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<DOCUMENT>
<TYPE>EX-10.72
<SEQUENCE>55
<FILENAME>a2069410zex-10_72.txt
<DESCRIPTION>EXHIBIT 10.72
<TEXT>
<PAGE>
Exhibit 10.72
COUNTERPART NO. 2
===============================================================================
AIRCRAFT LEASE AGREEMENT
dated as of November 29, 1995
between
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Trustee
f/b/o ITOCHU AirLease (Europe) Limited and
Marubeni Airleasing (U.K.) Limited,
Lessor
and
ALOHA AIRLINES, INC.,
Lessee
One Boeing 737-25A Aircraft
===============================================================================
THIS LEASE HAS BEEN EXECUTED IN MULTIPLE COUNTERPARTS, OF WHICH THERE IS ONE
COUNTERPART DESIGNATED AS "COUNTERPART NO. 1 - CHATTEL PAPER ORIGINAL" AND ALL
OTHER COUNTERPARTS SHALL BE DESIGNATED WITH NUMBERS OTHER THAN 1. TO THE EXTENT
THAT THIS LEASE CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, AS
IN EFFECT IN ANY APPLICABLE JURISDICTION, NO SECURITY INTEREST MAY BE CREATED
OR PERFECTED BY POSSESSION OF ANY COUNTERPART OF THIS LEASE OTHER THAN SAID
COUNTERPART NO. 1.
<PAGE>
COUNTERPART NO. 7
================================================================================
AIRCRAFT LEASE AGREEMENT
dated as of November 29, 1995
between
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Trustee
f/b/o ITOCHU AirLease (Europe) Limited and
Marubeni Airleasing (U.K.) Limited,
Lessor
and
ALOHA AIRLINES, INC.,
Lessee
One Boeing 737-25A Aircraft
================================================================================
THIS LEASE HAS BEEN EXECUTED IN MULTIPLE COUNTERPARTS, OF WHICH THERE IS ONE
COUNTERPART DESIGNATED AS "COUNTERPART NO. 1 - CHATTEL PAPER ORIGINAL" AND ALL
OTHER COUNTERPARTS SHALL BE DESIGNATED WITH NUMBERS OTHER THAN 1. TO THE EXTENT
THAT THIS LEASE CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, AS
IN EFFECT IN ANY APPLICABLE JURISDICTION, NO SECURITY INTEREST MAY BE CREATED
OR PERFECTED BY POSSESSION OF ANY COUNTERPART OF THIS LEASE OTHER THAN SAID
COUNTERPART NO. 1.
<PAGE>
Table of Contents
-----------------
<Table>
<Caption>
Page
----
<S> <C> <C>
Section 1. Definitions . . . . . . . . . . . . . . . 1
Section 2. Lease and Conditions . . . . . . . . . . . 9
Section 3. Delivery and Acceptance; Term . . . . . . 14
Section 4. Rent . . . . . . . . . . . . . . . . . . 15
Section S. Representations and Warranties . . . . . 17
Section 6. Possession and Use; Registration . . . . 24
Section 7. Information . . . . . . . . . . . . . . . 33
Section 8. Covenants of Lessee . . . . . . . . . . . 35
Section 9. Replacement of Parts; Alterations,
Modifications and Additions . . . . . . . 37
Section 10. General Tax Indemnity . . . . . . . . . . 40
Section 11. Casualty Occurrences . . . . . . . . . . . 47
Section 12. Insurance . . . . . . . . . . . . . . . . 51
Section 13. Indemnification . . . . . . . . . . . . . . 56
Section 14. Liens . . . . . . . . . . . . . . . . . . 58
Section 15. Perfection of Title and Further
Assurances . . . . . . . . . . . . . . . 59
Section 16. Return of Aircraft and Records . . . . . . 60
Section 17. Events of Default . . . . . . . . . . . . 67
Section 18. Remedies . . . . . . . . . . . . . . . . 69
Section 19. Alienation . . . . . . . . . . . . . . . 73
Section 20. Miscellaneous . . . . . . . . . . . . . . 75
Section 21. Security Deposit . . . . . . . . . . . . . 81
</Table>
-i-
<PAGE>
EXHIBITS
Exhibit A - Schedule and Description of Aircraft
Exhibit B-1 - Aircraft Documents on the Delivery Date
Exhibit B-2 - Aircraft Documents on the Return Occasion
Exhibit C-1 - Financial Information
Exhibit C-2 - Definitions and Values
