such Airframe or Engine and the rights of the Lessor under this Lease. The
Lessee will not place the Aircraft in operation or exercise any control or
dominion over the same until such nameplate has been placed thereon. The
Lessee will replace promptly any such nameplate which may be removed, defaced
or destroyed.
(t) TEMPORARY SUBSTITUTIONS. Provided that no Default shall have occurred
and be continuing, the Lessee shall be entitled to install an engine or part
on the Aircraft by way of replacement, notwithstanding that it does not
comply with the foregoing provisions of this Section 5 if: (i) there is not
available to the Lessee at the time and in the place that engine or part is
required to be installed on the Aircraft, a replacement Engine or, as the
case may be, Part complying with the requirements of this Section 5; and (ii)
it would constitute an unreasonable disruption of the operation of the
Aircraft and/or the business of the Lessee to ground the Aircraft until an
Engine or Part, as the case may be, complying with this Section 5 becomes
available for installation on the Aircraft; and (iii) as soon as practicable
after installation of the same on the Aircraft but, in any event, no later
than whichever is the earlier of (aa) sixty days after such installation and
(bb) Expiry, the Lessee removes any such engine or part and replaces it with
the Engine or Part replaced by it or by an Engine or Part, complying With
this Section 5.
(u) STAGE III NOISE ATTENUATION MODIFICATION. If Lessee is required by law
to meet Stage III noise requirements, then with at least nine months' written
notice from Lessee, Lessor will finance the cost of purchasing one ship set
of Hush Kits to be installed on the Aircraft.
The Basic Rent thereafter shall be increased by an amount required to
fully amortize the cost of the modification in equal monthly installments
over the greater of (a) forty-eight months or (b) the remaining term of the
Lease (as it may be extended) up to a maximum term of sixty months. In the
event the remaining term of the Lease is less than forty-eight months, Lessee
(at its sole option) may extend the Lease term for up to one year. If at any
time during the Lease term, the installation of Hush Kits is required by law,
Lessee (at its sole option) may terminate the Lease upon payment of the
present value of the remaining lease payments and compliance with all Return
Conditions set forth in Section 6 hereof.
Upon the termination of the Lease, Lessee may at Lessee's option
remove and retain the Hush Kits. In the event Lessee has not fully amortized
the cost of the Hush Kits as set forth above, upon the termination of the
Lease, Lessee will pay to Lessor the remaining unamortized cost of the Hush
Kits.
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SECTION 6. RETURN OF THE AIRCRAFT.
(a) RETURN. On the last day of the Term or earlier Expiry (the "Return
Date"), all of the terms of this Section 6 shall apply and the Lessee shall
return the Aircraft to the Lessor by delivering the same, at a location in
the Continental United States designated by Lessor, or such other place as
may be mutually agreed upon in writing by the Lessor and Lessee (the "Return
Location"), fully equipped with all Engines installed thereon. The Aircraft
at the time of its return shall be in the condition set forth in this Section
6 and shall be free and clear of all Liens other than Lessor Liens. The
provisions of this Section 6 may be altered only in writing duly executed by
both parties and incorporated into the Lease Supplement and Receipt. At the
time of acceptance of return of the Aircraft to Lessor, Lessor and Lessee
shall execute an Aircraft Return Receipt and Lease Termination in the form
attached hereto as Exhibit C.
(b) LEASE CONTINUES. In the event, for any cause, Lessee does not return
the Aircraft or any part thereof to Lessor on the last day of the Term or
earlier Expiry in the condition required hereunder, unless due to force
majeure, unreasonable delay by Lessor in inspecting the Aircraft or a request
by Lessor that Lessee perform work on the Aircraft unrelated to Lessee's
obligations under this Lease, then all of the obligations of Lessee under
this Lease shall continue and such continued use shall not be considered a
renewal of the Term of this Lease or a waiver of any right of Lessee
hereunder. During such continued use, Rent shall continue to be paid by
Lessee to Lessor and the other performance and obligations of Lessee to
Lessor shall continue hereunder and the same shall be prorated at the rate of
150% of the monthly installment of Basic Rent for each day until the Aircraft
is actually delivered to Lessor, and all other terms and conditions of this
Lease shall remain in full force and effect. Payment shall be made upon
presentation of Lessor's invoice and any failure to pay shall constitute an
Event of Default of Lessee. Any discrepancies found during the inspections
hereinafter described that were not corrected by Lessee prior to return of
the Aircraft to Lessor may be corrected by Lessor or its designee after
return of the Aircraft and Lessee shall reimburse Lessor for expenses
incurred by Lessor or its designee for accomplishing such discrepancy
corrections. Lessee shall pay Lessor for such expenses incurred upon
presentation of Lessor's invoice therefor. Any late payments shall be
subject to interest at the Overdue Payment Rate.
(c) RETURN OF ENGINES. Lessee may return the Aircraft with a substitute
engine or engines, provided that such engine conforms to all applicable
requirements set forth in this Section 6. In the event any engine not owned
by Lessor shall be returned with the Airframe, Lessee will, at its own
expense and concurrently with such return, furnish Lessor with a full
warranty bill of sale, free and clear of all liens, claims and encumbrances,
in form and substance satisfactory to Lessor, with respect to each such
replacement engine and shall take such other action as Lessor may reasonably
request in order that such replacement engine shall be duly and properly
titled in Lessor. Upon passage of title to Lessor such replacement engine
shall be deemed to be an Engine for all purposes hereof
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and thereupon Lessor will transfer to Lessee, without recourse or warranty
except a warranty as to Lessor's title and the absence of Lessor's Liens, all
of Lessor's right, title and interest in and to an Engine not installed on
such Airframe at the time of the return thereof.
(d) CONDITION OF AIRCRAFT. The Aircraft at the time of its return to Lessor
shall have been maintained and repaired in accordance with the Approved
Maintenance Program and this Lease with the same care and consideration for
the technical condition of the Aircraft as if it were to have been kept in
continued regular service by the Lessee, (it being expressly understood that
this clause does not expand Lessee's obligation to return the Aircraft in a
condition in excess of the specific requirements set forth below or as
otherwise required by this Lease), and shall meet the following requirements:
(i) OPERATING CONDITION: MINIMUM LIFE REMAINING. The Aircraft shall
be in as good operating condition as on the Delivery Date, ordinary wear and
tear from normal airline passenger or cargo operations excepted, with all of
the Aircraft equipment, components and systems functioning in accordance with
their intended use irrespective of deviations or variations authorized by the
manufacturer's minimum equipment list or configuration deviation list.
Notwithstanding any provision herein allowing a financial settlement in lieu
of return conditions, in any event all Aircraft equipment components, and
systems shall be fully airworthy and serviceable for no less than the lesser
of (1) 3,000 hours, 3,000 cycles, or one calendar year, whichever is the more
limiting factor; or (2) the hours, cycles or calendar time on the Delivery
Date, whichever is the more limiting factor.
(ii) CLEANLINESS STANDARDS. The Aircraft shall be clean by
commercial airline standards. The carpets shall have been shampooed, the seat
covers washed, all interior surfaces wiped down and paint touch up carried
out as necessary. The exterior shall have received a full wash and
lubrication.
(iii) CERTIFICATE OF AIRWORTHINESS. The Aircraft shall have, and be
in compliance with, a current valid transport-category certificate of
airworthiness for commercial passenger operations, and shall be airworthy
according to manufacturer's specifications and Aviation Authority
regulations. If required by Lessor, Lessee, at its cost and expense, shall do
the necessary paperwork to request in the name of Lessor a certificate of
airworthiness for export so as to allow Lessor to place the Aircraft on a
foreign registry. At Lessor's request, the Aircraft may be deregistered from
the Aviation Authority aircraft registry and shall have a necessary
governmental approvals, permits and licenses, if any, required for export of
the Aircraft.
(iv) COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. The Aircraft shall
be in compliance with all Airworthiness Directives affecting the Aircraft
which have an effective date for compliance during the Term. In the event
Lessee has obtained a waiver or deviation from the Aviation Authority from
having to comply with any such Airworthiness
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Directives, Lessee, shall irrespective of such waiver or deviation, fully
comply with all such Airworthiness Directives covered by such waiver or
deviation prior to the return of the Aircraft to Lessor as if such waiver or
deviation did rot exist.
(v) DEFERRED MAINTENANCE. The Aircraft shall have had accomplished
thereon all outstanding deferred maintenance items, carry-over items,
configuration deviation list items and flight discrepancies. Items deferred
because of maintenance concessions (i.e., an exemption to operate beyond the
normal limits by monitoring) shall be brought up-to-date as if such
maintenance concessions or exemptions did not exist. Components whose time
status exceeds the conditions or requirements imposed by this Lease shall be
brought into compliance with such conditions or requirements.
(vi) CORROSION TREATMENT. The Aircraft shall have been maintained by
clearing and treating of all mild corrosion and correcting of all moderate and
severe or exfoliated corrosion in accordance with the manufacturer's
recommended corrosion prevention and control procedures and the Approved
Maintenance Program. Fuel tanks shall be free from contamination and
corrosion and in compliance with an approved tank treatment program.
(vii) CONFIGURATION AND CONDITION. The Aircraft shall be returned in
the same configuration and condition, ordinary wear and tear from normal
airline passenger operations excepted, with all Parts installed therein as on
the Delivery Date, excepting only modifications, additions, replacements and
substitution of Parts as may have been properly made by Lessee pursuant to
Section 5. Lessee shall, prior to such return of the Aircraft furnish Lessor
a listing of all such modifications, additions, or replacements made during
the Term. Lessee shall provide Lessor with all supporting paperwork,
drawings, calculations and approvals associated with all repairs and
modifications to the Aircraft. Lessee shall provide Lessor with the last six
(6) reliability reports for the Aircraft as provided to the Aviation
Authority and a list of all Parts installed on the Aircraft during the last
six (6) months of the Term and of all Parts replaced during said last six (6)
months. Lessee shall not replace Parts with parts having an operating record
indicating a higher failure rate than the Parts replaced.
(e) CONDITION OF AIRFRAME. The Airframe at the time of its return to Lessor
shall meet the requirements as set forth below all at Lessee's expense, except
as otherwise provided herein:
(i) C CHECK. The Aircraft shall have no more than fifty (50) flight
hours since its last C check.
(ii) D CHECK. The Aircraft shall be delivered to Lessor fresh from a
D Check, as specified on the Lease Supplement and Receipt. In the event that
the time since D Check on the Return Date is more than set forth above,
Lessee shall pay Lessor a financial settlement to account for the difference
in accordance with the following formula:
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Average Industry Cost of D Check
inc. Non-Routine Items x Time since D Check on Return Date
---------------------------------
Life of D Check
(iii) PARTS. All Parts installed in the Aircraft shall be
serviceable in accordance with Aviation Authority standards and have a value,
modification status and condition equivalent to the Parts in the Aircraft on
the Delivery Date, ordinary wear and tear excepted. Anything to the contrary
contained in this Lease notwithstanding, Lessee may return the Aircraft
(including the Engines) with a substitute part or parts. In the event that
the Aircraft is returned with such substitute part or parts, Lessee will, at
its own expenses and concurrently with such return, ensure that title to such
substitute part or parts properly vest in Lessor free and clear of all liens.
If applicable and in keeping with standard industry practice, Lessee will
furnish Lessor with a full warranty bill of sale, in form and substance
satisfactory to Lessor, for such substitute part or parts. All such
substitute parts shall comply with all applicable provisions contained in
this ss.6. Upon passage of title to Lessor, such replacement part or parts
shall be deemed Parts for the purposes of this Lease. Lessor will transfer to
Lessee, without recourse or warranty except as to title and the absence of
Lessor's Liens, all of Lessor's right, title and interest in and to all parts
that have been removed from the Aircraft and replaced by such substitute
parts.
(iv) FUSELAGE, WINDOWS AND DOORS. The fuselage shall be free of
major dents and abrasions, and loose or pulled or missing rivets. The
fuselage will be freshly painted in white. Windows shall be free of
delamination, blemishes, cracking and shall be properly sealed. Doors shall
be free moving, correctly rigged and be fitted with serviceable seals.
(v) WINGS AND EMPENNAGE. All leading edges shall be free from
damage. All painted areas shall be freshly painted in white. All unpainted
cowlings and fairings shall be polished. Wings shall be free of fuel leaks.
(vi) INTERIOR. Ceilings, sidewalls and bulkhead panels shall be
clean and free of cracks and stains. All floor panels shall be firm. All
window shades shall operate properly and be undamaged. All carpets and seat
covers shall be in good condition, clean and stain free and meet all
international fire resistance regulations. All seats shall be serviceable, in
good condition and repainted as necessary. Recline mechanism and table
operation shall be satisfactory, and table condition level, tight and
undamaged. All signs and decals shall be in the English language, clean and
legible. All emergency equipment having a calendar life shall have a minimum
of one year or one hundred percent of its total approved life, whichever is
less, remaining.
(vii) COCKPIT. All decals shall be in the English language, clean,
secure and
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legible. All failing panels shall be free of stains and cracks, shall be
clean, secure and repainted as necessary. Floor coverings shall be clean and
effectively sealed, and painted as necessary. Seat covers shall be in good
condition, clean and shall conform to all international fire resistance
regulations. Seats shall be fully serviceable and shall be repainted as
necessary. Wear areas will be painted or refurbished as necessary.
(viii) CARGO COMPARTMENT. All panels and nets shall be in good
condition.
(f) CONDITION OF LANDING GEAR. Notwithstanding the definition of Delivery
Date, as set forth in this Agreement, each main and nose landing gear
component and each associated actuator and Part (a "Landing Gear") shall have
at least the same number of hours of its then authorized life since overhaul
as was the case on May 31, 1995. In the event that the time since Landing
Gear overhaul on the Return Date is more than set forth above, Lessee shall
pay Lessor a financial settlement to account for the difference in accordance
with the following formula:
Average Industry Cost of Overhaul x (Time since overhaul an Return Date -
--------------------------------- Time since overhaul on Delivery Date)
Life of Overhaul
Each Landing Gear shall be clean, free of leaks and repaired as necessary.
All decals shall be in the English language, clean, secure, and legible.
(g) CONDITION OF AUXILIARY POWER UNIT ("APU"). Lessee will return the
Aircraft installed APU in serviceable condition, in accordance with the
manufacturer's specifications and Aviation Authority parameters, ordinary
wear and tear excepted. and with no less than (i) the time or cycles
remaining to replacement of the most limiting Life Limited Component, (ii)
the aggregate life remaining on all Life Limited Components, and (iii) the
time since hot section inspection as the APU had on the Delivery Date, as
specified on the Lease Supplement and Receipt. Any operational discrepancies
of the APU shall be corrected at Lessee's expense prior to the return of the
Aircraft to Lessor. In the event that the APU time on the Return Date is less
than set forth above, Lessee shall pay Lessor a financial settlement to
account for the difference at the rate of US$10.00 per each operating hour
by which the APU time on the Return Date exceeds the APU time an the Delivery
Date. This hourly rate shall be adjusted annually in accordance with
increases in the Consumer Price Index published by the U.S. Department of
Labor, Bureau of Labor Statistics ("CPI").
(h) CONDITION OF ENGINES. Each Engine shall have at least the same average
number of cycles for Life Limited Components as was the case on the Delivery
Date, as specified on the Lease Supplement and Receipt. In addition, upon
return of the Aircraft to Lessor, each Life Limited Component of each Engine
shall have no less than the greater of 3,000 hours or 3,000 cycles remaining
until replacement of its most limiting Life Limited Component as was the case
on the Delivery Date. Each Engine shall meet both the Engine manufacturer
specifications and the Approved Maintenance Program parameters for acceptable
exhaust gas temperature margin at rated thrust, engine pressure ratio, and
fuel flow. In the event that the average number of cycles on the Return
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Date does not meet the conditions set forth above, Lessee shall pay Lessor a
financial settlement to account for the difference at the rate of US$54.00
per cycle in accordance with paragraph (r), below. This hourly rate shall be
adjusted annually in accordance with increases in the Consumer Price Index
published by the U.S. Department of Labor, Bureau of Labor Statistics ("CPI").
(i) HISTORICAL RECORDS: TREND MONITORING DATA. If the Engine
historical and maintenance records and/or trend monitoring data indicate a
rate of acceleration in performance deterioration of any installed Engine
which is higher than normal based on Lessee's maintenance experience in
operating such Engines, or if an Engine is "on watch," Lessee shall, prior to
the Aircraft's return, correct or cause to be corrected such conditions
which are determined to exceed the Engine manufacturer's maintenance manual
tolerances or otherwise be causing such performance deteriorations or "on
watch" condition.
(j) INSPECTIONS. The following inspections shall occur at Lessee's
facilities or at the location where the final C and D checks on the Aircraft
are being performed, pursuant to this Section 6:
(i) The Aircraft (including the Aircraft Documents) shall be
made available to Lessor for ground inspection by Lessor during the carrying
out of scheduled maintenance. Lessee shall open the inspection plates of the
Aircraft as determined by Lessor, and shall allow Lessor to accomplish its
inspection in order to determine that the Aircraft (including the Aircraft
Documents) is in the condition required by the provisions of this Section 6,
provided that the Lessor shall use all reasonable endeavors to accomplish its
inspection during the period in which the Aircraft is out of service for the
purposes of the scheduled maintenance. Lessee shall promptly correct any
discrepancies from the condition required by the provisions of this Section 6
which are observed during such inspection.
(ii) A full, videotaped borescope inspection of all Engine and
APU sections and isotope inspection shall be performed under the surveillance
of Lessor at Lessee's expense at the time of the Aircraft's return to Lessor
and Lessee shall provide evidence satisfactory to Lessor reflecting the
correction of any discrepancies found during such inspection and determined
to have exceeded the Engine or APU manufacturer's maintenance manual limits.
(iii) Lessee shall conduct an operational ground check in
accordance with the requirements of the Approved Maintenance Program and
shall correct any discrepancies disclosed by such check.
(iv) The Aircraft shall be check flown by Lessee at Lessee's
expense, using qualified flight personnel, for not more than one and one-half
(1-1/2) hours on a non-commercial flight, for the purpose of demonstrating to
Lessor the satisfactory operation
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of the Aircraft and its equipment and systems. Two (2) of Lessor's employees
or representatives (or more if consented to by Lessee) may participate in
such flight as observers. Lessee's pilot shall be in command of the Aircraft.
Such flight shall be flown using standard operational check flight procedures
as specified by the Airframe manufacturer's flight functional acceptance
procedure or operational test flight procedures. Upon completion of such
operational check flight, the representatives of Lessee and Lessor
participating in such flight shall agree in writing upon any discrepancies in
such Aircraft required be corrected by Lessee in order to comply with the
provisions of this Section 6 and Lessee shall promptly correct or cause to be
corrected at Lessee's expense any such discrepancies. If any discrepancies
continue to persist, Lessor may (but shall not be obligated to) accept
delivery of the Aircraft and apply the procedure set forth in Section 6(1)
for such discrepancies.