Exhibit D - Lease Supplement
Exhibit E - Return Condition Requirements
Exhibit F - Lessee's Counsel Opinion
Exhibit G - Approved Insurance Broker Report
Exhibit H - Insurance Special Provisions
Exhibit I - Form of Redelivery Acknowledgment
EXHIBIT J - Monthly Aircraft Utilization and
Status Report
EXHIBIT K - List of Documents to Be Supplied Annually
-ii-
<PAGE>
RECORDED
Federal Aviation Administration
Date 1-25-96 Time 3:38 PM
---------- ----------
Conveyance Number II004730
------------
By /s/ Donna Jennings
-------------------------------
Conveyances Examiner
AIRCRAFT LEASE AGREEMENT
THIS AIRCRAFT LEASE AGREEMENT, dated as of November 29, 1995
(the "Lease") , between (1) WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as Trustee f/b/o ITOCHU AirLease (Europe) Limited and
Marubeni Airleasing (U.K.) Limited (Wilmington Trust Company, in such capacity,
is herein called "Lessor") , and (2) Aloha Airlines, Inc., a corporation
organized under the laws of Hawaii (herein called "Lessee").
WHEREAS, Lessee desires to lease from Lessor and Lessor is
willing to lease to Lessee the aircraft described herein upon and subject to
the terms and conditions of this Lease;
NOW, THEREFORE, In consideration of the mutual promises,
covenants, terms and conditions contained herein, Lessor and Lessee agree as
follows:
Section 1. DEFINITIONS.
The following terms shall have the following respective
meanings for all purposes of this Lease Agreement (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
AFFILIATE shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under common
control with such Person.
AIRCRAFT shall mean the Airframe together with (i) the
Engines, whether or not installed on the Aircraft, (ii) all Parts, (iii) spare
parts or ancillary equipment or devices' furnished with the Aircraft under this
Lease, (iv) all Aircraft Documents, and (v) all substitutions, replacements and
renewals of any and all thereof.
AIRCRAFT DOCUMENTS shall mean, as applicable, the items
identified on Exhibit B-1 hereto provided to Lessee on the Delivery Date and
Exhibit B-2 hereto provided to Lessor on the Return Occasion, all of which
shall be maintained in the English language.
AIRCRAFT MAINTENANCE MANUAL shall mean the aircraft
maintenance manual which constitutes part of the Maintenance Program.
<PAGE>
AIRFRAME shall mean (a) the aircraft described on Exhibit A,
but not including any Engine installed thereon, and (b) any and all Parts so
long as the same shall be incorporated or installed on or attached to the
Airframe, or so long as title thereto shall remain vested in Lessor in
accordance with the terms of Section 9, after removal from the Airframe.
APPROVED INSURANCE BROKER shall mean any reputable insurance
broker of internationally recognized responsibility and standing specializing
in aircraft insurance.
APPROVED INSURER shall mean any reputable insurance company or
insurance broker of internationally recognized responsibility and standing
specializing in aircraft insurance.
APU shall mean the auxiliary power unit.
BASIC RENT shall mean the rent for the Aircraft specified on
Exhibit C-1 and payable throughout the Term for the Aircraft pursuant to
Section 4(a).
BASIC RENT PAYMENT DATE shall have the meaning set forth in
Exhibit C-1 hereto.
BUSINESS DAY shall mean any day other than a Saturday, Sunday
or other day on which banking institutions in Delaware, Hawaii, New York,
London or Dublin are authorized or required by law to be closed.
C CHECK is defined in the Maintenance Program and equivalent
to a "C" Check as defined in Boeing's "B737-200 Maintenance Planning Data" Doc.
D6-17594. A "C" Check is currently performed at 3,000 Flight Hour intervals.
CASUALTY OCCURRENCE shall mean any of the following events
with respect to the Aircraft, Airframe or any Engine: (a) loss of such property
or its use due to theft or disappearance for a period in excess of sixty (60)
consecutive days, or any destruction, damage beyond economic repair or
rendition of such property permanently unfit for normal use by Lessee for any
reason whatsoever; (b) any damage to such property which results in an
insurance settlement with respect to such property on the basis of a total loss
or on the basis of a compromised or constructive total loss, (c) the
condemnation, confiscation, appropriation or seizure of title, or requisition
of title to such property; (d) the appropriation or seizure of the use of such
property by or on the authority of any Governmental Entity or purported
Governmental Entity, which in any such case shall have resulted in the loss of
possession thereof
-2-
<PAGE>
by Lessee for a period in excess of one hundred eighty (180) consecutive days
(or for such shorter period ending on the date which is seven (7) days from the
date of receipt of an insurance settlement with respect to such property on the
basis of a total loss); or (e) prohibition under any applicable Law of the use
of the Aircraft for commercial transportation of passengers for a period of six
(6) months.
CASUALTY VALUE shall mean the value as specified on Exhibit
C-1 hereto.
CERTIFIED AIR CARRIER shall mean a United States "air carrier"
within the meaning of Section 40102(a)(2) of the Federal Aviation Act engaged
in regularly scheduled air transportation of passengers who is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the Federal
Aviation Act holding a certificate of public convenience and necessity issued
by the FAA pursuant to the Federal Aviation Act or by a similar authority under
legislation hereafter enacted.
CLAIMS shall have the meaning set forth in Section 13.
CODE shall mean the United States Internal Revenue Code of
1986, as amended, and any successor thereto, as interpreted by the rules and
regulations issued thereunder, in each case as in effect from time to time.
COMMONLY CONTROLLED PERSON shall mean any trade or business,
whether or not incorporated, which is at any relevant time a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Code) or affiliated service group (within the meaning of Section 414(m) or (o)
of the Code) as, or under common control (within the meaning of Section 414(c)
of the Code) with, Lessee.
CYCLE shall mean a cycle commencing each time the wheels of
the Airframe (or any other airframe on which an Engine or Part is installed,
but only insofar as the calculation of Cycles is required with reference to the
relevant Engine or Part) leave the ground on take-off and finishing when the
wheels of such Airframe (or any other airframe on which such Engine or Part is
installed) touch the ground in landing.
D CHECK is defined in the Maintenance Program and is
equivalent to a "D Check" or "heavy structural inspection" as defined in
"Boeing's B737-200 Maintenance Planning Data" Doc. D6-17594. A "D" Check is
currently performed at 12,000 Flight Hour intervals.
-3-
<PAGE>
DEFAULT shall mean an Event of Default or event which would
constitute an Event of Default but for the lapse of time or the giving of
notice or both.
DELIVERY DATE shall mean the date on which the Aircraft is
delivered to and accepted by Lessee for purposes of this Lease.
DELIVERY LOCATION shall mean the location specified on Exhibit
C-2 hereto for the delivery of the Aircraft by Lessor to Lessee.
DETAILED SPECIFICATIONS means the detailed specifications
number D6-32410-181 Revision C dated December 1, 1987 relating to the Aircraft
to be provided to Lessor on or before the Effective Date.
DOLLARS shall mean lawful currency of the United States of
America.
ENGINE shall mean any engine installed on or furnished with
the Aircraft on the Delivery Date, such engine being identified as to
manufacturer and type on Exhibit A hereto and which will be further identified
as to manufacturer serial number in the Lease Supplement, and any Replacement
Engine which may from time to time be substituted therefor pursuant to Section
11; together in each case with any and all Parts incorporated or installed in
or attached thereto or any and all Parts removed therefrom so long as title
thereto remains vested in Lessor in accordance with the terms of Section 9
after removal from such engine. Except as otherwise set forth herein, at such
time as a Replacement Engine shall be so substituted, such replaced engine
shall cease to be an Engine hereunder. The term "Engines" means, as of any date
of determination, all Engines then leased hereunder.