(k) ACCEPTANCE. After completion of the foregoing inspections at Lessee's
facilities and the correction of any discrepancies discovered during such
inspections as required to comply with this Section 6, Lessee shall ferry the
Aircraft to the Return Location and Lessee shall be liable only for
discrepancies manifested during such ferry flight and duly noted in the
technical log (the Lessee shall instruct the captain of such ferry flight to
duly note discrepancies manifested during such ferry flight). Lessee shall
not be obligated to correct discrepancies which were reasonable discernible
on inspection prior to the commencement of the ferry flight. The Lessor may
have an observer on such ferry flight. Lessor shall accept return of the
Aircraft at the Return Location. At the time of acceptance of return of the
Aircraft to Lessor, Lessor and Lessee shall execute an Aircraft Return
Receipt and Lease Termination in the form attached hereto as Exhibit C.
(l) DEFERRED DISCREPANCY CORRECTION. Any discrepancies found during the
inspections set forth in Section 6(j) or (k) above which are not corrected by
Lessee prior to return of the Aircraft to Lessor may be corrected by Lessor
or its designee after return of the Aircraft and Lessee shall reimburse
Lessor for all costs and expenses reasonably incurred by Lessor or its
designee for accomplishing such discrepancy corrections. Lessee shall pay
Lessor for all such costs and expenses incurred within ten (10) days of the
date on which Lessor submits its invoice and supporting documentation. Any
late payments shall be subject to interest at the Overdue Payment Rate.
(m) AIRCRAFT DOCUMENTS. Lessee shall return to Lessor, at the time the
Aircraft is returned to Lessor, all of the Aircraft Documents, updated and
maintained by Lessee through the date of return of the Aircraft. In the event
of missing, incomplete, mutilated, or otherwise unacceptable Aircraft
Documents, the Lessee shall, at its sole cost and expense, re-accomplish the
tasks necessary to produce such Aircraft Documents in accordance with the
provisions of Section 5(p). On the Return Date, Aircraft Documents for any
Life Limited Component shall establish total service, origin, and
authenticity "back-to-birth" only if either (i) on the Delivery Date Aircraft
Documents for such Life Limited Component established total service, origin,
and authenticity "back-to-birth"; or (ii) Lessee replaced such Life Limited
Component during the Term.
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(n) SERVICE BULLETIN KITS. All vendors' and manufacturers' service
bulletin kits ordered for the Aircraft and costing $5,000 or less, but not
installed therein shall be returned with the Aircraft, as part of the
Aircraft at the time of return, and shall be loaded by Lessee on board the
Aircraft as cargo. Service bulletin kits ordered for the Aircraft and costing
more than $5,000 but not installed therein may be purchased by Lessor at
Lessee's actual cost.
(o) LESSEE'S SPECIAL EXTERIOR MARKINGS. At the time of the return of the
Aircraft, Lessee shall, at Lessor's election, either remove or paint over
exterior markings painted on such Aircraft by Lessee and the area where such
markings were removed or painted over shall be refurbished by Lessee as
necessary to blend in with the surrounding surface. In the event that,
notwithstanding Lessee's obligation to do so, Lessee does not remove such
markings, Lessor shall have no obligation to remove such markings prior to
the sale, lease, or other disposition of the Aircraft by Lessor after its
return; however, if Lessor elects to remove such markings, Lessee shall pay
Lessor's costs and expenses for such removal within ten (10) days of the date
of Lessor's invoice therefor. Any late payments shall be subject to interest
at the Overdue Payment Rate.
(p) STORAGE OF AIRCRAFT UPON RETURN. [INTENTIONALLY OMITTED]
(q) ASSIGNMENT OF RIGHTS. Upon return of the Aircraft to the Lessor, the
Lessor may assign its rights under Section 5 and Section 6 hereof with
respect to the Aircraft to a third party purchaser or lessee of the Aircraft.
(r) FINANCIAL SETTLEMENT IN LIEU OF LIFE REMAINING: NO LESSOR OBLIGATIONS.
To the extent that on the Return Date the life remaining of the Airframe
(with respect to D Check time), the Landing Gear, the APU, or any Engine is
better than what is required by Sections 6(e)(ii), 6(f), 6(g), or 6(h), there
shall be no obligation for Lessor to make any financial settlement in favor
of Lessee. Provided that Lessee is not in default and it is otherwise
commercially reasonable to do so, Lessee may substitute engines and other
components which comply fully with this Section 6, for those installed on
the Aircraft at the end of the Term, or any extension thereof.
(s) OVERFLIGHT AND OTHER FEES. Upon return of the Aircraft to the Lessor,
Lessee shall have paid all overflight, landing fees, and handling charges
relating to the Aircraft and shall provide evidence of payment to Lessor if
requested.
SECTION 7. LIENS. The Lessee will not create or suffer to
exist any Lien upon or with respect to the Aircraft, the Airframe
or any Engine, except for the rights of the Lessor and the Lessee hereunder
and Permitted Liens, and save as otherwise expressly allowed herein.
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SECTION 8. TAXES.
(a) TAX INDEMNITY. The Lessee agrees to pay, and to indemnify each
Indemnitee for all taxes, fees, levies, imposts, duties, charges and
withholdings of any nature (together with any and all fines, penalties,
additions to tax and/or interest thereon or computed by reference thereto)
(individually, a "Tax" and collectively, "Taxes") which are imposed by any
government, governmental subdivision or other taxing authority of or in any
jurisdiction, or by any international organization, and which are imposed
with respect to or in connection with any transaction or activity described
in or resulting from this Lease or any other Operative Document, including
(without limitation) Taxes imposed on or with respect to, or measured by, any
of the following:
(i) The Aircraft or any part thereof or any interest therein;
(ii) The import, export, acceptance, possession, ownership, delivery,
use, operation, location, leasing, subleasing, condition, maintenance,
repair, modification, overhaul, testing, storage, abandonment repossession,
return, sale, replacement, or other disposition of the Aircraft, or any part
thereof or any interest therein;
(iii) The rentals, receipts, income, or earnings arising from the
Aircraft or any pan thereof or any interest therein;
(iv) This Lease or any other Operative Document; any agreement or
instrument executed in connection with or pursuant to any of the foregoing;
any future amendment, supplement, waiver or consent requested by Losses with
respect to any thereof, or the execution, delivery, recording or performance
of any thereof; or
(v) Any payment made pursuant to this Lease or any other Operative
Document;
PROVIDED, HOWEVER, that the Lessee shall not be required by paragraph (a) to
indemnify an Indemnitee for any of the following:
(aa) Taxes in respect of not income, net profits, capital gains or any Tax
which is enacted by a taxing jurisdiction as an express replacement or,
express substitute as a revenue source, in part or in whole, for a Tax on net
income, net profits or capital gain.
(bb) Penalties, Taxes, additions to Taxes, fines or interest on Taxes which
would not have arisen but for delay or failure (which constitutes gross
negligence) by the Lessor, or any Indemnitee, in notifying the Lessee or in
the filing of Tax Returns or payment of Taxes assessed on the Lessor, which
delay or failure shall not have been consented to, caused by or requested by
the Losses;
(cc) Any Tax which results solely from any act or omission on the part of
the Lessor which constitutes a breach by the Lessor of its express
obligations to the Lessee
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under this Lease or Operative Document or otherwise constitutes wilful
misconduct or gross negligence on the part of the Lessor:
(dd) Any Taxes to the extent properly attributable to any time or period
prior to the date of this Lease or after its Expiry;
(ee) In the event that the Lessor assigns or transfers its interest in the
Aircraft subject to and with the benefit of this Lease, any Taxes if and to
the extent that such Taxes exceed those which would have been imposed and in
respect of which the Lessee would have been liable to indemnify the Lessor
under this Lease had the Lessor not so assigned or transferred its interest;
provided, that this exclusion shall not apply to any assignment or transfer
pursuant to an exercise of remedies under Section 14;
(ff) Any Taxes which are caused by or arise out of or as a consequence of a
Lessor Lien or any debt of Lessor with respect to the Aircraft or any
interest therein;
(gg) Any Taxes (including, without limitation, sales, value added or other
transfer Taxes) which arise upon any sale, assignment, transfer or other
disposition (whether voluntary or involuntary) of the Aircraft or any
interest therein by the Lessor or any other Indemnitee (or any sale,
assignment, transfer or other disposition by an Indemnitee of any interest in
another Indemnitee), save where such sale, assignment, transfer or other
disposition occurs pursuant to an exercise of remedies under Section 14.
(hh) Any Taxes imposed in any taxing jurisdiction except to the extent such
Taxes are imposed as a result of the location or operation of the Aircraft or
any part thereof in that jurisdiction, the location or operation of the user
of the Aircraft or any part thereof in that jurisdiction, or the transmittal
of payments to the Lessor from that jurisdiction ("Use Jurisdiction Taxes");
provided, however, Lessee shall be liable for any non-Use Jurisdiction Taxes
to the extent they reduce, offset or eliminate any Use Jurisdiction Taxes in
respect of which the Lessee otherwise may be required to make an indemnity or
other payment pursuant to this Section 8(a).
If the Lessor or any Indemnitee becomes aware of any Taxes in respect of
which the Lessee may be required to make an indemnity or other payment
pursuant to this Section 8(a), the Lessor shall, or shall cause the
Indemnitee to, promptly notify the Lessee in writing accordingly. If
reasonably requested by the Lessee in writing, the Lessor shall, or shall
cause the Indemnitee to, in good faith, diligently contest (including
pursuing all administrative appeals or actions) in the name of the Lessor,
and/or Indemnitee as appropriate, or, if appropriate and requested by the
Lessee, in the name of the Lessee (and will permit, and/or cause the
Indemnitee to permit, the Lessee, if requested by the Lessee, to contest in
the name of the Lessee, the Indemnitee or the Lessor) the validity,
applicability or amount of such Taxes and shall, and/or cause the Indemnitee
to (i) resist payment thereof if reasonably practicable; (ii) pay the same
only under protest, if protest is necessary or proper; and (iii) if payment
is made, seek a refund thereof in appropriate administrative or judicial
proceedings provided that (aa) prior to any such action the Lessee shall have
agreed that it is liable for such Taxes to the extent that such contest is
unsuccessful and that the Lessee will indemnify the Lessor and the Indemnitee
to the Lessor's reasonable satisfaction for all costs and expenses which the
Lessor and/or the
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Indemnitee may incur in connection with such contest, including (without
limitation) all reasonable legal and accountants' fees and disbursements, and
the amount of any interest or penalties which may be payable as a result of
the contest; and (bb) if the Lessor determines in its reasonable discretion
that such contest is to be initiated by the payment of (and the claiming of a
refund for) such Taxes, the Lessee shall have advanced to the Lessor and/or
the Indemnitee sufficient funds (on an interest-free basis and, if such
advance constitutes taxable income in the hands of the Lessor and/or the
Indemnitee, on an after-tax basis) to make such payment. In any such contest
in which Lessor or an Indemnitee, and not the Lessee, is the party defending
or making the claim against the taxing authority, the Lessor shall, and shall
cause the Indemnitee to, follow the reasonable instructions of the Lessee as
to the manner in which such contest shall be defended or prosecuted by the
Lessor and/or the Indemnitee as the case may be, provided, however, that
Lessor or the Indemnitee, as the case may be, need not follow such
instructions if it reasonably determines and advises Lessee of the basis of
such determination that compliance with Lessee's instructions would generate
an adverse consequence to Lessor or the Indemnitee, as the case may be.
If the Lessor and/or Indemnitee shall obtain a refund, rebate, credit or
other relief in respect of all or any part of any Taxes or expenses (such as,
without limitation, attorneys fees) with respect to such Taxes in respect of
which the Lessee shall have made payment pursuant to this Section 8(a), the
Lessor shall, or shall cause the Indemnitee to, provided no Event of Default
shall have occurred and be continuing, promptly pay to the Lessee an amount
which is equal to the amount of the refund, rebate, credit or other relief,
plus any interest or other addition received on any refund, provided always
that any such payment by the Lessor or Indemnitee shall leave the Lessor
and/or the Indemnitee in no more and no less favorable a position that
they/it would have been in had the Lessee not been required to make any
payment in respect of such Taxes.
Lessee will pay all Taxes payable by it under this Section 8, prior to the
date on which penalties attach thereto and prior to the date on which any
lawful claim, if not paid, would become a Lien upon any of the material
property of Lessee; and Lessee will pay all amounts indemnifiable by it under
this Section 8, to the extent not previously paid or payable, on written
demand by the appropriate Indemnitee; in each case subject to Lessee's
contest rights under this Section 8(a). Except as otherwise provided in this
Lease, the Expiry of this Lease shall not limit or modify the obligations of
the Lessee or the Lessor with respect to any indemnities or agreements
contained in this Section.
(b) WITHHOLDING. If the Lessee is required by Applicable Law to make any
withholding (other than Taxes for which the Indemnitee is not entitled to be
indemnified under Section 8(a)) from any amount payable by the Lessee to or
for the benefit of any Indemnitee pursuant to this Lease or any related
agreement, the Lessee shall (i) pay such additional amount as may be
necessary to make the net amount actually received by the person entitled to
receive the payment, after all withholdings (other than Taxes for which
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the Indemnitee is not entitled to be indemnified under Section 8(a)), equal
to the amount such person would have received if no withholding (other than
Taxes for which the Indemnitee is not entitled to be indemnified under
Section 8(a)) had been required, and (ii) as soon as practicable thereafter,
deliver to the Indemnitee a receipt or other document reasonably satisfactory
to the Indemnitee evidencing the withholding and the payment of the amount
withheld to the relevant governmental authority.
If the Lessor receives the benefit of a Tax repayment, set-off, credit,
allowance or deduction resulting from a payment which includes an additional
amount paid by the Lessee under this Section 8(b) (or the Taxes deducted or
withheld from such payment) it shall pay to the Lessee a sum equal to the
value to the Lessor of such benefit (account being taken also of the value to
the Lessor of any tax benefit arising by reason of such payment) as in the
opinion of the Lessor's auditors will leave the Lessor (after such payment)
in no more and no less favorable a position than it would have been if no
additional amount had been required to be paid provided always that:
(aa) The Lessor's auditors shall determine in their sole discretion (acting
in good faith) the amount of any such benefit and the date on which it is
received; but further provided that an independent auditor approved by Lessor
(which approval shall not be unreasonably withheld), at Lessee's request and
expense, may review the opinion and determination of Lessor's auditors to
determine the propriety thereof and the opinion of such independent auditor
shall prevail for purposes of this Section;
(bb) In determining the amount of any such benefit by applying The Lessor
shall have an absolute discretion as to the order and manner in which it
claims tax credits, allowances, benefits and deductions available to it
pursuant to this Lease and the transactions hereunder to the Taxes, income
and other Tax or taxable items arising in connection herewith and to the
extent that any tax credits, allowances, benefits and deductions remain after
such application, the Lessor shall use reasonable efforts to reduce its Tax
liability; and
(cc) The Lessor shall not be obliged to disclose to the Lessee any
information regarding its Tax affairs or Tax computations, but, shall be
obliged to disclose to the independent auditor described above any and all
reasonable information relating to its review, but, the independent auditor
shall not be obliged to disclose any such information to Lessee.
If and to the extent that the Lessor makes a payment to the Lessee on account
of a tax benefit and it subsequently transpires that the Lessor did not
receive such benefit, the Lessee shall pay to the Lessor such sum as the
Lessor's auditors may certify as being appropriate to restore the after-tax
position of the Lessor to that which it would have been if such tax benefit
had been received, provided that an independent auditor approved by Lessor
(which approval shall not be unreasonably withheld), at Lessee's request and
expense, may review the certification and determination of Lessor's auditors
to determine
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the propriety thereof and the opinion of such independent auditor shall
prevail for purposes of this Section, and, further provided that Lessor shall
be obliged to disclose to the independent auditor described above any and all
reasonable information relating to its review, but, the independent auditor
shall not be obliged to disclose any such information to Lessee.
(c) AFTER-TAX PAYMENT. Each indemnity payment pursuant to Section 15 or
this Section 8 shall be in an amount which, after taking into account all
Taxes required to be paid by the Indemnitee entitled to the indemnity payment
as a result of the receipt or accrual of the indemnity payment and any
additional payment hereunder, shall be equal to the total amount of the
indemnity payment that the Lessee would be required to pay if the Indemnitee
were not subject to Taxes as a result of the receipt or accrual of the
indemnity payment.
(d) TAX SAVINGS. If as a result of the payment or accrual of Taxes paid or
indemnified by the Lessee an Indemnitee shall realize and recognize any
savings with respect to Taxes, such Indemnitee shall, and Lessor shall cause
such Indemnitee to, promptly notify the Lessee that it has realized and
recognized such savings and pay to the Lessee within thirty (30) days of the
realization of such savings an amount equal to (i) the net reduction in Taxes
realized and recognized by such Indemnitee and (ii) the amount of any further
net reduction in taxes realized and recognized under such tax laws as a
result of payments pursuant to this sentence, in each case as determined by
such Indemnitee; provided that an independent auditor approved by the
Indemnitee (which approval shall not be unreasonably withheld), at Lessee's
request and expense, may review the determination of such Indemnitee to
determine the propriety thereof and the opinion of such independent auditor
shall prevail for purposes of this Section, and, further provided that such
Indemnitee shall be obliged, and Lessor shall cause such Indemnitee, to
disclose to the independent auditor described above any and all reasonable
information relating to its review, but, the independent auditor shall not
disclose any such information to Lessee.
(e) COOPERATION IN FILING TAX RETURNS. Lessee and Lessor will, and Lessor
shall cause each Indemnitee to, cooperate with one another in providing
information which may be reasonably required to fulfill each party's tax
filing requirements and any audit information request arising from such
filing.
SECTION 9. RISK OF LOSS. EVENT OF LOSS: REQUISITION FOR USE
(a) RISK OF LOSS. The Lessee will bear the entire risk of destruction,
loss, theft, requisition of title, or use, confiscation, taking or damage of
or to the Aircraft from any cause during the period commencing when the Lease
Supplement and Receipt is executed and delivered by Lessee and ending when
the Aircraft Return Receipt and Lease Termination is executed and delivered
by Lessor, provided, that Lessor shall be responsible to Lessee to the extent
that such destruction, loss, theft, requisition of title or use,
confiscation, taking or damage of or to the Aircraft is the direct result of
a breach by the Lessor of any of its express obligations under this Lease.