EQUIPMENT shall mean the Airframe, each Engine and the
Aircraft Documents.
ERISA shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute thereto, as interpreted by the
rules and regulations thereunder, all as the same may be in effect from time to
time.
ESTIMATED DELIVERY DATE shall mean the date specified on
Exhibit C-2 hereto, which the. parties anticipate to be the Delivery Date.
EVENT OF DEFAULT shall have the meaning specified in any one
or more clauses in Section 17.
-4-
<PAGE>
EXPIRATION DATE shall mean the date specified in the Lease
Supplement for expiration of the Term.
FAA shall mean the Federal Aviation Administration of the
United States Department of Transportation or any successor.
FEDERAL AVIATION ACT shall mean Subtitle VII, Part A of Title
49 of the United States Code, as amended.
FINAL INSPECTION shall have the meaning set forth in Section
16(b).
FLIGHT HOUR shall mean each hour and any fractional portion
of an hour which elapses from the time the wheels of the Airframe (or any other
airframe on which an Engine or Part is installed, but only insofar as the
calculation of Flight Hours is required with reference to the relevant Engine
or Part) leave the ground on take-off to the time when the wheels of such
Airframe (or any other airframe on which such Engine or Part is installed)
touch the ground on landing.
GOVERNMENTAL ENTITY shall mean any federal, state, municipal
or other governmental department, commission, board, bureau, court, legislature,
agency, instrumentality or authority, domestic or foreign.
INDEMNITEE shall mean Wilmington Trust Company in its
individual capacity, Lessor, each Beneficiary, each Lender and, in each case
their respective Affiliates, officers, directors, shareholders, agents and
employees and their respective successors and assigns.
ITEM means the Aircraft or Airframe or any Engine in each
case including Parts constituting a part of any thereof.
LAW shall mean and include (i) any statute, decree,
constitution, regulation, order, judgment or other directive of any
Governmental Entity; (ii) any treaty, pact, compact or other agreement to which
any Governmental Entity is a signatory or party; (iii) any judicial or
administrative interpretation or application of any Law described in (i) or
(ii) above; and (iv) any amendment or revision of any Law described in (i),
(ii) or (iii) above.
LEASE SUPPLEMENT shall mean the Lease Supplement,
substantially in the form of Exhibit D hereto, entered into between Lessor and
Lessee.
LENDER shall mean each Person who now or hereafter makes a
loan to the Lessor or any Beneficiary or otherwise
-5-
<PAGE>
finances the Beneficiaries' interest in the Aircraft and for whose benefit
Lessor grants a security interest in the Aircraft and the Lease.
LESSOR'S LIENS shall mean Liens arising as a result of (i)
claims against Lessor or any Beneficiary not related to the transactions
contemplated by this Lease; or (ii) acts of Lessor or any Beneficiary, not
contemplated and expressly permitted under this Lease; or (iii) Taxes imposed
against Lessor which are not indemnified against by Lessee pursuant to Section
10; or (iv) claims against Lessor arising out of the voluntary transfer by
Lessor of all or any part of its interests in the Aircraft or this Lease, other
than a transfer pursuant to Section 11 or 18 hereof.
LIBOR shall mean the offered rate (rounded up to the nearest
1/32 of one percent) for deposits in Dollars for six-month periods which appear
on the Telerate Page 3750 as of 11:00 a.m., London time, on the day that is two
(2) Business Days preceding that date for which LIBOR is being determined. If
at least two (2) such offered rates appear on the Telerate Page 3750, the rate
will be the arithmetic mean of such offered rates (rounded up to the nearest
1/32 of one percent).
LIEN shall mean any mortgage, pledge, lien, charge,
encumbrance, lease, exercise of rights, security interest or claim.