(b) AIRFRAME EVENT OF LOSS. If an Event of Loss shall occur with respect to
the Airframe, the Lessee will forthwith notify the Lessor thereof in writing
and will pay to the Lessor, in U.S. Dollars and in immediately available
funds (i) 60 days after the date of the occurrence of such Event of Loss (and
Lessor and Lender shall timely execute and return documents reasonably
requested by Lessee or its insurer), or (ii) the data of receipt of
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insurance proceeds, whichever is earlier, an amount equal to the Stipulated
Loss Value of the Aircraft; PROVIDED, however, that if the date such payment
is made by the Lessee is not a Rent Payment Date, there shall be deducted
from the amount payable by the Lessee an amount equal to a pro rata portion
of the Basic Rent for the Aircraft computed on a daily basis from and
including the date such payment is made by the Lessee to but not including
the Rent Payment Date immediately following the date such payment is made by
the Lessee. In addition, the Lessee will pay in full when due, but without
duplication, the Basic Rent for the aircraft payable on each Rent Payment
Date occurring prior to the date payment is made by the Lessee pursuant to
the immediately preceding sentence hereof. Upon Payment in full by the Lessee
of all amounts referred to above in this Section 9(b), (i) the Lessee shall
have no further obligation to pay Basic Rent for such Aircraft due
thereafter, (ii) upon payment in full of any Supplemental Rent then owing
this Lease shall terminate with respect to the Aircraft and (iii) the Lessor
will transfer to Lessee title to the Airframe and each Engine, without any
recourse, representation or warranty on the part of the Lessor except that
the Airframe and Engines are free and clear of Lessor Liens and title is held
by Lessor. If, following the occurrence of such Event of Loss as theft,
disappearance, confiscation, seizure, or requisition, the Aircraft is
subsequently returned to the possession of the Lessor or the Lessee within
the foregoing 60-day period and prior to the receipt of insurance proceeds,
this the provisions of this Section 9(b) shall come to apply to such Event of
Loss. In the event that such 60-day period expires prior to the receipt of
the insurance proceeds, so that Lessee has to pay and has paid the Stipulated
Loss Value, then, upon receipt of the insurance proceeds, the Lessor shall,
within 5 days after receipt of the same, pay the same to Lessee.
(c) ENGINE EVENT OF LOSS. If an Event of Loss shall occur with respect to
an Engine but not the Airframe, the Lessee will forthwith notify the Lessor
thereof in writing and will, not later than 60 days after the occurrence of
such Event of Loss, duly convey to the Lessor (or cause to be conveyed to the
Lessor), as replacement for such Engine, title to another engine of the same
make and model which shall be owned by the Lessee free of all Liens other
than Permitted Liens and shall, in the opinion of the Lessor, have a value
and utility at least equal to (and be in as good operating condition as) such
Engine immediately prior to such Event of Loss, assuming compliance by the
Lessee with all of the terms of this Lease with respect to such Engine. At
the time of such conveyance the Lessee will (i) cause to be delivered to the
Lessor a written warranty reasonably acceptable to the Lessor to the effect
that the Lessor has acquired full title to such replacement engine free and
clear of all Liens except for Permitted Liens and that such replacement
engine is duly subjected to this Lease; (ii) cause a lease supplement and
receipt for such replacement engine to be duly executed by Lessee and to be
filed for recording pursuant to the Aviation Law and (iii) cause to be
delivered to the Lessor evidence satisfactory to the Lessor as to the due
compliance by the Lessee with the insurance provisions of Section 10 hereof
with respect to such replacement engine. Upon compliance by the Lessee with
the foregoing terms of this subsection (b) within the 60-day period referred
to above, the Lessor will (A) upon request by the insurers of such Engine
transfer title to Lessee of the Engine so replaced without any recourse,
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representation or warranty on the part of the Lessor except that such Engine
is free and clear of any Lessor Liens and (B) execute and deliver to the
Lessee a partial release, in recordable form, releasing such Engine from this
Lease. Such replacement engine shall thereupon constitute an "Engine" for all
purposes hereof. Lessor shall make insurance proceeds available to accomplish
for foregoing.
(d) REQUISITION. In the event of the requisition for use by the government
of the United States of the Airframe or any Engine during the Term. Lessee
shall promptly notify Lessor of such requisition and all Lessee's obligations
under this Lease with respect to the Airframe or such Engine shall continue
to the same extent as if such requisition had not occurred. If the Airframe
or such Engine shall not be returned by the United States government prior to
the end of the Term, Lessee obligations under this Lease shall continue until
the end of such requisition, including without limitation the obligations to
pay Rent and to return the Airframe or such Engine to Lessor in accordance
with the provisions of Section 8 promptly upon its return by the United
States government. Provided no Default has occurred and is continuing, all
payments received by Lessor or Lessee from the government of the United
States for the use of the Airframe or such Engine during such requisition
shall be paid over to, or retained by, Lessee. Lessor shall accept the
insurance provided by the U.S. Government under the Civil Reserve Air Fleet
Program in lieu of the insurance required under Section 10 hereof in the
event of requisition for use by the U.S. Government.
SECTION 10. INSURANCE. The Lessee represents, warrants, and agrees
to allow the Aircraft to be operated only in areas and only in a manner for
which each policy of insurance required by the provisions of this Section 10
shall be in full force and effect. On or before the Delivery Date and through
out the Term, Lessee shall without cost or expense to Lessor or Lender
obtain, maintain and keep in full force and effect the following insurance
with respect to the Aircraft, carried with insurers satisfactory to Lessor
and Lender:
(a) ALL-RISK INSURANCE. All-risk hull insurance on the Aircraft (with
flight, ground, taxiing and ingestion coverages) in an amount not less than
Eight Million Four Hundred Thousand Dollars (US$8,400,000) (the "Stipulated
Loss Value") at Lease Inception. Such hull insurance shall cover Engines or
engines and Parts temporarily removed from the Airframe in an aggregate
amount not less than their replacement cost.
The Stipulated Loss Value shall be adjusted annually to an amount equal to
the greater of the fair market value of the Aircraft, not to exceed
$8,400,000, or the following sums:
In year two: $7,500,000
In year three: 6,700,000
In year four: 5,800,000
In year five: 5,000,000
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In year six: 4,100,000
In year seven: 3,300,000
In year eight: 2,400,000
If, at any time, Lessor or Lessee are unable to agree upon the fair market
value of the Aircraft, Lessor and Lessee shall appoint a mutually acceptable
appraiser whose determination of fair market value shall be final and binding
on Lessor and Lessee. In the event Lessor and Lessee are unable to agree upon
an appraiser, Lessor and Lessee each shall select one appraiser and the two
appraisers so selected shall select the third appraiser. The determination of
fair market value made by the panel of appraisers shall be final and binding
on Lessor and Lessee. All such appraiser expenses shall be paid for by Lessee.
(b) WAR RISK INSURANCE. War risk and allied perils hull and liability
insurance on the Aircraft to the broadest extent available in the market in
an amount not less than the Stipulated Loss Value or the liability amount set
forth below, respectively, and covering the perils of:
(i) war, invasion, acts of foreign enemies, hostilities (whether war be
declared or not), civil war, rebellion, revolution, insurrection, martial
law, military or usurped power, or attempts at usurpation of power;
(ii) strikes, riots, civil commotions or labor disturbances;
(iii) any act of one or more persons, whether or not agents of a
sovereign power, for political or terrorist purposes and whether the loss or
damage therefrom is accidental or intentional;
(iv) any malicious act or act of sabotage;
(v) confiscation, nationalization, seizure, restraint, detention,
expropriation, appropriation, requisition for title or use by or under the
order of any government (whether civil, military or de facto) or public or
local authority expressly including without limitation the government or any
public or local authority of the country of registration; and
(vi) hijacking or any unlawful seizure or wrongful seizure or wrongful
exercise of control of the Aircraft or crew in flight (including any attempt
at such seizure or control) made by any person or persons on board the
Aircraft acting without the consent of Lessee.
(c) LIABILITY INSURANCE. Throughout the Term, Lessee shall also, without
cost or
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expense to the Lessor or Lender, obtain, maintain and keep in full force and
effect liability insurance with respect to the Aircraft carried with insurers
satisfactory to Lessor and Lender for a combined single limit of not less
than Three Hundred Million Dollars (US$300,000,000), with sublimits as
standard in this industry, per occurrence, as respects cargo legal liability,
a limit of One Million Dollars (US$1,000,000) per occurrence, which shall:
(i) include comprehensive aircraft liability insurance, passenger
liability insurance, property damage liability, cargo, contractual liability
and products liability insurance (other than manufacturer's products
liability); and
(ii) provide that all the provisions thereof, except the limits of
liability, shall operate in the same manner as if there were a separate
policy covering each such insured.
In relation to product liability, the combined single limit may be an
aggregate limit for any and all losses occurring during the currency of the
policy. Lloyd's endorsement AVN60 may apply to reduce such limit for certain
offenses defined therein.
(d) DEDUCTIBLES AND SELF INSURANCE. Lessee may from time to time
self-insure, by way of deductible or premium adjustment provisions in
insurance policies, the risks required to be insured against pursuant to
Section 10(a) or (b), but in no case shall such self-insurance exceed the
following:
(i) the amount of self-insurance applicable to any owned or
leased aircraft similar to the Aircraft in Lessee's fleet; and
(ii) for hull insurance, Lessee may self-insure for events that
are not an Event of Loss in amounts not more than US$500,000, unless Lessee's
self-insured retention an other similar aircraft in its fleet is of a lesser
amount, in which event the lower amount shall apply to the Aircraft. No
deductible shall apply in the event of an Event of Loss.
(e) ADDITIONAL REQUIREMENTS: LOSS PAYMENT. The hull insurance shall
be provided on an agreed value basis, and all policies shall:
(i) name the Indemnitees as additional Insured as their
respective interests may appear;
(ii) provide that the Insurance shall not be invalidated by any
action or inaction by Lessee or any other Person and insure the interest of
the Indemnities regardless of any breach or violation by Lessee or any other
named insured of any warranty, declaration or condition contained in such
policies;
(iii) provide that the insurers shall waive any right of
subrogation to any right of any Indemnitee or against any Indemnitee to the
same extent that Lessee, has waived its rights;
(iv) provide that in the event of separate insurance being
arranged to cover the
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all-risk hull insurance and the war risk and allied perils insurance, the
underwriters subscribing to such insurance agree to a 50/50 claim funding
arrangement in the event of any dispute as to which insurance is applicable;
(v) provide that the liability of the insurers shall not be
affected by any other insurance which may be available to any Indemnitee so
as to reduce the amount payable to any indemnitee;
(vi) be of the type usually carried by corporations engaged in
the same or a similar business, similarly situated with Lessee and owning and
operating similar aircraft engines, and covering risks of the kind
customarily insured against by such corporations;
(vii) be primary without right of contribution from other
insurance which may be available to any Indemnitee;
(viii) provide that the Indemnitee shall have no liability for
premiums, commissions, calls, assessments, representations or warranties to
insurers with respect to such policies; and
(ix) provide in the case of the hull insurance that, so long as
the insurers shall not have received written notice that a Default or an
Event of Default has occurred and is continuing, any proceeds of less than
US$250,000 shall be payable to Lessee; and any proceeds in excess of
US$250,000 shall be payable to Lessee and Lender, and any proceeds in respect
of an Event of Loss, or if the insurers shall have received written notice
that a Default or an Event of Default has occurred and is continuing, any
single loss regardless of the amount, shall be payable to Lender.
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(f) NO SET-OFF. Each insurance policy shall contain a waiver of any right
of the insurers to any set-off or counter-claim or any other deduction
against any Indemnitee.
(g) NOTICE OF MATERIAL ALTERATION OR CANCELLATION. Each insurance policy
shall provide that no cancellation or lapse of coverage for nonpayment of
premium or otherwise, and no substantial change of coverage which adversely
affects the Indemnitee shall be effective as to the indemnities until not
less than 30 days (7 days in the case of war risk policies, subject to
exceptions uniformly applied in war risk policies then available in
commercially reasonable terms) after receipt by Lessor and Lender of written
notice from the insurers of such cancellation, lapse or change.
(h) RENEWAL. Each Insurance policy shall provide that the insurers or
Lessee's insurance broker shall promptly notify Lessor and Lender if any
insurance is not renewed.
(i) APPLICATION OF HULL INSURANCE PROCEEDS. As between Lessor and Lessee,
any payments received under policies of insurance shall be applied as follows:
(i) If such payments are received with respect to loss or damage
(including an Event of Loss with respect to an Engine) not constituting an
Event of Loss with respect to the Airframe, such payments shall be paid over
to or retained by Lessee upon Lessee's performance of its repair or
replacement obligations under this Lease pursuant to 5 hereof; and
(ii) if such payments are received with respect to an Event of Loss
with respect to the Airframe, so much of such payments as shall not exceed
the amount required to be paid by Lessee pursuant to Section 9 hereof shall
be applied in reduction of Lessee's obligation to pay such amount if not
already paid by Lessee, and to reimburse Lessee if it shall have paid all or
part of such amount, and the balance, if any, of such payments shall be paid
over to or retained by Lessee.
(j) INSURANCE FOR OWN ACCOUNT. Nothing in this Section 10 shall prohibit
any Indemnitee or Lessee from obtaining insurance for its own account and any
proceeds payable thereunder shall be payable as provided in the insurance
policy relating thereto, provided that no such insurance may be obtained
which would limited or otherwise adversely affect the coverage or payment of
any insurance. The insurance Lessee is required to maintain pursuant to this
Lease will not be affected by any insurance which may be maintained by any
Indemnitee.
(k) REPORTS; CERTIFICATES. Lessee shall furnish to Lessor and Lender not
later than five (5) Business Days prior to the Delivery Date a report signed
by a firm of independent insurance brokers satisfactory to Lessor and Lender
stating the opinion of such firm that
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the insurance then carried and maintained on the Aircraft complies with the
terms hereof. Lessee will during the Term furnish to Lessor and Lender
evidence of renewal of the insurance policies required pursuant to this
Section 10 prior to the cancellation, lapse or expiration of such insurance
policies and, on the renewal dates of thereof, a report signed by a firm of
independent aircraft insurance brokers, satisfactory to Lessor and Lender
stating the opinion of such firm that the insurance then carried and
maintained on the Aircraft complies with the terms hereof. Lessee will cause
such firm to advise Lessor and Lender in writing promptly of any default in
the payment of any premium and of any other act of omission on the part of
Lessee of which they have knowledge and which would in such firm's opinion
invalidate or render unenforceable, in whole or in any material part, any
insurance on the Aircraft. Lessee will also cause such firm to advise Lessor
and Lender in writing at least 30 days (or 7 days or such other period as is
or may be customarily available, in the case of war risk coverage) prior to
the termination or cancellation of, or material adverse change in such
insurance carried and maintained on the Aircraft.
SECTION 11. THE LESSOR'S RIGHT TO PERFORM FOR THE LESSEE. If the
Lessee fails to make any payment required hereunder or fails to perform or
comply with any of its agreements contained herein, the Lessor may make such
payment or perform or comply with such agreement, including, but not limited
to, the placement of insurance required by this Lease, and the amount of such
payment and the amount of its out-of-pocket costs and expenses incurred in
connection with the performance of or compliance with such agreement
(together with interest thereon at the Overdue Payment Rate) shall be payable
by the Lessee on demand as Supplemental Rent.
SECTION 12. FURTHER ASSURANCES. The Lessee will promptly and duly
execute and deliver such documents and assurances and take such action as may
be necessary or desirable, or as the Lessor may from time to time reasonably
request, in writing, in order to more effectively carry out the intent and
purpose of this Lease and the other Operative Documents and to establish and
protect the Lessor's title to the Aircraft and its rights and remedies
created or intended to be created under this Lease and the other Operative
Documents, in form and substance satisfactory to the Lessor, in Hawaii and
other jurisdictions where the Lessee operates the Aircraft. Such further
assurances
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shall be at Lessee's expense if occasioned by changes in law or if occasioned
by Lessee's Default, and otherwise shall be at Lessor's expense.
SECTION 13. EVENTS OF DEFAULT. The following events shall constitute
Events of Default (whether any such event shall be voluntary or involuntary
or arise by operation of law or pursuant to or in compliance with any
judgment, decree, order, rule or regulation of any court or any
administrative or governmental body):
(a) FAILURE TO PAY BASIC RENT. The Lessee shall fail to make any payment
of Basic Rent within one day after Rent Payment Date; or
(b) FAILURE TO PAY SUPPLEMENTAL RENT. The Lessee shall fail to make any
other payment of Rent of any kind or Stipulated Loss Value and such failure
shall continue unremedied for a period of five (5) days after written demand
therefor by the Lessor to the Lessee; or
(c) FAILURE TO MAINTAIN INSURANCE. The Lessee shall fail to maintain
insurance in accordance with Section 10 hereof; or
(d) MISREPRESENTATION OR BREACH OF WARRANTY. Any representation or warranty
made by the Lessee in this Lease or in any other Operative Document or in any
document or certificate furnished by the Lessee in connection herewith or
therewith shall have been incorrect in any material respect at the time made;
or
(e) BANKRUPTCY ETC. THE Lessee shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors;
or any proceeding shall be instituted by or against the Lessee under the laws
of any country seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law of any country
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of its
property and either such proceeding shall remain undismissed and unstayed for
a period of 30 days or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief against it
or the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property) shall occur; or
the Lessee shall take any corporate action to authorize any of the actions
set forth above in this subsection (e); or
(f) GENERAL DEFAULT. The Lessee fails to duly observe or perform any of its
other obligations under this Lease and such failure shall not have been
remedied within a period of twenty (20) calendar days after delivery of
written notice specifying the same from Lessor, including without limitation
failure to maintain the Aircraft as required by this Lease or the Aviation
Authority or failure to protect or preserve Lessor's title to the
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Aircraft; or
(g) LOSS OF AIRLINE OR CORPORATE AUTHORITY. Lessee shall cease to be a
commercial airline, or the franchises, concessions, permits, rights or
privileges required for the conduct of the business and operations of Lessee
shall be revoked, canceled or otherwise terminated or the free and continued
use and exercise thereof curtailed or prevented, and as a result thereof the
preponderant business activity of Lessee shall cease to be that of a
commercial airline; or shall in any respect violate Section 4(d) hereof; or
(h) NON-PERMITTED TRANSFER. The Lessee (except as expressly permitted by
the provisions of this Lease or as may be expressly consented to in writing
by the Lessor) attempts to sell, transfer, encumber, part with possession of,
assign or lease the Aircraft, the Airframe, any Engines or any part thereof;
or
(i) ABANDONMENT. The Aircraft is (a) abandoned by Lessee or (b) is
arrested, confiscated, seized, taken in execution, impounded, forfeited,
detained, acquired, or otherwise for any reason ceases to be in the
unencumbered possession and control of Lessee otherwise than due to any act
of Lessor, or as permitted in this Lease, and Lessee fails to obtain the
release of the Aircraft within 30 days of such date unless Lessor in the
reasonable exercise of its opinion shall determine (a) Lessee is pursuing a
course of action which if successful will result in the return of
unencumbered possession to Lessee within 60 days; (b) such course of action
is likely to succeed; (c) the Aircraft is fully insured; and (d) no Event of
Default has otherwise occurred; or
(j) UNLAWFUL ACT. It becomes unlawful for Lessee to perform any of its
obligations under this Agreement or any of such obligations cease to be
legal, valid and enforceable in accordance with the terms of this Agreement
by reason of any act or omission of Lessee; or
(k) FAILURE TO PERFORM COVENANTS. The Lessee fails to perform or observe
any other term, covenants, condition or agreement to be performed or observed
by it hereunder, under the Lease (other than a covenant, condition or
agreement failure in the performance or observance of which is elsewhere in
this Section specifically dealt with), and such failure shall continue
unremedied for a period of 15 days after written notice thereof shall have
been given to the Lessee by the Lender, specifying such failure and requiring
it to be remedied; or
(l) OTHER OBLIGATIONS. A material event of default shall have occurred and
been declared and not waived under any agreement wherein Lessee is a debtor
or a lessee with respect to aircraft or aircraft engines; or a judgment or
judgments for the payment of money shall be rendered against Lessee and such
judgment shall not be effectively stayed; or Lessee shall fail to pay any
portion of any indebtedness or other obligation of Lessee in excess of the
value of $500,000, or there shall occur a declaration of default, an
acceleration or any exercise of remedies with respect to any obligation or
Liability of
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Lessee in or relating to an amount in excess of the value of $500,000,
PROVIDED ALWAYS that it shall only constitute an Event of Default under this
subsection if:
(i) The indebtedness or other obligation or liability relates to
borrowed monies or to a lease;
(ii) Any applicable grace period shall have expired;
(iii) Any such acceleration is caused by an actual default on the
part of the Lessee and not by an event or act outside its reasonable control;
and
(iv) The declaration of default, acceleration or exercise of any
other remedy is not being disputed by the Lessee in good faith and on
reasonable grounds.