MAINTENANCE PROGRAM shall mean an FAA approved maintenance
program as in effect from time to time for the Aircraft encompassing scheduled
maintenance, condition monitored maintenance and on-condition maintenance of
the Airframe, Engines and components of the Aircraft in accordance with the
Manufacturer's maintenance planning document. Upon request by Lessor or any
Beneficiary a copy of such Maintenance Program shall be made available to
Lessor or such Beneficiary.
MORTGAGE CONVENTION shall mean the Convention for the
International Recognition of Rights in Aircraft, signed (ad referendum) at
Geneva, Switzerland, on June 19, 1948, and amended from time to time, but
excluding the terms of any adhesion thereto or ratification thereof containing
reservations to which the United States of America does not accede.
OPERATIVE DOCUMENTS shall mean this Lease, the Lease
Supplement, the Trust Agreement and the Supplemental Agreement.
PARTS shall mean all appliances, components, parts,
instruments, appurtenances, accessories, furnishings
-6-
<PAGE>
and other equipment of whatever nature (other than complete Engines or
engines), which may now or from time to time be incorporated or installed in or
attached to the Airframe or any Engine. Except as otherwise set forth herein,
at such time as a replacement part shall be substituted for a Part in
accordance with Section 9 hereof, the Part so removed shall cease to be a Part
hereunder.
PBGC shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Part IV of ERISA, and any successor
thereof.
PERSON shall mean and include any individual person,
corporation, partnership, limited liability company, firm, joint stock company,
joint venture, trust, estate, unincorporated organization, association or
Governmental Entity.
PLAN shall mean any employee pension benefit plan (as defined
in Section 3(2) of ERISA) maintained or contributed to at any time, or required
to be contributed to, by Lessee or any Commonly Controlled Person.
REMOVABLE PART shall have the meaning set forth in Section
9(b).
RENT shall mean Basic Rent and Supplemental Rent,
collectively.
REPLACEMENT ENGINE shall mean an engine of the same
manufacturer and model and having not less than equivalent value, utility,
modification and remaining warranty status as the Engine it is intended to
replace under Section 11(b) hereof, or, at Lessee's option, an engine of the
same manufacturer as such Engine but of an improved model, and otherwise of not
less than equivalent value and utility and suitable for installation and use on
the Airframe without impairing the value or utility of the Airframe.
RETURN OCCASION shall mean the event that occurs when
possession of the Aircraft is returned from Lessee to Lessor at the end of the
Term of this Lease or upon Lessor taking possession pursuant to Section 18.
SUPPLEMENTAL RENT shall mean any and all amounts, liabilities
and obligations (other than Basic Rent) which Lessee assumes or agrees to pay
hereunder, including without limitation (i) any payment of Casualty Value; (ii)
any payment of indemnity required by Sections 10 or 13 hereof; and (iii) to the
extent permitted by applicable Law, interest at the Overdue Rate (all
computations of interest at the Overdue Rate under this Lease to be made on the
basis
-7-
<PAGE>
of a 360-day year for the actual number of days elapsed) calculated on any
Rent not paid when due hereunder until the same is paid.
TAXES shall mean any and all sales, use, business, gross
income, personal property, transfer, fuel, leasing, occupational, value added,
excess profits, excise, gross receipts, franchise, stamp, income, levies,
imposts, withholdings or other taxes or duties of any nature whatsoever now or
hereafter imposed, levied, collected, withheld or assessed, together with any
penalties, fines, charges or interest thereon.
TELERATE PAGE 3750 shall mean the display page so designed on
the Dow Jones Telerate Service (or such other page as may replace that page on
that service, or such other service as may be nominated as the information
vendor, for the purpose of displaying comparable rates).
TERM shall mean the term of this Lease specified in the Lease
Supplement hereto.
WET LEASE shall mean any arrangement whereby Lessee agrees to
operate the Aircraft under a contractual arrangement with a third party
pursuant to which no rights to any aircraft specifically identified by serial
number or registration number are granted to such third party and pursuant to
which the Aircraft (i) remains at all times under the sole and complete
operational control of Lessee, (ii) shall be operated solely by cockpit crew
employed by Lessee possessing all current certificates and licenses required by
applicable Laws and (iii) shall be maintained by Lessee in accordance with all
the provisions of the Lease including, but not limited to, Sections 6(d) and 12
(it being understood and agreed by Lessor and Lessee that any Wet Lease shall,
by its terms, be in all cases subject and subordinate to this Lease).