SECTION 14. REMEDIES. Upon the occurrence of any Event of Default and
at any time thereafter so long as the same shall be continuing, the Lessor may,
at its option, declare in writing to the Lessee that this Lease is in default;
and at any time thereafter, so long as the Lessee shall not have remedied all
outstanding Events of Default, the Lessor may do one or more of the following
with respect to the Airframe or any Engine, as the Lessor in its sole
discretion shall elect, to the extent permitted by Applicable Law then in
effect:
(a) RETURN AND REPOSSESSION. Lessor may in writing demand the prompt
return, and the Lessee hereby agrees that it shall return promptly, the
Aircraft to the Lessor in the manner and condition required by, and otherwise
in accordance with all the provisions of, Section 6 as if the Aircraft were
being returned at the end of the Term, or the Lessor or the Lessor's agent,
at its option, may, but shall be under no obligation to, enter upon the
premises where all or any part of the Airframe or any Engine is believed to
be located and take immediate possession of and remove the same by summary
proceedings self help or otherwise, all without liability accruing to the
Lessor or the Lessor's agent for or by reason of such entry. or taking of
possession or removed whether for the restoration of damage to property
caused by such action or otherwise.
(b) SALE. USE. ETC. Lessor may sell the Airframe or any Engine at public or
private sale, as the Lessor may determine, or otherwise dispose of, hold,
use, operate, lease to others or keep idle the Airframe or any Engine as the
Lessor may determine, all free and clear of any rights or claims of the
Lessee and without any duty to account to the Lessee with respect to such
action or inaction or for any proceeds with respect thereto. The Lessor shall
act in good faith.
(c) LIQUIDATED DAMAGES: FAIR MARKET RENTAL. The Lessor, by written notice
to the Lessee specifying a payment date which shall be a Rent Payment Date
not earlier than ten days from the date of such notice, may cause the Lessee
to pay to the Lessor, and the Lessee shall pay to the Lessor, on the payment
date specified in such notice, as
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liquidated damages for loss of a bargain and not as a penalty (in lieu of the
Basic Rent for the Aircraft due on Rent Payment Dates occurring on and after
the payment date specified for payment in such notice), any unpaid Basic Rent
for the Aircraft due (or which would have been due in the absence of the
Expiry) prior to the payment date specified in such notice, plus an amount
equal to the present value (computed as of the payment date specified in such
notice and using an interest discount rate of 6% per annum) of the total
Basic Rents due for what would have been the remainder of the Term in the
absence of the Expiry ("Liquidated Rental') (together with interest on all
amounts payable by the Lessee under this subsection (c) at the Overdue
Payment Rate from such specified payment date until the date of actual
payment); and upon such payment of Liquidated Rental and the payment of all
other Rent then due hereunder, Lessor shall proceed to exercise commercially
reasonable efforts to sell or lease the Aircraft and shall pay over to
Lessee, as, if, and when received, (i) in the case of a re-lease, an amount
equal to the net rents (after expenses) received under the re-lease for the
remainder of the original Term hereof up to the amount of Liquidated Rental
actually paid, or (ii) in the case of a sale, the value of the leasehold
(determined by Lessor in its sole but good faith discretion), from the date
of sale through the original Term hereof, had this Lease not been cancelled.
(d) APPLICATION OF SECURITY DEPOSIT. Apply all or any portion of the
Security Deposit to Lessor's damages attributable to such Event of Default or
to the costs of curing such Event of Default. In such event, the Event of
Default shall continue until the Security Deposit is restored to its original
amount.
(e) CANCELLATION. TERMINATION. AND RESCISSION. The Lessor may cancel,
terminate, or rescind this Lease, or may exercise any other right or remedy
which may be available to it under Applicable Law or proceed by court action
to enforce the terms hereof or to recover damage for the breach hereof,
including without limitation Lessee's agreement to lease the Aircraft for the
Term and to pay Rent.
(f) OTHER REMEDIES. In addition, the Lessee shall be liable, except as
otherwise provided above, for any and all unpaid Rent due hereunder before,
after or during the exercise of any of the foregoing remedies and for all
legal fees and other costs and expenses incurred by reason of the occurrence
of any Event of Default or the exercise of remedies with respect thereto,
including all costs and expenses incurred in connection with any retaking of
the Airframe or any Engine or in placing the Airframe or any Engine in the
condition and airworthiness required by Sections 5 and 6. At any sale of the
Airframe or any Engine pursuant to this Section 14 the Lessee may bid for and
purchase such property. No remedy referred to in this Section 14 is intended
to be exclusive, but each shall be cumulative and in addition to any other
remedy referred to above or otherwise available to the Lessor at law or in
equity, including without limitation the Uniform Commercial Code of New York;
and the exercise or beginning of exercise by the Lessor of any one or more of
such remedies shall not preclude the simultaneous or later exercise by the
Lessor of any or all of such other remedies. No express or implied waiver by
the Lessor of any Event of Default or Default shall in any way be, or be
construed to
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be, a waiver of any future or subsequent Event of Default or Default. To the
extent permitted by Applicable Law, the Lessee hereby waives any rights now
or hereafter conferred by statute or otherwise which may require the Lessor
to sell, lease or otherwise use the Airframe or any Engine in mitigation of
the Lessor's damages except as set forth in this Section 14 or which may
otherwise limit or modify any of the Lessor's rights or remedies under this
Section 14.
(g) ATTORNEY-IN-FACT. Upon the occurrence of an Event of Default, Lessee
shall be deemed to have appointed, and does hereby appoint, Lessor as its
attorney-in-fact, which power is hereby deemed to be coupled with an
interest, with the full power and authority at Lessee's expense to act, do,
or take any action with regard to the Aircraft that Lessee itself could do or
authorize, including but not limited to, removal of the Aircraft from
Lessee's operating certificate, demand of payment from any third party for
sums due for the use of the Aircraft, and cancelling any sublease. Lessee
shall execute a separate document in the form attached hereto as Exhibit "D",
evidencing this authority to be held by Lessor until redelivery of the
Aircraft to Lessor and Lessee's compliance with all of the terms and
conditions of this Lease.
(h) CONTINUING OBLIGATION. Except as otherwise may be provided herein,
Lessee shall be liable for any and all unpaid Rent and for reasonable legal
fees and other costs and expenses incurred by reason of the occurrence of any
Event of Default or the exercise of Lessor's remedies with respect thereto,
including all costs and expenses including maintenance reserves, payments
heretofore due and those which are incurred in connection with the return of
the Aircraft in the Return Condition or in placing the Aircraft in the Return
Condition.
SECTION 15. GENERAL INDEMNITY AND EXPENSES.
(a) GENERAL INDEMNITY. The Lessee agrees to indemnify, reimburse, and hold
harmless each Indemnitee from and against all claims, damages, losses,
liabilities, demands, suits, judgments, causes of action, civil and criminal
legal proceedings, penalties, fines, and other sanctions, and any attorney
fees and other reasonable costs and expenses, arising or imposed with or
without the Lessor's fault or negligence or under the doctrine of strict
liability (collectively, "Claims"), relating to or arising in any manner out
of:
(i) This Lease or the breach of any representation, warranty, or
covenant made by the Lessee under this Lease;
(ii) Manufacture, lease, redelivery, acceptance, rejection,
ownership, possession, use, operation, or return, of the Aircraft; provided
however that Lessee shall have no obligation hereunder to defend or indemnify
any manufacturer, operator or maintenance facility;
58
<PAGE>
(iii) The Aircraft's condition or any discoverable or
nondiscoverable defect in it arising from its design, testing, or
construction; any article used in the Aircraft; or any maintenance, service
or repair, whether or not the Aircraft is in the Lessee's possession and
regardless of where the Aircraft is located; or
(iv) Any transaction (exclusive of Lessor's purchase financing),
approval, or document contemplated by this Lease.
The Lessee waives and releases each Indemnitee from any existing or
future Claims in any way connected with injury to or death of the Lessee's
personnel, loss or damage of the Lessee's property, or loss of use of any
property, which may:
(v) Result from or arise in any manner out of the interference with
ownership, leasing, condition, use or operation of the Aircraft; or
(vi) Be caused by any defect in the Aircraft; its design, testing,
or construction; any article used in the Aircraft; or any maintenance,
service, or repair, whether or not the Aircraft is in the Lessee's possession
and regardless of where the Aircraft is located.
The Lessee shall have no liability to indemnify the Lessor under this
Section 15(a) with respect to any Claim:
(aa) to the extent that it BOTH is caused by the wilful misconduct
or gross negligence of the Indemnitee AND is not insured by insurance in
compliance with Section 10;
(bb) to the extent that such Claim is the result of any failure on
the part of the Lessor to comply with any of the express terms of this Lease
or any representation or any warranty given by the Lessor in this Lease not
being true and correct at the date when, or when deemed to have been, given
or made;
(cc) to the extent that such Claim represents a Tax or a loss of Tax
benefits (the Lessee's liabilities for which, to the extent thereof, are set
forth in Section 8);
(dd) which represents ordinary and usual operating or overhead
expenses of the Lessor except to the extent that the same arise on the
occurrence of an Event of Default;
(ee) which is required to be borne by the Lessor in accordance
with any other provision of this Lease;
(ff) which results from, or represents, any decline in the market
value of the Aircraft (unless such decline arises out of any Default); or
(gg) to the extent that such Claim arises in connection with the
Aircraft in
59
<PAGE>
respect of an event or circumstance which occurs or exists prior to the
Delivery Date or after the Expiry Date and is not proximately caused by to
any act or omission on the part of the Lessee.
The Lessor agrees that it shall, promptly after it becomes aware of any
circumstances which shall, or would reasonably be expected to, become the
subject of a claim by the Lessor for indemnification pursuant to this Section
15(a), notify the Lessee in writing accordingly as soon as reasonably
practicable. The Lessor and the Lessee shall then consult with one another in
good faith in order to determine what action (if any) may reasonably be taken
to avoid or mitigate such Claim. The Lessee shall have the right to take all
reasonable action (on behalf, and, if necessary, in the name, of the Lessor)
in order to resist, defend or compromise (provided such compromise is
accompanied by payment) any claims by third parties in respect of such Claim,
PROVIDED always that the Lessee shall not be entitled to take any such action
unless adequate provision, reasonably satisfactory to the Lessor, shall have
been made in respect of the third party claim and the costs thereof. The
Lessee shall be entitled to select any counsel to represent it and/or the
Lessor in connection with any such action, subject to the approval of the
Lessor (such approval not to be unreasonably withheld) and any action taken
by the Lessee shall be on a basis that will fully indemnify each Indemnitee.
The indemnities described in this Section will continue in full force and
effect notwithstanding the expiration or other termination of this Lease and
are expressly made for the benefit of and will be enforceable by each
Indemnitee.
(b) LEGAL FEES AND EXPENSES. The Lessee agrees to pay to Lessor all
reasonable costs and expenses, if any (including, without limitation,
reasonable counsel fees and expenses), in connection with the enforcement of
this Lease, any other Operative Document and the other documents to be
delivered hereunder or thereunder.
SECTION 16. ASSIGNMENT AND ALIENATION. Lessor shall have the right
to assign, sell or encumber any interest of Lessor in the Aircraft or this
Lease and/or the proceeds hereof subject to the rights of Lessee under the
provisions of this Lease. To effect or facilitate any such assignment, sale
or encumbrance, Lessee agrees to provide, at Lessor's cost, such agreements,
consents, conveyances or documents as may be reasonably requested by Lessor,
which shall include, without limitation, a commercially standard estoppel
certificate and an unrestricted release of Lessor from its obligations under
this Lease, save as to antecedent liabilities. The agreements, covenants,
obligations and liabilities contained herein including, but not limited to,
all obligations to pay Rent and indemnify each Indemnitee are made for the
benefit of each Indemnitee and their respective successors and assigns;
provided, however, that, unless consented to by Lessee, no assignment, sale
or encumbrance shall increase the aggregate financial exposure under the
indemnity obligations or otherwise of Lessee under this Lease as compared to
what such obligations would have been had such assignment, sale or
encumbrance not occurred. In the event this Lease is assigned, sold or
encumbered by
60
<PAGE>
Lessor, any assignee, transferee or mortgagee shall agree as a condition
precedent thereto not to disturb or otherwise interfere with the quiet
enjoyment of Lessee of the Aircraft so long as no Event or Default shall have
occurred and be continuing.
SECTION 17. NOTICES. All notices required under the terms and
provisions hereof shall be in writing in the English language, and any such
notice shall become effective when received by the other party, by hand, by
registered mail with proper postage for airmail prepaid, by overnight courier
service, or, if in the form of a telecopy, upon confirmation of receipt
thereof, in each case addressed (i) if to the Lessee:
ALOHA AIRLINES, INC.
P.O. Box 30028
Honolulu, Hawaii 96820
Attention: CHIEF FINANCIAL OFFICER
Telecopier: (808) 833-3100
or to such other address as the Lessee shall from time to time designate in
writing to the Lessor and Lender, or (ii) if to the Lessor:
AJET, INC.
c/o Prentice Hall
32 Loockerman Sq., Suite L-100
Dover, Delaware 19901
with a copy to:
JETLEASE, INC.
5718 Westheimer, Suite 1700
Houston, Texas 77057
Attention: PRESIDENT
Telecopier: (713) 974-2813
with a further copy to:
61
<PAGE>
ANANIA, BANDKLAYDER & BLACKWELL
International Place, Suite 3300
100 S.E. Second Street
Miami, Florida 33131
Attention: FRANCIS A. ANANIA, ESQ.
Telephone: (305) 373-4900
Telecopier: (305) 373-2939
or to such other address as the Lessor shall from time to time designate in
writing to Lessee and Lender, or (iii) if to Lender:
THE CIT GROUP/EQUIPMENT FINANCING, INC.
1211 Avenue of the Americas
New York, New York 10036
Attention: GENERAL COUNSEL
Telecopier: (212) 536-1388
or to such other address as Lender shall from time to time designate in
writing to Lessee and Lessor.
SECTION 18. NO SET-OFF. COUNTERCLAIM. Etc. The Lessee's obligation
to pay all Rent payable hereunder shall be absolute and unconditional and
shall not be affected by any circumstance (except to the extent the Lessee is
required by a court of competent jurisdiction to pay Basic Rent to a Person
other than the Lessor), including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which the Lessee may have
against the Lessor, any partner comprising the Lessor, the manufacturer of
the Airframe or of any Engine or anyone else for any reason whatsoever
(whether in connection with the transactions contemplated hereby or in
connection with any unrelated transaction), (ii) any defect in the title,
airworthiness, eligibility for registration under the laws of the United
States, condition, design, operation, or fitness for use of, or any damage to
or loss or destruction of, or any Lien upon, the Airframe or any Engine, or
any interruption or cessation in the use or possession thereof by the Lessee
for any reason whatsoever, whether arising out of or related to an act or
omission of the Lessor or any other Person, (iii) any insolvency, bankruptcy,
reorganization or similar proceedings by or against the Lessee, the Lessor or
any other Person, (iv) the invalidity or unenforceability of this Lease or
any absence of right, power, or authority of the Lessor or Lessee to enter
into this Lease, or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing. The Lessee hereby
waives, to the extent permitted by Applicable Law, any and all rights which
it may now have or which at any time hereafter may be conferred upon it, by
Applicable Law or otherwise, to terminate, cancel, quit or surrender this
Lease, or any obligation imposed on the Lessee by this Lease. Nothing in this
Section 18 shall be construed to preclude
62
<PAGE>
the Lessee from bringing any suit at law or in equity against any Person that
it would otherwise be entitled to bring for breach of any representation,
warranty, covenant or duty hereunder.
SECTION 19. GOVERNING LAW.
(a) WAIVER OF IMMUNITY. CONSENT TO JURISDICTION. Each of the Lessor and
the Lessee hereby irrevocably agrees that, to the extent that it or any of
its assets has or hereafter may acquire any right of immunity, as against the
other party hereto or its respective successors and assigns, whether
characterized as sovereign immunity or otherwise, from any legal proceedings,
in the United States of America including, without limitation, immunity from
service of process, immunity from jurisdiction or judgment of any court or
tribunal, immunity from execution of a judgment, and immunity of any of its
property from attachment prior to any entry of judgment or from attachment in
aid of execution upon a judgment, it hereby expressly and irrevocably waives
any such immunity. Each of the Lessor and the Lessee irrevocably agrees that
any legal suit, action or proceeding arising out of or relating solely to
this Lease or any other Operative Document, or any of the transactions
contemplated hereby or thereby or any document referred to herein or therein,
may be instituted in the State or Federal courts in the State of Florida or
any other jurisdictions authorized under this Section 19, and it hereby
irrevocably waives, to the fullest extent permitted by law, any objection
which it may have now or hereafter to the laying of the venue or the
jurisdiction or the convenience of the forum of any such legal suit, action
or proceeding and irrevocably submits generally and unconditionally to the
jurisdiction of any such court but only in any such suit, action or
proceeding. Final judgment against the Lessee or the Lessor in any suit shall
be conclusive, and may be enforced in other jurisdictions by suit on the
judgment, a certified or true copy of which shall be conclusive evidence of
the fact and of the amount of any indebtedness or liability of the Lessee or
the Lessor, as the case may be, therein described; provided always that the
plaintiff may at its option bring suit, or institute other judicial
proceedings, against the Lessee or the Lessor, as the case may be, or any of
its assets in the courts of any country or place where the Lessee or the
Lessor, as the case may be, or such assets may be found.
(b) GOVERNING LAW. This Lease is being delivered in the State of New
York, and shall be governed and controlled as to validity, enforcement,
interpretation, construction, effect and in all other respects by the federal
law and statutes, and laws and decisions of the State of New York.
(c) SERVICE OF PROCESS. In the event of any legal proceedings arising out
of or relating to this Lease, the parties agree and consent to service of
process by any means allowed by law, including but not limited to Certified
Mail, Return Receipt Requested, hand delivery, facsimile transmission,
Federal Express or other express courier service, any other manner which
provides actual notice and/or any other; method or procedure allowed by law.