The terms SECURITY DEPOSIT, SECURITY DEPOSIT ADIUSTMENT and
SECURITY LETTER OF CREDIT shall have the meanings set forth in Exhibit C-1
hereto.
The terms ASSIGNMENT AGREEMENT, ASSIGNMENT AGREEMENT N685MA,
BENEFICIARY, BENEFICIARY'S ADDRESS, DEDUCTIBLE AMOUNT, DELIVERY LOCATION,
ENGINE MANUFACTURER, ESTIMATED DELIVERY DATE, LAST BASIC RENT PAYMENT DATE,
LEASE IDENTIFICATION, LESSEE'S ADDRESS, LESSOR'S ADDRESS, MANUFACTURER, OTHER
LEASE, OVERDUE RATE, PAYMENT LOCATIONS, PERMITTED JURISDICTION, PERMITTED
SUBLESSEES, PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE, RETURN LOCATION,
SUPPLEMENTAL AGREEMENT, TRUST AGREEMENT and TRUSTEE shall have the meanings set
forth on Exhibit C-2 hereto.
-8-
<PAGE>
Section 2. LEASE AND CONDITIONS.
(a) Lessor hereby agrees to lease the Aircraft to Lessee, and
Lessee hereby agrees to lease the Aircraft from Lessor, on the terms and
conditions of this Lease, as supplemented by the Lease Supplement.
(b) Lessor's obligation to lease the Aircraft hereunder to
Lessee shall be subject to the satisfaction of the following conditions
precedent, in each case subject to the reasonable satisfaction of Lessor and
each Beneficiary:
(i) the absence of any Default hereunder;
(ii) the absence of any material adverse change in
Lessee's financial condition or in Lessee's ability to carry on its
business from September 30, 1995 to the Delivery Date;
(iii) the absence of any default or event of default by
Lessee under any aircraft lease or obligation for the payment of borrowed
money to which the Lessee is a party;
(iv) no action or proceeding shall be pending nor shall
any governmental action be threatened before any court or governmental
agency of competent jurisdiction, nor shall any order, judgment or decree
have been issued or proposed to be issued by any court or governmental
agency, to set aside, restrain, enjoin or prevent the completion and
consummation of this Lease or any other Operative Documents or the
transactions contemplated hereby or thereby;
(v) receipt of every consent, approval or authorization
of, and the giving of every notice to, any third party that is required in
order to execute and deliver this Lease and to perform the transactions
contemplated hereby and each such consent, approval or authorization shall
be valid and effective and shall not have been revoked;
(vi) receipt of the approval of the Board of Directors of
each Beneficiary and any other Affiliate of each Beneficiary as such
Beneficiary, in its sole discretion, deems necessary;
(vii) receipt by Lessor and each Beneficiary of the
following documents on or before the Delivery Date, all of which shall be
reasonably satisfactory in form and substance to Lessor and each
Beneficiary:
-9-
<PAGE>
(1) a Lease Supplement in the form of Exhibit D, duly
authorized, executed and delivered by Lessee, and effective as of the
Delivery Date of the Aircraft;
(2) a certified copy of the resolutions of the Board
of Directors of Lessee evidencing due authority of Lessee for the
execution, delivery and performance of this Lease, the Lease
Supplement and all other documents related hereto or thereto,
together with an incumbency certificate as to the person or persons
authorized to execute and deliver such documents on behalf of Lessee;
(3) a favorable opinion of Lessee's counsel, dated
the Delivery Date, substantially in the form as set forth on Exhibit
F hereto and of special aviation counsel, dated the Delivery Date, in
form and scope acceptable to Lessor and the Beneficiaries;
(4) a certificate signed by a duly authorized officer
of Lessee, dated the Delivery Date, stating that: (i) the
representations and warranties contained' in Section 5(d) hereof are
true and accurate on and as of such date as though made on and as of
such time; (ii) no event has occurred and is continuing, or would
result from the lease of the Aircraft, which constitutes a Default;
and (iii) since September 30, 1995 there has not occurred any
material adverse change in Lessee's financial condition or in
Lessee's ability to carry on its business;
(5) an opinion or report, dated the Delivery Date,
signed by an Approved Insurance Broker or Approved Insurer as to the
due compliance with the insurance provisions of Section 12 hereof
with respect to the Aircraft, substantially in the form as set forth
on Exhibit G hereto;
(6) certificates of an Approved Insurance Broker
evidencing the insurance as required by Section 12 hereof
-10-
<PAGE>
together with such special provisions as set forth on Exhibit H
hereto;
(7) certified copies of all necessary consents from
any Governmental Entities or such other Persons as to the
transactions contemplated by this Lease;
(8) such financial information concerning Lessee and
other documents and matters incidental to any of the foregoing as
Lessor or any Beneficiary may reasonably request; and
(9) a duly executed original of the Security Letter
of Credit.
(vii) the Lease, the Lease Supplement, an application for
registration of the Aircraft on AC Form 8050-1 in the name of the
Trustee, the Trust Agreement, and the affidavit of citizenship of the
Trustee shall have been duly filed for recordation (or shall be in the
process of being so fully filed for recordation) with the FAA pursuant to
the Federal Aviation Act and precautionary UCC filings with respect to
the Lease shall have been duly executed and delivered and shall have been
duly filed in Hawaii and all places in which such filings are necessary
or advisable to establish and perfect Trustee's right, title and interest
in the Equipment.
(c) Lessee's obligation to lease the Aircraft hereunder from
Lessor shall be conditional upon (i) the receipt by Lessee of a certified copy
of the resolutions of the Board of Directors of Lessor evidencing due authority
of Lessor for the execution, delivery and performance of the Trust Agreement
and this Lease and all other documents related thereto, together with an
incumbency certificate as to the person or persons authorized to execute and
deliver such documents on behalf of Lessor, (ii) the receipt by Lessee of
certification by Lessor to the effect that Lessor's representations and
warranties herein are true as at the Delivery Date, and (iii) the continued
effectiveness of the registration of the Aircraft with the FAA.
(d) Lessee's obligation to lease the Aircraft hereunder from
Lessor shall also be conditioned upon the Aircraft being delivered to Lessee in
the following condition:
(1) The Aircraft shall be airworthy and in good
operating condition
-11-
<PAGE>
with all of the Aircraft equipment, components and systems;
(2) The Aircraft shall be clean;
(3) The Aircraft shall meet the requirements for
airworthiness certification by the FAA;
(4) A borescope of the Engines and the inspection of
the APU in accordance with the Manufacturer's or APU manufacturer's
recommendation shall have been performed at the direction of Lessee
but under the control and at the cost of the Beneficiaries, and any
discrepancies discovered in connection therewith shall have been
corrected;
(5) Lessor shall, in cooperation with the
Beneficiaries, retain a flight crew at competitive market rates to
conduct a functional check flight, not to exceed two hours (the
"Acceptance Flight"), to demonstrate the airworthiness of the
Aircraft and proper functioning of all systems and components. At
all times during such Acceptance Flight, the flight crew shall be
under the direction of the Beneficiaries and the Beneficiaries shall
be in command of the Aircraft. The Acceptance Flight shall be
conducted after the conclusion of Lessee's ground inspection and
technical acceptance of the Aircraft on the Delivery Date, PROVIDED,
HOWEVER, that such technical inspection shall be subject to the
satisfactory completion of the Acceptance Flight, as provided below.