Process may be served upon any officer, director, employee or agent
63
<PAGE>
of the parties, or any other individual authorized by law. Service of process
shall be complete upon delivery unless delivery is refused, in which event
service of process shall be deemed complete upon such refusal.
(d) VENUE AND JURISDICTION. Venue of any actions arising out of or
relating to this Lease shall lie exclusively in Dade County, Florida, New
York, New York, or Honolulu, Hawaii and the parties expressly agree to submit
themselves to the IN PERSONAM jurisdiction of the Dade County, Florida
courts, the New York County, New York courts, and the Honolulu, Hawaii courts.
(e) TRIAL BY JURY. Lessor and Lessee, to the extent permissible by law,
do each waive their right to trial by jury.
SECTION 20. MISCELLANEOUS. This Lease constitutes the entire
agreement of the parties. Any provision of this Lease which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibitions or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, each of Lessor and the Lessee hereby waives any
provision of Applicable Law which renders any provision hereof prohibited or
unenforceable in any respect.
This Lease shall constitute an agreement of lease, and nothing herein
shall be construed as conveying to the Lessee any right, title or interest in
the Aircraft except as a lessee only.
This Lease, including all agreements, covenants, representations and
warranties, shall be binding upon and inure to the benefit of, and may be
enforced by, (1) Lessor and its agents, servants and personal representatives
and, to the extent permitted hereby, assigns and (2) Lessee and its
successors and, to the extent permitted hereby, assigns. The section and
subsection headings in this Lease are for convenience of reference only and
shall not modify, define, expand or limit any of the terms or provisions
hereof. This Lease may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
No term or provision of this Lease may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which
64
<PAGE>
the enforcement of the change, waiver, discharge or termination is sought and
by Lender.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this Lease
to be duly executed at _____________, as of the date and year first above
written.
ALOHA AIRLINES, INC.
By: /s/ Brenda A. Cutwright
-----------------------------------
SR. VICE PRESIDENT FINANCE &
PLANNING AND CFO
Title:
---------------------------------
the Lessee
By: /s/ [Illegible]
-----------------------------------
STAFF VICE PRESIDENT - FINANCE
& CONTROLLER
Title:
---------------------------------
the Lessee
AJET, INC.
By:
------------------------------------
Title:
---------------------------------
the Lessor
65
<PAGE>
the enforcement of the change, waiver, discharge or termination is sought and
by Lender.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this Lease
to be duly executed as of the date and year first above written.
ALOHA AIRLINES, INC., the Lessee
By:
------------------------------------
Title:
---------------------------------
By:
------------------------------------
Title:
---------------------------------
AJET, INC., the Lessor
By: /s/ Nigel Minion
------------------------------------
Title: PRESIDENT
---------------------------------
Counterpart no. 4 of 4 fully executed counterparts. Only counterpart no. 1 is
the "original" for chattel paper purposes; all others are duplicates.
65
<PAGE>
EXHIBIT A: FORM OF LEASE SUPPLEMENT AND RECEIPT
LEASE SUPPLEMENT AND RECEIPT dated June 1 , 1995 between Ajet, Inc.
(the "Lessor"), and Aloha Airlines, Inc. (the "Lessee").
The Lessor and the Lessee have heretofore entered into that certain
Aircraft Lease Agreement, dated as of May 31, 1995 (herein called the "Lease"
and the defined terms therein being hereinafter used with the same meanings),
relating to one Boeing model 737-2X6QC aircraft, manufacturer serial number
23122. The Lease provides for the execution and delivery of a Lease
Supplement and Receipt.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, the Lessor and the Lessee hereby agree as follows:
A. THE LEASE. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement and Receipt to the same
extent as if fully set forth herein. The parties confirm that the Delivery
Date is the date of this Lease Supplement and Receipt.
B. THE AIRCRAFT. The Lessee hereby certifies that the Aircraft described
Schedule I hereto, consisting of 2 pages and made a part hereof, and the
Aircraft Documents described in Schedule 2 hereto, consisting of 1 page and
made a part hereof, have been delivered to the Lessee, inspected by the
Lessee, found to be in good order and accepted under, and for all purposes
of, the Lease, all on the date hereof. Lessee accepts delivery of the
Aircraft "AS IS," 'WHERE IS," AND SUBJECT TO EACH AND EVERY DISCLAIMER OF
WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 4(c) OF THE LEASE. For
the avoidance of doubt, the Lessee's obligations to return the Aircraft in
the conditions set forth in Section 6 of the Lease may be amended as
expressly set forth in Schedules 1 and 2 hereto.
C. REPRESENTATIONS BY THE LESSEE. THE Lessee hereby represents
warrants to the Lessor that on the date hereof:
1. The representations and warranties of the Lessee set forth in the
Lease are true and correct in all material respects as though made on and as
of the date hereof.
2. The Lessee has satisfied or complied with all requirements set forth
in the Lease to be satisfied or complied with on or prior to the date thereof.
3. No default or Event of Default under the Lease has occurred and is
continuing on the date hereof.
4. The Lessee has obtained, and there are in full force and effect, such
insurance policies with respect to the Aircraft as are required to be
obtained under the terms of the
66
<PAGE>
Lease.
5. The balance sheet and statement of income of the Lessee or any
consolidated group of companies of which the Lessee is a member, heretofore
delivered to the Lessor, have been prepared in accordance with generally
accepted accounting principles, and fairly represent the financial position
of the Lessee or any consolidated group of companies of which the Lessee is a
member, on and as of the date thereof and the results of its or their
operations for the period or periods covered thereby. Since the date of such
balance sheet, there has been no material adverse change in the financial or
operating condition of the Lessee, or any consolidated group of companies of
which Lessee is a member.
This Lease Supplement and Receipt may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall
be an original, but all such counterparts shall together constitute but one
and the same instrument.
This Lease Supplement and Receipt is being delivered in the State of New
York, and shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this Lease
Supplement and Receipt to be duly executed as of the date and year first
above written.
ALOHA AIRLINES, INC., the Lessee
By:
------------------------------------
Title:
---------------------------------
By:
------------------------------------
Title:
---------------------------------
AJET, INC., the Lessor
By:
-----------------------------------
Title:
---------------------------------
67
<PAGE>
SCHEDULE 1
May 8, 1995
B737-2X6QC
SERIAL NUMBER 23122
================================================================================
GENERAL DATA
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AIRCRAFT DATA: INTERIOR CONFIGURATION:
-------------- -----------------------
Operator: Passengers: All pax 120
Registration: *
Manufacturer: Boeing 0 Pallet/109 Pax
Year of Manufacture: July 1984 2 Pallet/ 70 Pax 3 Pallet/ 54 Pax
Engines: JT8D-17A 4 Pallet/ 34 Pax 5 Pallet/ 24 Pax
Line Number 1036 6 Pallet/ 6 Pax 7 Pallet/ 0 Pax
AIRFRAME DATA WEIGHTS (LBS):
------------- --------------
Total flight Hours: 24,855 hrs Max Taxi Weight: 128,600 Lbs
Total Cycles: 23,091 cyc Max Takeoff Weight: 128,100 Lbs
(As of 05/05/95) Max Landing Weight: 107,000 Lbs
Max Zero fuel Weight: 99,000 Lbs
Operating Empty Weight: 60,446 Lbs
Fuel Capacity: 5,173 Usg
</TABLE>
<TABLE>
<CAPTION>
EQUIPMENT & FURNISHINGS
-----------------------
<S> <C>
Coach Class Seats: Combi Aircraft/Seats PTC Aerospace (UOP QC Pallets/Pemco & Tramco
Cargo Handling System: QC Pemco Locks/Ancra Ballmat
Overhead Storage Bin Type: Boeing Wide body Look Interior
Life Jackets (Crew): EAM/Air Cruisers Life Jackets (Pax): Flotation Cushions
Hand megaphone: ACR/EM-1
Escape Path Lighting: Intervalve system Escape slides: Air Cruisers-(2)Fwd/(l) Aft
P.B.E.: Dupont
Galley/Locations: Nordskog (3 ea)-#1 Fwd / #3 Aux / #4 Aft
Ovens: Nordskog Model 5316E (#1 & #4 Galley only)
Beverage Carts: Nordskog (2 ea)
</TABLE>
--------------------------------------------------------------------------------
MAINTENANCE
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAINTENANCE PROGRAM: TIME SINCE LAST CHECK HRS. TO NEXT CHECK
-------------------- --------------------- ------------------
<S> <C> <C>
A-1 Check 125 Hours Due
B Check 631 Hours n/a
C Check 3490 Hours n/a
D Structural Segmented into each "C" Check
</TABLE>
--------------------------------------------------------------------------------
LANDING GEAR
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Position Nose Left Right
-------- ---- ---- -----
<S> <C> <C> <C>
65-46200-55 65-46100-52 65-45100-52
Serial Number S0139P1036 MC01995P1036 MC01996P1036
Total Cycles Since New 23,070 23,070 23,070
Overhaul Interval 24,000 24,000 24,000
Cyc. remaining to Overhaul 909 909 909
</TABLE>
JETLEASE, INC.
Page 1 of 2
*to be assigned United States Registration No. N816AL
<PAGE>
SCHEDULE 1
--------------------------------------------------------------------------------
ENGINE STATUS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
[ILLEGIBLE] [ILLEGIBLE]
(As of 05/05/95) (As of 05/05/95)
<S> <C> <C> <C>
Serial #: P709457B Serial #: P709430B
Total Hours: 22,812.15 Total Hours: 26,003.19
Total Cycles: 20,864 Total Cycles: 20,877
Hours since EHM: 3,972 Hours since EHM: 4,093
Cycles since EHM: 1,957 Cycles since EHM: 2,335
Hours to Life Limit/Item: 19,539.38/C2 Hours to Life Limit/Item: 18933.38/C7
Cycles to Life Limit/Item: 6,241/C1 Cycles to Life Limit/Item: 5,667/C7
</TABLE>
--------------------------------------------------------------------------------
A.P.U. STATUS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Serial Number Model MGF TSO Rem Hrs
------------- ----- --- --- -------
<S> <C> <C> <C> <C>
P50167 GTCP85-129 Garrett 631 Hrs On Condition
</TABLE>
--------------------------------------------------------------------------------
AVIONICS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Manufacturer No. Model Part Number
------------ --- ----- -----------
<S> <C> <C> <C> <C>
A.F.C.S. Sperry 1 SP77 N/A
HF Communications Collins 1 628-T1 622-3371-001
VHF Communications Collins 2 618M-3 622-1181-001
Selcal Decoder Motorola 1 NA134D2 N/A
Cockpit Voice Recorder Fairchild 1 A100A 93A100-80
Flight Recorder Fairchild 1 F800 17M600-00A
G.P.W.S. Sundstrand 1 MKVII 965-0876-001
Marker Beacon Collins 1 51Z-4 522-29996-000
VOR/ILS Nav. Collins 2 51RV-4 622-3255-002
A.D.F. Collins 2 51Y-7 777-1492-004
Auto Pilot Sperry 1 SP77 N/A
ATC Xponder (Mode S) Collins 2 TPR-720 622-7878-200
Air Data Computer Honeywell 1 N/A N/A
Digital Air Data Computer Honeywell 2 N/A HG48OB13
Loran 'C' ONI 2 7000 N/A
D.M.E. Collins 2 860E-5 622-2921-001
Weather Radar Sperry 1 Primus 90 MI585161
Radio Altimeter Collins 1 86OF-4 622-3890-003
PMS \ PDCS Lear Siegler 1 163356-88-1
TCAS Collins 1 TCAS II N/A
Windshear Sundstrand 1 MKVII N/A (See GPWS)
Flight Director Collins 2 329B-8J 772-5005-005
Omega Navigation N/A 1 N/A N/A
</TABLE>
SPECIFICATION SUBJECT TO VERIFICATION UPON INSPECTION.
JETLEASE, INC. [DATE ILLEGIBLE]
Page 2 of 2
<PAGE>
SCHEDULE 2
LIST OF AIRCRAFT DOCUMENTATION
------------------------------
TECHNICAL DOCUMENTATION AND LOOSE EQUIPMENT
-------------------------------------------
I. TECHNICAL DOCUMENTATION
<TABLE>
<CAPTION>
Quantity
--------
<S> <C> <C> <C>
1. Maintenance manual 1
2. Emergency checklist 1
3. Operations manual (systems) 1
4. Operations manual (procedures) 1
5. Flight manual 1
6. Loran manual 1
7. Weight and balance manual 1
8. Mark Air minimum equipment list 1
9. Log books
10. Engine records
11. AD and services bulletin compliance records
12. Aircraft maintenance records
</TABLE>
<TABLE>
<CAPTION>
II. LOOSE EQUIPMENT
<S> <C>
Emergency flashlight assembly
Portable oxygen bottle
Halon extinguisher
Cargo pallet locks
Crash axe
Smoke masks
9G net
Cargo system components
Engine exhaust and inlet plugs
</TABLE>
<PAGE>
EXHIBIT "B"
May 26, 1995
Ajet, Inc.
c/o Prentice Hall
32 Loockerman Sq., Suite L-100
Dover, Delaware 19901
Gentlemen:
We are counsel to Aloha Airlines, Inc. ("Aloha") and have acted as such
in connection with the Aircraft Lease Agreement dated as of May ______, 1995
between Ajet, Inc., as Lessor ("Ajet"), and Aloha, as Lessee, (the "Lease
Agreement"), relating to one Boeing 737-2X6QC aircraft, bearing m.s.n. 23122,
and two Pratt & Whitney JT8D-17A engines, bearing m.s.n.'s P709457B and
P709430B (the "Aircraft").
In so acting, we have examined the Lease Agreement referred to above, and
the originals and copies, certified to our satisfaction, of such records,
documents, certificates and other instruments as, in our judgment, are
necessary or appropriate to enable me to render the opinion expressed below.
For the purposes of this opinion, we have assumed the due execution of
all documents by parties other than Aloha.
Based on the above, and subject to the qualifications set forth below, we
are of the opinion that:
1. Aloha is (a) duly formed, validly existing and in good standing as a
Hawaii corporation qualified to do business in all jurisdictions where
it does business, (b) maintains its principal place of business and chief
executive office in Honolulu, Hawaii, (c) has full power to carry on its
business as it is now being conducted and to enter into, legally bind
itself by, and perform its obligations under the Lease Agreement, and all
transactions contemplated thereunder and has complied with all material
statutory and other requirements relative to the business carried on by
it.
<PAGE>
Ajet, Inc.
May 26, 1995
Page 2
2. All necessary consents, resolutions and authorizations for Aloha to enter
into the Lease Agreement have been obtained, and no further consents or
authorizations are necessary for the performance by Aloha of all its
obligations pursuant to the provisions of the Lease Agreement and all
other documents executed in connection with the foregoing or contemplated
thereby.
3. The Lease Agreement constitutes a valid and binding obligation of Aloha,
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, or other similar laws affecting the enforcement
of creditors' rights generally, and to the extent that certain remedies
require or may require enforcement by a court of equity, by such
principles of equity as a court having jurisdiction may impose and by
laws which may affect some of such remedies, but which do not make
available remedies inadequate for substantial realization of the benefits
provided therein.
4. The execution and delivery of, and the performance of the provisions of
the Lease Agreement, and of the transactions contemplated thereby, do not
and will not contravene the Articles of Incorporation or Bylaws of Aloha,
and will not contravene any applicable law, regulation, decrees, order,
permit, mortgage, indenture, deed of trust, loan or credit or contractual
or other restriction now existing and binding on Aloha or on any of its
properties.
5. There are no outstanding judgments against Aloha and there is no suit
pending or threatened against Aloha which would have a material adverse
effect on their ability to enter into and perform its obligations under
the Lease Agreement.
6. The Lease Agreement and any filing required or permitted thereunder is
not subject to any registration tax, a stamp duty or similar tax.
We are members of the Bar of the State of Hawaii and do not hold
ourselves out as being conversant with, and express no opinion as to, the
laws of any jurisdiction other than those of the United States of America and
the State of Hawaii.
<PAGE>
Ajet, Inc.
May 26, 1995
Page 3
The opinions expressed herein are solely for your benefit and may not be
relied upon in any manner or for any purpose by any other person.
Char Sakamoto Ishii & Lum
<PAGE>
EXHIBIT "C"
CERTIFICATE OF COMPLIANCE
This Certificate of Compliance is delivered, on and as of the date set
forth below by ALOHA AIRLINES, INC. ("LESSEE") to AJET, INC., ("LESSOR")
relating to one (1) Boeing 737-2X6QC Aircraft, Serial Number 23122,
Registration No. N816AL, together with two (2) Pratt & Whitney JT8D-9A
Engines, (collectively referred to as the "Aircraft") as more fully described
in that certain Aircraft Lease Agreement between Lessor and Lessee, dated as
of May ______, 1995 ("Lease Agreement"). In respect thereof, LESSEE who hereby
certifies as follows:
1. The Aircraft is ready for re-delivery to LESSOR, in accordance with
the terms and conditions of the Lease Agreement.
2. The Aircraft conforms to the terms and conditions of the Lease
Agreement, including but not limited to Section 6 thereto;
3. The Aircraft is in a condition ready for issuance of an FAA Standard
Certificate of Airworthiness for an aircraft type certificated in the
transport category for operation in scheduled airline service under United
States Federal Aviation Regulations, Part 121, ("FAR Part 121") and is
eligible for inclusion on the United States Federal Aviation Administration
operations specifications of a United States air carrier authorized to
provide such service under FAR Part 121.
4. All Aircraft systems are functioning within manufacturer's limits.
5. The Aircraft is being re-delivered with the same equipment installed
thereon at the commencement of the Lease Agreement, subject only to
replacements, additions and modifications which may have been made pursuant
to the Lease Agreement.
LESSEE hereby acknowledges and confirms that LESSOR is entitled to rely
upon such representations as proof that the Aircraft fully meets the
requirements for return of the Aircraft in accordance with the provisions of
the Lease Agreement.
IN WITNESS WHEREOF, LESSEE has caused this Certificate of Compliance to
be executed in its name, by its duly authorized officer or representative,
pursuant to due corporate authority, this ______ day of ______________________.
LESSEE: ALOHA AIRLINES, INC.
By: _______________________________ By: _______________________________
Title: ____________________________ Title: ____________________________
Date: _____________________________ Date: _____________________________
<PAGE>
EXHIBIT "D"
APPOINTMENT AS ATTORNEY-IN-FACT
ALOHA AIRLINES, INC. hereby irrevocably appoints AJET, INC., and THE CIT
GROUP/EQUIPMENT FINANCING, INC., and the successors and assigns of each, as its
true and lawful attorneys-in-fact, jointly and severally, to act in all respects
and do such actions as ALOHA AIRLINES, INC. could do or authorized others to do
under that certain Aircraft Lease Agreement between AJET, INC. and ALOHA
AIRLINES, INC. dated May ______, 1995, with respect to the use or loss of use,
recovery of insurance proceeds, operation, maintenance, repair and possession of
that certain Boeing 737-2X6QC Aircraft, Serial Number 23122, (Aircraft) which
AJET, INC. has leased to ALOHA AIRLINES, INC. This appointment is made as part
of and in consideration of the leasing of the Aircraft to ALOHA AIRLINES, INC.
by AJET, INC. and shall remain in full force and effect until all obligations of
ALOHA AIRLINES, INC. under the referenced Lease shall be fully discharged or
satisfied.
Executed this ______ day of _____________________________.
ALOHA AIRLINES, INC.
By: ______________________________
Title: ___________________________
Date: ____________________________
By: ______________________________
Title: ___________________________
Date: ____________________________
<PAGE>
EXHIBIT "E"
DELIVERY RECEIPT
THE UNDERSIGNED hereby acknowledges that on the ______ day of May, 1995,
AJET, INC. ("AJET"), presented for delivery and acceptance at Phoenix, Arizona,
U.S.A. to ALOHA AIRLINES, INC. ("ALOHA") and ALOHA's authorized representative
_____________________________, one (1) used The Boeing Company Model 737-2X6QC
aircraft bearing Manufacturer's Serial Number 23122, bearing Federal Aviation
Administration Registration Number N816AL, together with two (2) used Pratt &
Whitney Model JT8D-17A engines installed thereon bearing Manufacturer's Serial
Numbers P709457B and P709430B, and together with all fixed equipment, parts,
components and accessories installed thereon (collectively the "Aircraft") and
all Aircraft documents as attached hereto as Schedule A and incorporated herein
by reference, pursuant to that certain Aircraft Lease Agreement dated as of
May ______, 1995 between AJET and ALOHA ("Lease").
The undersigned further acknowledges that such Aircraft is acceptable to
it and is in the condition contemplated for delivery at Phoenix, Arizona,
U.S.A.
The undersigned further acknowledges that AJET has in all respects
complied with the terms of the Lease as they relate to delivery of the
Aircraft, and that ALOHA accepts delivery of the Aircraft "AS IS, WHERE IS"
in Phoenix, Arizona, U.S.A.
EXECUTED THIS ______ day of May, 1995.
ALOHA AIRLINES, INC.
By: ________________________________________
________________________________________
Its Authorized Representative
<PAGE>
EXHIBIT "F"
MAINTENANCE PROVIDERS
1. AIRFRAME: DYNAIR (PARTS - BOEING)
2. ENGINES: AVIALL, GREENWICH, AEROTHRUST (PARTS - PRATT &
WHITNEY)
3. LANDING GEAR: MONASCO
4. APU: GARRETT
5. CSD: SUNSTRAND
<PAGE>
ASSIGNMENT, ASSUMPTION, AMENDMENT AND CONSENT
---------------------------------------------
THIS ASSIGNMENT, ASSUMPTION, AMENDMENT AND CONSENT ("Assignment"), dated
as of December 26, 1996 is between AJET, INC. ("Lessor"), ALOHA AIRLINES,
INC., a Hawaii Corporation ("Assignor"), ALOHA AIRLINES, INC., a Delaware
corporation ("Assignee") and THE CIT GROUP/EQUIPMENT FINANCING, INC. ("CIT").
RECITALS
--------
WHEREAS, Lessor and Assignor entered into that certain Aircraft Lease
Agreement dated as of May 31, 1995, as it may be supplemented or amended from
time to time (the "Lease"), pursuant to which Assignor leased from Lessor one
(1) Boeing model 737-2X6QC aircraft bearing manufacturer's serial number 23122
and registration mark N816AL (the "Aircraft");
WHEREAS, Lessor and CIT entered into that certain Loan and Security
Agreement dated as of May 31, 1996, as it may be supplemented or amended from
time to time pursuant to which Lessor transferred and assigned to CIT, and
granted CIT a first security interest in, all of Lessor's present and future
right, title, and interest in, to, and under the Lease.
WHEREAS, Lessor, Assignor and CIT entered into that certain Lessee's
Consent and Agreement dated as of May 31, 1995 (the "Consent") pursuant to which
Assignor consented to the Loan and Security Agreement.
WHEREAS, effective December 26, 1996, Assignor merged with Assignee, and
Assignee emerged as the surviving entity and the successor in interest to
Lessee.
AGREEMENT
---------
NOW, THEREFORE, in consideration of these presents and for other valuable
consideration, the parties agree as follows.
1. CERTAIN DEFINED TERMS. Unless otherwise defined herein or the context
otherwise requires, all capitalized terms used in this Assignment shall have the
respective meanings assigned to them in the Lease.
2. ASSIGNMENT. As of December 26, 1996 (the "Effective Date"), the Assignor
hereby sells, assigns, transfers and conveys to Assignee all of the Assignor's
right, title and interest in and to the Lease, as if Assignee were the original
party to the Lease.
<PAGE>
3. ASSUMPTION BY ASSIGNEE. Assignee hereby accepts the foregoing sale,
assignment, transfer and conveyance of all of the Assignor's right, title,
interest, obligations and liabilities in, to and under the Lease to the Assignee
and, as of the Effective Date, agrees to assume and to be bound by all the terms
of, and to undertake all of the obligations of the Assignor contained in, the
Lease, including without limitation, all such obligations existing at or prior
to, or attributable to acts or events occurring prior to the Effective Date.
4. LESSOR AND LENDER CONSENT.
(a) Pursuant to Section 4(d)(i) of the Lease and Section 3(d) of the
Consent, Lessor and CIT acknowledge and consent to the foregoing sale,
assignment, transfer and conveyance of all of the Assignor's right, title,
interest, obligations and liabilities in, to and under the Lease to the Assignee
under this Assignment, and acknowledge the rights and obligations of the
Assignee described in this Assignment.
(b) Lessor and CIT further acknowledge and agree that from and after the
Effective Date Assignee shall be deemed the "Lessee" for all purposes of the
Lease and each reference in the Lease to the Assignor as "Lessee" shall be
deemed after the Effective Date for all purposes to refer to the Assignee and
that, from and after the Effective Date Lessor will perform its obligations
under the Lease, in all respects as if Assignee were the original party to the
Lease as "Lessee" thereunder.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ASSIGNEE. Assignee
represents and warrants as follows:
(a) ORGANIZATION AND QUALIFICATION. The Assignee is duly incorporated in
and validly existing under the laws of the state of Delaware, possessing
perpetual corporate existence, having the capacity to sue and be sued in its own
name, has full power, legal right and authority (corporate and otherwise) to
carry on its business as currently conducted, to own and hold under lease its
properties and to execute, deliver and perform and observe the provisions of
this Assignment and is duly qualified to do business in good standing wherever
the nature of its business makes such qualification necessary.
(b) AIR CARRIER. The Assignee is a citizen of the United States (as defined
in 49 U.S.C. ss.40102) holding an air carrier operating certificate issued under
49 U.S.C. chapter 447 for aircraft capable of carrying 10 or more individuals.
Assignee is duly licensed by all Governmental authorities whose license or
approval may be required to conduct its operations and to operate the Aircraft
in air commerce under Part 121 of the Federal Aviation Administration Air
Regulations, 14 C.F.R. 121,
<PAGE>
and to use an air carrier aircraft radio station under Part 87 of the Federal
Communications Commission Aviation Services Regulations, 47 C.F.R. 87, and to
the best of the knowledge of Assignee there is no pending or threatened
action or proceeding to revoke, modify or suspend any such license.
(c) CORPORATE AUTHORIZATION. The execution, delivery, and performance by
the Assignee of this Assignment (A) has been duly authorized by all necessary
corporate action on behalf of the Assignee, (B) does not require the consent or
approval of the Assignee's stockholders or of any trustee or the holders of any
indebtedness or obligations of the Assignee (except such as have been obtained,
and certified copies of which have been furnished to the Lessor), (C) does not
contravene any existing Applicable Law to which the Lessee is subject, (D) does
not conflict with or result in any breach of any of the terms or constitute a
default under any document, instrument, or agreement to which the Assignee is a
party or is subject or by which it or any of its assets are bound, (E) does not
contravene the Assignee's charter or by-laws, or any other provisions of
Assignee's constitutive documents, and (F) does not and will not result in the
creation or imposition of or obligate Assignee to create any Lien on or over the
Aircraft other than any Permitted Lien.
(d) GOVERNMENTAL APPROVAL. Every consent, authorization, and approval
required by the Assignee to enable it to carry on its business or required by it
to authorize or in connection with the execution, delivery, legality, validity,
priority, enforceability, admissibility in evidence, or effectiveness of this
Assignment or performance by it of any of its obligations under this Assignment
has been duly obtained or made and is in full force and effect and there has
been no default in observance or performance of any of the conditions,
restrictions (if any), imposed on or in connection with any such consent or
approval or sanction. On the Effective Date, Assignee will have and will
thereafter maintain valid all necessary certificates and licenses for the
operation of (a) its business as an airline operating scheduled and charter
flights for the carriage of passengers and cargo and (b) the Aircraft on such
flights; the Assignee is not exempt from the obtaining of any such certificates
or licenses usually required by commercial airline operators.
(e) VALID AND BINDING AGREEMENTS. This Assignment constitutes the legal,
valid and binding obligations of the Assignee enforceable against the Assignee
in accordance with its terms, subject to bankruptcy, insolvency, moratorium and
similar laws affecting creditors generally and subject also to general equitable
principles (regardless or whether enforcement is sought in a proceeding in
equity or at law). This Assignment shall governed by the laws of the State of
New York.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have caused this Assignment,
Assumption, Amendment and Consent to be duly executed and delivered by their
duly authorized officers as of the date first written above.
ASSIGNOR: ALOHA AIRLINES, INC., a Hawaii
Corporation
By: /s/ BRENDA F. CUTWRIGHT
------------------------------
Name: BRENDA F. CUTWRIGHT
------------------------------
Title: SR. VICE PRESIDENT FINANCE &
------------------------------
PLANNING AND CFO
------------------------------
By: /s/ JAMES M. KING
------------------------------
Name: JAMES M. KING
------------------------------
Title: VICE PRESIDENT PLANNING &
------------------------------
DEVELOPMENT
------------------------------
ASSIGNEE: ALOHA AIRLINES, INC., a
Delaware Corporation
By: /s/ BRENDA F. CUTWRIGHT
------------------------------
Name: BRENDA F. CUTWRIGHT
------------------------------
Title: SR. VICE PRESIDENT FINANCE &
------------------------------
PLANNING AND CFO
------------------------------
By: /s/ JAMES M. KING
------------------------------
Name: JAMES M. KING
------------------------------
Title: VICE PRESIDENT PLANNING &
------------------------------
DEVELOPMENT
------------------------------
LESSOR: AJET, INC.
By: /s/ NIGEL MINION
------------------------------
Name: NIGEL MINION
------------------------------
Title: PRESIDENT
------------------------------
LENDER: THE CIT GROUP/EQUIPMENT
FINANCING, INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have caused this Assignment,
Assumption, Amendment and Consent to be duly executed and delivered by their
duly authorized officers as of the date first written above.
ASSIGNOR: ALOHA AIRLINES, INC., a Hawaii
Corporation
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
------------------------------
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
------------------------------
ASSIGNEE: ALOHA AIRLINES, INC., a
Delaware Corporation
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
------------------------------
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
------------------------------
LESSOR: AJET, INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
LENDER: THE CIT GROUP/EQUIPMENT
FINANCING, INC.
By: WILLIAM J. HUNTER
-----------------------------
Name: /s/ WILLIAM J. HUNTER
-----------------------------
Title: VICE PRESIDENT
-----------------------------
<PAGE>
LEASE SUPPLEMENT AND RECEIPT
LEASE SUPPLEMENT AND RECEIPT dated June 1, 1995 between Ajet, Inc. (the
"Lessor"), and Aloha Airlines, Inc. (the "Lessee").
The Lessor and the Lessee have heretofore entered into that certain
Aircraft Lease Agreement, dated as of May 31, 1995 (herein called the "Lease"
and the defined terms therein being hereinafter used with the same meanings),
relating to one Boeing model 737-2X6QC aircraft, manufacturer serial number
23122. The Lease provides for the execution and delivery of a Lease
Supplement and Receipt.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, the Lessor and the Lessee hereby agree as follows:
A. THE LEASE. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement and Receipt to the same
extent as if fully set forth herein. The parties confirm that the Delivery Date
is the date of this Lease Supplement and Receipt.
B. THE AIRCRAFT. The Lessee hereby certifies that the Aircraft described
Schedule 1 hereto, consisting of 2 pages and made a part hereof, and the
Aircraft Documents described in Schedule 2 hereto, consisting of 1 page and made
a part hereof, have been delivered to the Lessee, inspected by the Lessee, found
to be in good order and accepted under, and for all purposes of, the Lease, all
on the date hereof. Lessee accepts delivery of the Aircraft "AS IS," "WHERE IS,"
AND SUBJECT TO EACH AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET
FORTH IN SECTIONS 4(c) OF THE LEASE. For the avoidance of doubt, the Lessee's
obligations to return the Aircraft in the conditions set forth in Section 6 of
the Lease may be amended as expressly set forth in Schedules 1 and 2 hereto.
C. REPRESENTATIONS BY THE LESSEE. The Lessee hereby represents warrants to
the Lessor that on the date hereof:
1. The representations and warranties of the Lessee set forth in the Lease
are true and correct in all material respects as though made on and as of the
date hereof.
2. The Lessee has satisfied or complied with all requirements set forth in
the Lease to be satisfied or complied with on or prior to the date thereof.
3. No default or Event of Default under the Lease has occurred and is
continuing on the date hereof.
4. The Lessee has obtained, and there are in full force and effect, such
insurance policies with respect to the Aircraft as are required to be obtained
under the terms of the
<PAGE>
Lease.
5. The balance sheet and statement of income of the Lessee or any
consolidated group of companies of which the Lessee is a member, heretofore
delivered to the Lessor, have been prepared in accordance with generally
accepted accounting principles, and fairly represent the financial position of
the Lessee or any consolidated group of companies of which the Lessee is a
member, an and as of the date thereof and the results of its or their operations
for the period or periods covered thereby. Since the date of such balance sheet,
there has been no material adverse change in the financial or operating
condition of the Lessee, or any consolidated group of companies of which Lessee
is a member.
This Lease Supplement and Receipt may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
This Lease Supplement and Receipt is being delivered in the State of New
York, and shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this Lease
Supplement and Receipt to be duly executed as of the date and year first above
written.
ALOHA AIRLINES, INC.
By: /s/ BRENDA F. CUTWRIGHT
-------------------------------
Title: SR. VICE PRESIDENT FINANCE &
-------------------------------
PLANNING AND CFO
-------------------------------
the Lessee
By: /s/ OWEN SEKIMURA
-------------------------------
Title: STAFF VICE PRESIDENT - FINANCE
-------------------------------
& CONTROLLER
-------------------------------
the Lessee
AJET, INC.
By:
-------------------------------
Title:
-------------------------------
the Lessor
67
<PAGE>
Lease.
5. The balance sheet and statement of income of the Lessee or any
consolidated group of companies of which the Lessee is a member, heretofore
delivered to the Lessor, have been prepared in accordance with generally
accepted accounting principles, and fairly represent the financial position of
the Lessee or any consolidated group of companies of which the Lessee is a
member, on and as of the date thereof and the results of its or their operations
for the period or periods covered thereby. Since the date of such balance sheet,
there has been no material adverse change in the financial or operating
condition of the Lessee, or any consolidated group of companies of which Lessee
is a member.
This Lease Supplement and Receipt may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
This Lease Supplement and Receipt is being delivered in the State of New
York, and shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this Lease
Supplement and Receipt to be duly executed as of the date and year first above
written.
ALOHA AIRLINES, INC., the Lessee
By:
-------------------------------
Title:
-------------------------------
By:
-------------------------------
Title:
-------------------------------
AJET, INC., the Lessor
By: /s/ NIGEL MINION
-------------------------------
Title: PRESIDENT
-------------------------------
Counterpart no. 4 of 4 fully executed counterparts. Only counterpart no. 1 is
the "original" for chattel paper purposes; all others are duplicates.
67
<PAGE>
SCHEDULE 1
May 8, 1995
B737-2X6QC
SERIAL NUMBER 23122
================================================================================
GENERAL DATA
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AIRCRAFT DATA: INTERIOR CONFIGURATION:
-------------- -----------------------
Operator: Passengers: All pax 120
Registration: *
Manufacturer: Boeing 0 Pallet/109 Pax
Year of Manufacture: July 1984 2 Pallet/ 70 Pax 3 Pallet/ 54 Pax
Engines: JT8D-17A 4 Pallet/ 34 Pax 5 Pallet/ 24 Pax
Line Number 1036 6 Pallet/ 6 Pax 7 Pallet/ 0 Pax
AIRFRAME DATA WEIGHTS (LBS):
------------- --------------
Total flight Hours: 24,855 hrs Max Taxi Weight: 128,600 Lbs
Total Cycles: 23,091 cyc Max Takeoff Weight: 128,100 Lbs
(As of 05/05/95) Max Landing Weight: 107,000 Lbs
Max Zero fuel Weight: 99,000 Lbs
Operating Empty Weight: 60,446 Lbs
Fuel Capacity: 5,173 Usg
</TABLE>
<TABLE>
<CAPTION>
EQUIPMENT & FURNISHINGS
-----------------------
<S> <C>
Coach Class Seats: Combi Aircraft/Seats PTC Aerospace (UOP QC Pallets/Pemco & Tramco
Cargo Handling System: QC Pemco Locks/Ancra Ballmat
Overhead Storage Bin Type: Boeing Wide body Look Interior
Life Jackets (Crew): EAM/Air Cruisers Life Jackets (Pax): Flotation Cushions
Hand megaphone: ACR/EM-1
Escape Path Lighting: Intervalve system Escape slides: Air Cruisers-(2)Fwd/(l) Aft
P.B.E: Dupont
Galley/Locations: Nordskog (3 ea)-#1 Fwd / #3 Aux / #4 Aft
Ovens: Nordskog Model 5316E (#1 & #4 Galley only)
Beverage Carts: Nordskog (2 ea)
</TABLE>
--------------------------------------------------------------------------------
MAINTENANCE
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAINTENANCE PROGRAM: TIME SINCE LAST CHECK HRS. TO NEXT CHECK
-------------------- --------------------- ------------------
<S> <C> <C>
A-1 Check 125 Hours Due
B Check 631 Hours n/a
C Check 3490 Hours n/a
D Structural Segmented into each "C" Check
</TABLE>
--------------------------------------------------------------------------------
LANDING GEAR
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Position Nose Left Right
-------- ---- ---- -----
<S> <C> <C> <C>
65-46200-55 65-46100-52 65-45100-52
Serial Number S0139P1036 MC01995P1036 MC01996P1036
Total Cycles Since New 23,070 23,070 23,070
Overhaul Interval 24,000 24,000 24,000
Cyc. remaining to Overhaul 909 909 909
</TABLE>
JETLEASE, INC.
Page 1 of 2
*to be assigned United States Registration No. N816AL
<PAGE>
SCHEDULE 1
--------------------------------------------------------------------------------
ENGINE STATUS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
[ILLEGIBLE] [ILLEGIBLE]
(As of 05/05/95) (As of 05/05/95)
<S> <C> <C> <C>
Serial #: P709457B Serial #: P709430B
Total Hours: 22,812.15 Total Hours: 26,003.19
Total Cycles: 20,864 Total Cycles: 20,877
Hours since EHM: 3,972 Hours since EHM: 4,093
Cycles since EHM: 1,957 Cycles since EHM: 2,335
Hours to Life Limit/Item: 19,539.38/C2 Hours to Life Limit/Item: 18933.38/C7
Cycles to Life Limit/Item: 6,241/C1 Cycles to Life Limit/Item: 5,667/C7
</TABLE>
--------------------------------------------------------------------------------
A.P.U. STATUS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Serial Number Model MGF TSO Rem Hrs
------------- ----- --- --- -------
<S> <C> <C> <C> <C>
P50167 GTCP85-129 Garrett 631 Hrs On Condition
</TABLE>
--------------------------------------------------------------------------------
AVIONICS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Manufacturer No. Model Part Number
------------ --- ----- -----------
<S> <C> <C> <C> <C>
A.F.C.S. Sperry 1 SP77 N/A
HF Communications Collins 1 628-T1 622-3371-001
VHF Communications Collins 2 618M-3 622-1181-001
Selcal Decoder Motorola 1 NA134D2 N/A
Cockpit Voice Recorder Fairchild 1 A100A 93A100-80
Flight Recorder Fairchild 1 F800 17M600-00A
G.P.W.S. Sundstrand 1 MKVII 965-0876-001
Marker Beacon Collins 1 51Z-4 522-29996-000
VOR/ILS Nav. Collins 2 51RV-4 622-3255-002
A.D.F. Collins 2 51Y-7 777-1492-004
Auto Pilot Sperry 1 SP77 N/A
ATC Xponder (Mode S) Collins 2 TPR-720 622-7878-200
Air Data Computer Honeywell 1 N/A N/A
Digital Air Data Computer Honeywell 2 N/A HG48OB13
Loran 'C' ONI 2 7000 N/A
D.M.E. Collins 2 860E-5 622-2921-001
Weather Radar Sperry 1 Primus 90 MI585161
Radio Altimeter Collins 1 86OF-4 622-3890-003
PMS \ PDCS Lear Siegler 1 163356-88-1
TCAS Collins 1 TCAS II N/A
Windshear Sundstrand 1 MKVII N/A (See GPWS)
Flight Director Collins 2 329B-8J 772-5005-005
Omega Navigation N/A 1 N/A N/A
</TABLE>
SPECIFICATION SUBJECT TO VERIFICATION UPON INSPECTION.
JETLEASE, INC. [DATE ILLEGIBLE]
Page 2 of 2
<PAGE>
SCHEDULE 2
LIST OF AIRCRAFT DOCUMENTATION
------------------------------
TECHNICAL DOCUMENTATION AND LOOSE EQUIPMENT
-------------------------------------------
I. TECHNICAL DOCUMENTATION
<TABLE>
<CAPTION>
Quantity
--------
<S> <C> <C> <C>
1. Maintenance manual 1
2. Emergency checklist 1
3. Operations manual (systems) 1
4. Operations manual (procedures) 1
5. Flight manual 1
6. Loran manual 1
7. Weight and balance manual 1
8. Mark Air minimum equipment list 1
9. Log books
10. Engine records
11. AD and services bulletin compliance records
12. Aircraft maintenance records
</TABLE>
<TABLE>
<CAPTION>
II. LOOSE EQUIPMENT
<S> <C>
Emergency flashlight assembly
Portable oxygen bottle
Halon extinguisher
Cargo pallet locks
Crash axe
Smoke masks
9G net
Cargo system components
Engine exhaust and inlet plugs
</TABLE>
<PAGE>
LEASE SUPPLEMENT NO. 2
----------------------
This Lease Supplement No. 2 (this "SUPPLEMENT") is entered into on June 29,
1995 to supplement the May 31, 1995 Aircraft Lease Agreement (the "LEASE")
between Aloha Airlines, Inc. ("LESSEE") , and Ajet, Inc. ("LESSOR").
Terms that are defined in the Lease have the same meanings when used in
this Supplement.
Lessee previously executed the Lease, and a Lease Supplement and Receipt
dated June 1, 1995, covering the aircraft and engines described in that Lease
Supplement and Receipt.
The Lease and that Lease Supplement and Receipt were recorded together as
one document with the Federal Aviation Administration ("FAA") under the Federal
Aviation Act on June 8, 1995 as conveyance number 2A266908.
The Lease, as supplemented, contemplates the execution and delivery of
supplements to the Lease for the purposes of specifically subjecting equipment
to the Lease.
Now, THEREFORE, in consideration of Lessee's and Lessor's termination of
their interests in two Pratt & Whitney model JT8D-17A engines, Lessor hereby
leases to Lessee, and Lessee hereby leases from Lessor, the following engines:
two Pratt & Whitney model JT8D-9A engines (each having 750 or more
rated takeoff horsepower or its equivalent) bearing manufacturer's
serial nos. 707311 and 707365,
each such engine constituting an "Engine" under the Lease effective upon the
filing of this Supplement with the FAA.
This Supplement forms a part of the Lease, as previously supplemented.
Except as supplemented by this Supplement, the Lease, as supplemented, is hereby
ratified, approved, and confirmed.
This Supplement may be executed in separate counterparts.
This Supplement is being delivered in the state of New York and shall in
all respects be governed by, and construed in accordance with, the laws of the
state of New York (excluding any conflicts-of-laws rule that would apply the
laws of any other jurisdiction).
<PAGE>
IN WITNESS WHEREOF, Lessee and Lessor have executed this Lease Supplement
No. 2.
ALOHA AIRLINES, INC. (Lessee)
By: /s/ Authorized Signatory
-------------------------------
Title:
-------------------------------
AJET, INC. (Lessor)
By: /s/ [ILLEGIBLE]
-------------------------------
Title: SECRETARY
-------------------------------
<PAGE>
PARTIAL TERMINATION OF LEASE
This Partial Termination of Lease (this "AGREEMENT") is entered into on
June 29, 1995 with respect to the May 31, 1995 Aircraft Lease Agreement (the
"LEASE") between Aloha Airlines, Inc. ("LESSEE"), and Ajet, Inc.
("LESSOR").
Terms that are defined in the Lease have the same
meanings when used in this Agreement.
Lessee previously executed the Lease, and a Lease Supplement and Receipt
dated June 1, 1995, covering the aircraft and engines described in that Lease
Supplement and Receipt.
The Lease and that Lease Supplement and Receipt were recorded together as
one document with the Federal Aviation Administration ("FAA") under the Federal
Aviation Act on June 8, 1995 as conveyance number 2A266908.
In consideration of Lessee's leasing from Lessor under the Lease, and
Lessor's leasing to Lessee under the Lease, two Pratt & Whitney model JT8D-9A
engines, Lessor and Lessee hereby terminate the Lease with respect to the
following engines:
two Pratt & Whitney model JT8D-17A engines (each having
750 or more rated takeoff horsepower or its equivalent)
bearing manufacturer's serial nos. P709430B and P709457B,
each such engine ceasing to be an "Engine" under the Lease effective upon the
filing of this Agreement with the FAA.
Except for the engines specifically terminated by this Agreement, the
Lease, as supplemented, is hereby ratified, approved, and confirmed.
This Agreement may be executed in separate counterparts.
This Agreement is being delivered in the state of New York and shall in
all respects be governed by, and construed in accordance with, the laws of
the state of New York (excluding any conflicts-of-laws rule that would apply
the laws of any other jurisdiction) .
<PAGE>
IN WITNESS WHEREOF, Lessee and Lessor have executed this Partial
Termination of Lease.
ALOHA AIRLINES, INC. (Lessee)
By: /s/ Brenda F. Cutwright
----------------------------------------
Sr. Vice President -- Finance & Planning
Title: and Chief Financial Officer
----------------------------------------
By: /s/ [ILLEGIBLE]
----------------------------------------
Staff Vice President -- Finance and
Title: Controller
----------------------------------------
AJET INC. (Lessor)
By:
----------------------------------------
Title:
----------------------------------------
<PAGE>
IN WITNESS WHEREOF, Lessee and Lessor have executed this Partial
Termination of Lease.
ALOHA AIRLINES, INC. (Lessee)
By:
----------------------------------------
Title:
----------------------------------------
AJET, INC. (Lessor)
By: /s/ [ILLEGIBLE]
----------------------------------------
Title: Secretary
----------------------------------------
<PAGE>
ASSIGNMENT, ASSUMPTION, AMENDMENT AND CONSENT
---------------------------------------------
THIS ASSIGNMENT, ASSUMPTION, AMENDMENT AND CONSENT ("Assignment"), dated
as of December 26, 1996 is between AJET, INC. ("Lessor"), ALOHA AIRLINES,
INC., a Hawaii Corporation ("Assignor"), ALOHA AIRLINES, INC., a Delaware
corporation ("Assignee") and THE CIT GROUP/EQUIPMENT FINANCING, INC. ("CIT").
RECITALS
--------
WHEREAS, Lessor and Assignor entered into that certain Aircraft Lease
Agreement dated as of May 31, 1995, as it may be supplemented or amended from
time to time (the "Lease"), pursuant to which Assignor leased from Lessor one
(1) Boeing model 737-2X6QC aircraft bearing manufacturer's serial number 23122
and registration mark N816AL (the "Aircraft");
WHEREAS, Lessor and CIT entered into that certain Loan and Security
Agreement dated as of May 31, 1996, as it may be supplemented or amended from
time to time pursuant to which Lessor transferred and assigned to CIT, and
granted CIT a first security interest in, all of Lessor's present and future
right, title, and interest in, to, and under the Lease.
WHEREAS, Lessor, Assignor and CIT entered into that certain Lessee's
Consent and Agreement dated as of May 31, 1995 (the "Consent") pursuant to which
Assignor consented to the Loan and Security Agreement.
WHEREAS, effective December 26, 1996, Assignor merged with Assignee, and
Assignee emerged as the surviving entity and the successor in interest to
Lessee.
AGREEMENT
---------
NOW, THEREFORE, in consideration of these presents and for other valuable
consideration, the parties agree as follows.
1. CERTAIN DEFINED TERMS. Unless otherwise defined herein or the context
otherwise requires, all capitalized terms used in this Assignment shall have the
respective meanings assigned to them in the Lease.
2. ASSIGNMENT. As of December 26, 1996 (the "Effective Date"), the Assignor
hereby sells, assigns, transfers and conveys to Assignee all of the Assignor's
right, title and interest in and to the Lease, as if Assignee were the original
party to the Lease.
<PAGE>
3. ASSUMPTION BY ASSIGNEE. Assignee hereby accepts the foregoing sale,
assignment, transfer and conveyance of all of the Assignor's right, title,
interest, obligations and liabilities in, to and under the Lease to the Assignee
and, as of the Effective Date, agrees to assume and to be bound by all the terms
of, and to undertake all of the obligations of the Assignor contained in, the
Lease, including without limitation, all such obligations existing at or prior
to, or attributable to acts or events occurring prior to the Effective Date.
4. LESSOR AND LENDER CONSENT.
(a) Pursuant to Section 4(d)(i) of the Lease and Section 3(d) of the
Consent, Lessor and CIT acknowledge and consent to the foregoing sale,
assignment, transfer and conveyance of all of the Assignor's right, title,
interest, obligations and liabilities in, to and under the Lease to the Assignee
under this Assignment, and acknowledge the rights and obligations of the
Assignee described in this Assignment.
(b) Lessor and CIT further acknowledge and agree that from and after the
Effective Date Assignee shall be deemed the "Lessee" for all purposes of the
Lease and each reference in the Lease to the Assignor as "Lessee" shall be
deemed after the Effective Date for all purposes to refer to the Assignee and
that, from and after the Effective Date Lessor will perform its obligations
under the Lease, in all respects as if Assignee were the original party to the
Lease as "Lessee" thereunder.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ASSIGNEE. Assignee
represents and warrants as follows:
(a) ORGANIZATION AND QUALIFICATION. The Assignee is duly incorporated in
and validly existing under the laws of the state of Delaware, possessing
perpetual corporate existence, having the capacity to sue and be sued in its own
name, has full power, legal right and authority (corporate and otherwise) to
carry on its business as currently conducted, to own and hold under lease its
properties and to execute, deliver and perform and observe the provisions of
this Assignment and is duly qualified to do business in good standing wherever
the nature of its business makes such qualification necessary.
(b) AIR CARRIER. The Assignee is a citizen of the United States (as defined
in 49 U.S.C. ss.40102) holding an air carrier operating certificate issued under
49 U.S.C. chapter 447 for aircraft capable of carrying 10 or more individuals.
Assignee is duly licensed by all Governmental authorities whose license or
approval may be required to conduct its operations and to operate the Aircraft
in air commerce under Part 121 of the Federal Aviation Administration Air
Regulations, 14 C.F.R. 121,
<PAGE>
and to use an air carrier aircraft radio station under Part 87 of the Federal
Communications Commission Aviation Services Regulations, 47 C.F.R. 87, and to
the best of the knowledge of Assignee there is no pending or threatened
action or proceeding to revoke, modify or suspend any such license.
(c) CORPORATE AUTHORIZATION. The execution, delivery, and performance by
the Assignee of this Assignment (A) has been duly authorized by all necessary
corporate action on behalf of the Assignee, (B) does not require the consent or
approval of the Assignee's stockholders or of any trustee or the holders of any
indebtedness or obligations of the Assignee (except such as have been obtained,
and certified copies of which have been furnished to the Lessor), (C) does not
contravene any existing Applicable Law to which the Lessee is subject, (D) does
not conflict with or result in any breach of any of the terms or constitute a
default under any document, instrument, or agreement to which the Assignee is a
party or is subject or by which it or any of its assets are bound, (E) does not
contravene the Assignee's charter or by-laws, or any other provisions of
Assignee's constitutive documents, and (F) does not and will not result in the
creation or imposition of or obligate Assignee to create any Lien on or over the
Aircraft other than any Permitted Lien.
(d) GOVERNMENTAL APPROVAL. Every consent, authorization, and approval
required by the Assignee to enable it to carry on its business or required by it
to authorize or in connection with the execution, delivery, legality, validity,
priority, enforceability, admissibility in evidence, or effectiveness of this
Assignment or performance by it of any of its obligations under this Assignment
has been duly obtained or made and is in full force and effect and there has
been no default in observance or performance of any of the conditions,
restrictions (if any), imposed on or in connection with any such consent or
approval or sanction. On the Effective Date, Assignee will have and will
thereafter maintain valid all necessary certificates and licenses for the
operation of (a) its business as an airline operating scheduled and charter
flights for the carriage of passengers and cargo and (b) the Aircraft on such
flights; the Assignee is not exempt from the obtaining of any such certificates
or licenses usually required by commercial airline operators.
(e) VALID AND BINDING AGREEMENTS. This Assignment constitutes the legal,
valid and binding obligations of the Assignee enforceable against the Assignee
in accordance with its terms, subject to bankruptcy, insolvency, moratorium and
similar laws affecting creditors generally and subject also to general equitable
principles (regardless or whether enforcement is sought in a proceeding in
equity or at law). This Assignment shall governed by the laws of the State of
New York.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have caused this Assignment,
Assumption, Amendment and Consent to be duly executed and delivered by their
duly authorized officers as of the date first written above.
ASSIGNOR: ALOHA AIRLINES, INC., a Hawaii
Corporation
By: /s/ BRENDA F. CUTWRIGHT
------------------------------
Name: BRENDA F. CUTWRIGHT
------------------------------
Title: SR. VICE PRESIDENT FINANCE &
------------------------------
PLANNING AND CFO
------------------------------
By: /s/ JAMES M. KING
------------------------------
Name: JAMES M. KING
------------------------------
Title: VICE PRESIDENT PLANNING &
------------------------------
DEVELOPMENT
------------------------------
ASSIGNEE: ALOHA AIRLINES, INC., a
Delaware Corporation
By: /s/ BRENDA F. CUTWRIGHT
------------------------------
Name: BRENDA F. CUTWRIGHT
------------------------------
Title: SR. VICE PRESIDENT FINANCE &
------------------------------
PLANNING AND CFO
------------------------------
By: /s/ JAMES M. KING
------------------------------
Name: JAMES M. KING
------------------------------
Title: VICE PRESIDENT PLANNING &
------------------------------
DEVELOPMENT
------------------------------
LESSOR: AJET, INC.
By: /s/ NIGEL MINION
------------------------------
Name: NIGEL MINION
------------------------------
Title: PRESIDENT
------------------------------
LENDER: THE CIT GROUP/EQUIPMENT
FINANCING, INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have caused this Assignment,
Assumption, Amendment and Consent to be duly executed and delivered by their
duly authorized officers as of the date first written above.
ASSIGNOR: ALOHA AIRLINES, INC., a Hawaii
Corporation
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
------------------------------
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
------------------------------
ASSIGNEE: ALOHA AIRLINES, INC., a
Delaware Corporation
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
------------------------------
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
------------------------------
LESSOR: AJET, INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
LENDER: THE CIT GROUP/EQUIPMENT
FINANCING, INC.
By: WILLIAM J. HUNTER
-----------------------------
Name: /s/ WILLIAM J. HUNTER
-----------------------------
Title: VICE PRESIDENT
-----------------------------
<PAGE>
AMENDEMENT TO LEASE AGREEMENT
This Amendment to that certain Aircraft Lease Agreement dated as of May
31, 1995, by and between Ajet, Inc. ("Ajet") and Aloha Airlines, Inc.
("Aloha") ("Ajet Lease") is made as of the 20 day of November, 2001.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Ajet and Aloha agree to amend the Ajet Lease as
follows:
1. On or before November 20, 2001, Aloha shall pay Ajet the interest
portion only of the payments owed by Aloha under the Lease for each of the
months of October and November, 2001.
2. In addition to all other payments to be made under the Lease, Aloha
shall pay Ajet the principal portion of the payments owed by Aloha under the
Lease for each of the months of October and November, 2001, in six equal
monthly installments beginning with May 1, 2002 in accordance with the schedule
attached hereto as Exhibit A.
3. Aloha shall be responsible for all costs associated with compliance
with airworthiness directives applicable at any time during the Lease. Ajet
shall have no obligation to share in the cost of complying with any
airworthiness directives applicable at any time during the Lease, either
before or after the effective date of this Amendment.
4. Except as otherwise set forth herein, all of the other provisions of
the Lease shall remain in full force and effect.
5. In the event of any conflict between the terms of the Lease and the
terms of this Amendment, the terms of this Amendment shall govern.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Lease Agreement as of the date first shown above.
AJET, INC, ALOHA AIRLINES, INC.
By: /s/ [ILLEGIBLE] By: /s/ Brenda F. Cutwright
------------------------------- ----------------------------------
Name: [ILLEGIBLE] Name: BRENDA F. CUTWRIGHT
------------------------------- ---------------------------------
Title: CFO Title: EXECUTIVE VICE PRESIDENT & CFO
------------------------------ ---------------------------------
ALOHA AIRLINES, INC.
By: /s/ James M. King
---------------------------------
Name: /s/ JAMES M. KING
---------------------------------
SENIOR VICE PRESIDENT
Title: PLANNING AND BUSINESS DEVELOPMENT
---------------------------------
<PAGE>
EXHIBIT A
ALOHA AIRLINES, INC.
(1) 1984 737-2X6QC
<Table>
<Caption>
PAYMENT DATE DEBT SERVICE INTEREST PRINCIPAL BALANCE
------------ ------------ -------- --------- -------
<S> <C> <C> <C> <C>
01-Jun-95 99,871.22 0.00 98,871.22 6,581,128.78
01-Jul-95 98,871.22 52,179.58 46,691.64 6,534,437.14
01-Aug-95 98,871.22 51,809.38 47,061.84 6,487,376.30
01-Sep-95 98,871.22 51,436.24 47,434.08 6,439,940.32
01-Oct-95 98,871,22 51,060.14 47,811.08 6,392,129.24
01-Nov-95 98,871.22 50,681.06 48,190.16 6,343,939.08
01-Dec-95 98,871.22 50,298.98 48,672.24 6,295,366.84
01-Jan-96 98,871.22 49,913.87 48,957.35 6,246,409.49
01-Feb-96 98,871.22 48,525.70 49,346.52 6,197,063.97
01-Mar-96 98,871.22 49,134.46 49,736.76 6,147,327.21
01-Apr-96 98,871.22 48,740.11 50,131.11 6,037,196.10
01-May-96 98,871.22 48,342.64 50,528.58 6,048,667.52
01-Jun-96 98,871.22 47,842.01 50,929.21 5,995,738.31
01-Jul-96 98,871.22 47,538.21 61,333.01 5,944,405.30
01-Aug-96 98,871.22 47,131.21 51,740.01 5,892,865.29
01-Sep-96 98,871.22 46,720.98 62,150.24 5,840,616.05
01-Oct-96 98,871.22 46,307.60 52,563.72 5,787,951.33
01-Nov-96 98,871.22 45,890.74 52,980.48 5,734,970.85
01-Dec-96 98,871.22 45,470.67 53,400.69 5,681,670.30
01-Jan-97 98,871.22 45,047.28 53,823.94 5,627,746.36
01-Feb-97 98,871.22 44,620.53 54,250.69 5,673,495.67
01-Mar-97 98,871.22 44,190.39 54,686.83 5,318,014.84
01-Apr-97 98,871.22 43,756.84 55,114.38 5,463,700.46
01-May-97 98,871.22 43,319.86 65,551.36 5,408,149.10
01-Jun-97 98,871.22 42,879.41 65,991.81 5,352,187.29
01-Jul-97 98,871.22 42,435.47 66,435.75 5,295,721.34
01-Aug-97 98,871.22 41,988.01 56,883.21 5,238,833.33
01-Sep-97 98,871.22 41,537.00 57,334.22 5,181,504.11
01-Oct-97 98,871.22 41,082.42 57,789.80 5,123,715.31
01-Nov-97 98,871.22 40,624.23 55,246.99 5,065,468.32
01-Dec-97 98,871.22 40,162.41 58,708.81 5,006,759.51
01-Jan-98 98,871.22 39,696.93 59,174.29 4,947,585.22
01-Feb-98 98,871.22 39,227.76 59,643.46 4,887,941.76
01-Mar-98 98,871.22 38,754.86 60,116.36 4,827,825.40
01-Apr-98 98,871.22 38,270.22 60,593.00 4,767,232.40
01-May-98 98,871.22 37,797.80 61,073.42 4,706,168.98
01-Jun-98 98,871.22 37,313.57 61,557.55 4,644,601.33
01-Jul-98 98,871.22 38,825.50 62,045.72 4,892,558.61
01-Aug-98 98,871.22 36,333.56 62,537.66 4,520,017.05
01-Sep-98 98,871.22 35,837.72 63,033.50 4,456,904.45
01-Oct-98 98,871.22 35,337.95 63,533.27 4,393,451.18
Q1-Nov-98 98,871.22 34,834.21 54,037.01 4,329,414.17
01-Dec-98 98,871.22 34,326.48 64,544.74 4,264,869.43
01-Jan-99 98,871.22 33,814.73 66,066.49 4,199,812.34
01-Feb-99 98,871.22 33,298.92 66,572.30 4,134,240.64
01-Mar-99 98,871.22 32,770.02 66,092.20 4,068,148.44
01-Apr-99 98,87l.22 32,254.29 66,616.23 4,001,532.21
01-May-99 98,871.22 31,726.82 67,144.40 3,934,387.81
01-Jun-99 98,871.22 31,194.45 67,676.77 3,866,711.04
</Table>
<PAGE>
<Table>
<Caption>
PAYMENT DATE DEBT SERVICE INTEREST PRINCIPAL BALANCE
------------ ------------ -------- --------- -------
<S> <C> <C> <C> <C>
01-Jul-99 98,871.22 30,657.86 68,213.36 3,798,497.68
01-Aug-99 98,671.22 30,117.02 68,754.20 3,729,743.48
01-Sep-99 98,871.22 29,571.89 69,299.33 3,660,444.16
01-Oct-99 98,871.22 29,022.44 69,848.78 3,590,595.37
01-Nov-99 98,871.22 28,463.63 70,402.59 3,520,192.78
01-Dec-99 98,871.22 27,910.44 70,960.78 3,449,232.00
01-Jan-00 110,000.00 27,347.81 (1,177,347.81) 4,626,575.81
01-Feb-00 110,000.00 36,682.61 73,317.39 4,553,262.42
01-Mar-00 110,000.00 36,101.30 73,898.70 4,479,36a.72
01-Apr-00 110,000.00 35,515.38 74,484.62 4,404,879.10
01-May-00 110,000.00 34,924.82 75,076.18 4,329.802.92
01-Jun-00 110,000.00 34,329.57 75,670.43 4,754,133.49
01-Jul-00 110,000.00 33,729.61 76,270.39 4,177,883.10
01-Aug-00 110,000.00 33,124.89 76,575.11 4,100,987.99
01-Sep-00 110,000.00 32,515.37 77,484.63 4,023,503.36
01-Oct-00 110,000.00 31,901.02 78,098.98 3,945,404.38
01-Nov-00 110,000.00 31,281.80 78,718.20 3,866,666.18
01-Dec-00 110,000.00 30,657.67 79,342.33 3,787,343,85
01-Jan-01 110,000.00 30,028.59 79,971.41 3,707,372.44
01-Feb-01 110,000.00 29,394.52 80,605.49 3,626,766.96
01-Mar-01 110,000.00 28,755.43 81,244.57 3,545,522.39
01-Apr-01 110,000.00 28,111.27 81,558.73 3,463,633.66
01-May-01 110,000.00 27,462.00 82,538.00 3,381,095.66
01-Jun-01 110,000.09 26,807.58 83,192.42 3,297,903.24
01-Jul-01 110,000.00 26,147.98 83,852.02 3,214,051.22
01-Aug-01 110,000.00 25,483.14 84,616.86 3,129,534.36
01-Sep-01 110,000.00 24,813.04 85,186.96 3,044,347.40
01-Oct-01 24,137.62 24,137.62 0.00 3,044,347.40
01-Nov-01 24,137.62 24,137.62 0.00 3,044,347.40
01-Dec-01 110,000.00 24,137.62 85,862.38 2,962,495.02
01-Jan-02 110,000.00 23,455,84 86,543.16 2,871,941.86
01-Feb-02 110,000.00 22,770.67 87,229.33 2,764,712.53
01-Mar-02 110,000.00 22,079.06 87,920.94 2,696,791.59
01-Apr-02 110,000.00 21,381.96 88,818.04 2,608,173.55
01-May-02 140,726.34 20,679.34 120,047.20 2,488,126.35
01-Jun-02 140,726.54 19,727.53 120,998.01 2,367,127.34
01-Jul-02 140,726.64 18,768.16 121,958.38 2,245,168.96
01-Aug-02 140,726.64 17,001.20 122,925.34 2,122,243.62
01-Sep-02 140,726.54 16,826.66 123,899.98 1,998,343.64
01-Oct-02 140,726.54 15,844.20 124,882.34 1,873,481.30
01-Nov-02 110,000.00 14,854.05 95,145.96 1,778,315.35
01-Dec-02 110,000.00 14,099.67 95,900.33 1,682,415.02
01-Jan-03 110,000.00 13,339.31 95,660.69 1,585,754.33
01-Feb-03 110,000.00 12,572.92 97,427.08 1,488,327.25
01-Mar-03 110,000.00 11,800.45 98,199.65 1,390,127.70
01-Apr-03 110.000.00 11,021.86 98,978.14 1,291,149.56
01-May-O3 110,000.00 10,237.09 99,782.91 1,191,386.65
01-Jun-03 0.00 9,446.11 9,446.11 1,200,832.76
</Table>
<PAGE>
AMENDEMENT TO LEASE AGREEMENT
This Amendment to that certain Aircraft Lease Agreement dated as of May
31, 1995, by and between Ajet, Inc. ("Ajet") and Aloha Airlines, Inc.
("Aloha") ("Ajet Lease") is made as of the ___ day of November, 2001.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Ajet and Aloha agree to amend the Ajet Lease as
follows:
1. On or before November ___, 2001, Aloha shall pay Ajet the interest
portion only of the payments owed by Aloha under the Lease for each of the
months of October and November, 2001.
2. In addition to all other payments to be made under the Lease, Aloha
shall pay Ajet the principal portion of the payments owed by Aloha under the
Lease for each of the months of October and November, 2001, in six equal
monthly installments beginning with May 1, 2002 in accordance with the
schedule attached hereto as Exhibit A.
3. Aloha shall be responsible for all costs associated with compliance
with airworthiness directives applicable at any time during the Lease. Ajet
shall have no obligation to share in the cost of complying with any
airworthiness directives applicable at any time during the Lease, either
before or after the effective date of this Amendment.
4. Except as otherwise set forth herein, all of the other provisions of
the Lease shall remain in full force and effect.
5. In the event of any conflict between the terms of the Lease and the
terms of this Amendment, the terms of this Amendment shall govern.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Lease Agreement as of the date first shown above.
AJET, INC, ALOHA AIRLINES, INC.
By: /s/ Authorized Signatory By: /s/ Brenda F. Cutwright
------------------------------- ----------------------------------
Name: Name: BRENDA F. CUTWRIGHT
------------------------------- ---------------------------------
Title: Title: EXECUTIVE VICE PRESIDENT & CFO
------------------------------ ---------------------------------
ALOHA AIRLINES, INC.
By: /s/ James M. King
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Name: /s/ JAMES M. KING
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SENIOR VICE PRESIDENT
Title: PLANNING AND BUSINESS DEVELOPMENT
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<PAGE>
EXHIBIT A
ALOHA AIRLINES, INC.
(1) 1984 737-2X6QC
<Table>
<Caption>
PAYMENT DATE DEBT SERVICE INTEREST PRINCIPAL BALANCE
------------ ------------ -------- --------- -------
<S> <C> <C> <C> <C>
01-Jun-95 99,871.22 0.00 98,871.22 6,581,128.78
01-Jul-95 98,871.22 52,179.58 46,691.64 6,534,437.14
01-Aug-95 98,871.22 51,809.38 47,061.84 6,487,376.30
01-Sep-95 98,871.22 51,436.24 47,434.08 6,439,940.32
01-Oct-95 98,871,22 51,060.14 47,811.08 6,392,129.24
01-Nov-95 98,871.22 50,681.06 48,190.16 6,343,939.08
01-Dec-95 98,871.22 50,298.98 48,672.24 6,295,366.84
01-Jan-96 98,871.22 49,913.87 48,957.35 6,246,409.49
01-Feb-96 98,871.22 48,525.70 49,346.52 6,197,063.97
01-Mar-96 98,871.22 49,134.46 49,736.76 6,147,327.21
01-Apr-96 98,871.22 48,740.11 50,131.11 6,037,196.10
01-May-96 98,871.22 48,342.64 50,528.58 6,048,667.52
01-Jun-96 98,871.22 47,842.01 50,929.21 5,995,738.31
01-Jul-96 98,871.22 47,538.21 61,333.01 5,944,405.30
01-Aug-96 98,871.22 47,131.21 51,740.01 5,892,865.29
01-Sep-96 98,871.22 46,720.98 62,150.24 5,840,616.05
01-Oct-96 98,871.22 46,307.60 52,563.72 5,787,951.33
01-Nov-96 98,871.22 45,890.74 52,980.48 5,734,970.85
01-Dec-96 98,871.22 45,470.67 53,400.69 5,681,670.30
01-Jan-97 98,871.22 45,047.28 53,823.94 5,627,746.36
01-Feb-97 98,871.22 44,620.53 54,250.69 5,673,495.67
01-Mar-97 98,871.22 44,190.39 54,686.83 5,318,014.84
01-Apr-97 98,871.22 43,756.84 55,114.38 5,463,700.46
01-May-97 98,871.22 43,319.86 65,551.36 5,408,149.10
01-Jun-97 98,871.22 42,879.41 65,991.81 5,352,187.29
01-Jul-97 98,871.22 42,435.47 66,435.75 5,295,721.34
01-Aug-97 98,871.22 41,988.01 56,883.21 5,238,833.33
01-Sep-97 98,871.22 41,537.00 57,334.22 5,181,504.11
01-Oct-97 98,871.22 41,082.42 57,789.80 5,123,715.31
01-Nov-97 98,871.22 40,624.23 55,246.99 5,065,468.32
01-Dec-97 98,871.22 40,162.41 58,708.81 5,006,759.51
01-Jan-98 98,871.22 39,696.93 59,174.29 4,947,585.22
01-Feb-98 98,871.22 39,227.76 59,643.46 4,887,941.76
01-Mar-98 98,871.22 38,754.86 60,116.36 4,827,825.40
01-Apr-98 98,871.22 38,270.22 60,593.00 4,767,232.40
01-May-98 98,871.22 37,797.80 61,073.42 4,706,168.98
01-Jun-98 98,871.22 37,313.57 61,557.55 4,644,601.33
01-Jul-98 98,871.22 38,825.50 62,045.72 4,892,558.61
01-Aug-98 98,871.22 36,333.56 62,537.66 4,520,017.05
01-Sep-98 98,871.22 35,837.72 63,033.50 4,456,904.45
01-Oct-98 98,871.22 35,337.95 63,533.27 4,393,451.18
Q1-Nov-98 98,871.22 34,834.21 54,037.01 4,329,414.17
01-Dec-98 98,871.22 34,326.48 64,544.74 4,264,869.43
01-Jan-99 98,871.22 33,814.73 66,066.49 4,199,812.34
01-Feb-99 98,871.22 33,298.92 66,572.30 4,134,240.64
01-Mar-99 98,871.22 32,770.02 66,092.20 4,068,148.44
01-Apr-99 98,87l.22 32,254.29 66,616.23 4,001,532.21
01-May-99 98,871.22 31,726.82 67,144.40 3,934,387.81
01-Jun-99 98,871.22 31,194.45 67,676.77 3,866,711.04
</Table>
<PAGE>
<Table>
<Caption>
PAYMENT DATE DEBT SERVICE INTEREST PRINCIPAL BALANCE
------------ ------------ -------- --------- -------
<S> <C> <C> <C> <C>
01-Jul-99 98,871.22 30,657.86 68,213.36 3,798,497.68
01-Aug-99 98,671.22 30,117.02 68,754.20 3,729,743.48
01-Sep-99 98,871.22 29,571.89 69,299.33 3,660,444.16
01-Oct-99 98,871.22 29,022.44 69,848.78 3,590,595.37
01-Nov-99 98,871.22 28,463.63 70,402.59 3,520,192.78
01-Dec-99 98,871.22 27,910.44 70,960.78 3,449,232.00
01-Jan-00 110,000.00 27,347.81 (1,177,347.81) 4,626,575.81
01-Feb-00 110,000.00 36,682.61 73,317.39 4,553,262.42
01-Mar-00 110,000.00 36,101.30 73,898.70 4,479,36a.72
01-Apr-00 110,000.00 35,515.38 74,484.62 4,404,879.10
01-May-00 110,000.00 34,924.82 75,076.18 4,329.802.92
01-Jun-00 110,000.00 34,329.57 75,670.43 4,754,133.49
01-Jul-00 110,000.00 33,729.61 76,270.39 4,177,883.10
01-Aug-00 110,000.00 33,124.89 76,575.11 4,100,987.99
01-Sep-00 110,000.00 32,515.37 77,484.63 4,023,503.36
01-Oct-00 110,000.00 31,901.02 78,098.98 3,945,404.38
01-Nov-00 110,000.00 31,281.80 78,718.20 3,866,666.18
01-Dec-00 110,000.00 30,657.67 79,342.33 3,787,343,85
01-Jan-01 110,000.00 30,028.59 79,971.41 3,707,372.44
01-Feb-01 110,000.00 29,394.52 80,605.49 3,626,766.96
01-Mar-01 110,000.00 28,755.43 81,244.57 3,545,522.39
01-Apr-01 110,000.00 28,111.27 81,558.73 3,463,633.66
01-May-01 110,000.00 27,462.00 82,538.00 3,381,095.66
01-Jun-01 110,000.09 26,807.58 83,192.42 3,297,903.24
01-Jul-01 110,000.00 26,147.98 83,852.02 3,214,051.22
01-Aug-01 110,000.00 25,483.14 84,616.86 3,129,534.36
01-Sep-01 110,000.00 24,813.04 85,186.96 3,044,347.40
01-Oct-01 24,137.62 24,137.62 0.00 3,044,347.40
01-Nov-01 24,137.62 24,137.62 0.00 3,044,347.40
01-Dec-01 110,000.00 24,137.62 85,862.38 2,962,495.02
01-Jan-02 110,000.00 23,455,84 86,543.16 2,871,941.86
01-Feb-02 110,000.00 22,770.67 87,229.33 2,764,712.53
01-Mar-02 110,000.00 22,079.06 87,920.94 2,696,791.59
01-Apr-02 110,000.00 21,381.96 88,818.04 2,608,173.55
01-May-02 140,726.34 20,679.34 120,047.20 2,488,126.35
01-Jun-02 140,726.54 19,727.53 120,998.01 2,367,127.34
01-Jul-02 140,726.64 18,768.16 121,958.38 2,245,168.96
01-Aug-02 140,726.64 17,001.20 122,925.34 2,122,243.62
01-Sep-02 140,726.54 16,826.66 123,899.98 1,998,343.64
01-Oct-02 140,726.54 15,844.20 124,882.34 1,873,481.30
01-Nov-02 110,000.00 14,854.05 95,145.96 1,778,315.35
01-Dec-02 110,000.00 14,099.67 95,900.33 1,682,415.02
01-Jan-03 110,000.00 13,339.31 95,660.69 1,585,754.33
01-Feb-03 110,000.00 12,572.92 97,427.08 1,488,327.25
01-Mar-03 110,000.00 11,800.45 98,199.65 1,390,127.70
01-Apr-03 110.000.00 11,021.86 98,978.14 1,291,149.56
01-May-O3 110,000.00 10,237.09 99,782.91 1,191,386.65
01-Jun-03 0.00 9,446.11 9,446.11 1,200,832.76
</Table>
</TEXT>
</DOCUMENT>