If, during the Acceptance Flight, no discrepancy or malfunction is
detected with respect to the airworthiness or operational nature of
the Aircraft by normal airline standards, then (i) the delivery of
the Aircraft from Lessor to Lessee hereunder shall occur, the
Aircraft shall be accepted by Lessee hereunder whilst the Aircraft
is located at the Delivery Location, and Lessee shall execute and
deliver the Lease Supplement, (ii) the Aircraft shall continue en
route to a location selected by Lessee (the "Ferry Location"), under
the operational control of Lessee from the time of such delivery and
acceptance (the Acceptance Flight shall terminate at the time of
such delivery and acceptance, and that portion of the flight from
the Delivery Location to the Ferry Location is herein called the
"Ferry Flight"), and (iii) Lessee shall bear the costs of the flight
crew, fuel and other costs
-12-
<PAGE>
relating to the Ferry Flight and shall reimburse the Beneficiaries
therefor promptly following receipt of the Beneficiaries, invoice
therefor, PROVIDED, HOWEVER, that, if any discrepancy or malfunction
is detected with respect to the airworthiness during the Acceptance
Flight, then, at Lessee's option after consultation with Lessor,
either (A) the Aircraft shall be delivered to and accepted by Lessee
at the Delivery Location and shall be ferried to the Ferry Location,
as provided in clauses (i), (ii) and (iii) above, where Lessee shall
remedy such discrepancy or malfunction at the cost (without mark up)
of the Beneficiaries (provided that such subsequent repair or
maintenance work shall not affect Lessee's acceptance of the
Aircraft hereunder), or (B) the Aircraft shall return to the
Beneficiaries' storage and maintenance facility where such
discrepancy or malfunction shall be corrected at the Beneficiaries'
expense, in which case the Delivery Date shall be postponed to such
date as the Beneficiaries shall advise, subject to the second
paragraph of Section 3(c) below. Any discrepancy or malfunction
detected of an airworthiness nature shall be corrected by Lessee or
the Beneficiaries in accordance with clause (A) or (B) above, as
applicable, at Beneficiaries, expense. If during the Acceptance
Flight a discrepancy or malfunction is detected with respect to the
operational nature of the Aircraft by normal airline standards but
no discrepancy or malfunction is detected with respect to the
airworthiness of the Aircraft, then the Aircraft shall be delivered
to and accepted by Lessee at the Delivery Location as provided in
clause (A) above, and Lessee shall remedy such discrepancy or
malfunction at the cost (without mark up) of the Beneficiaries.
In anticipation of the occurrence of the Delivery Date, the
Beneficiaries retained a flight crew to conduct the Acceptance
Flight and will incur costs relating to such retention. In
connection therewith, Lessee agrees to reimburse the Beneficiaries,
promptly following Lessee's receipt of an invoice therefor, for
one-half of the costs incurred by the Beneficiaries in connection
with retaining such flight crew for the Acceptance Flight, which
costs relate to the period commencing on and including November 29,
1995 and ending on the day immediately preceding the Delivery Date.
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Section 3. Delivery and Acceptance; Term.
(a) DELIVERY. It is anticipated that the Aircraft will become
available for delivery on or about the Estimated Delivery Date set forth on
Exhibit C-2.
(b) PLACE OF DELIVERY AND ACCEPTANCE. The Aircraft shall be
delivered to Lessee at the Delivery Location set forth on Exhibit C-2.
(c) FORCE MAJEURE. Notwithstanding any other provision
hereof to the contrary, Lessor shall not have any obligation to lease the
Aircraft to Lessee on account of its or Beneficiaries, inability to deliver the
Aircraft if such inability or delay results from (i) loss or destruction of the
Aircraft or any substantial part of the Aircraft or damage to the Aircraft for
any reason whatsoever, including but not limited to, the negligence of the
Beneficiaries or (ii) any other cause occurring without the negligence of the
Beneficiaries and beyond the reasonable control of the Beneficiaries (after use
of reasonable diligence), including but not limited to war, warlike operations,
acts of government or governmental priorities, insurrections or riots, strikes
or labor troubles causing cessation, slow down or interruption of work, riots,
fire, floods, explosions, earthquakes, accidents, epidemics or quarantine
restrictions, mechanical failure, inability for any reason to obtain materials,
accessories, equipment or parts, delays in transportation or any act of God or
a public enemy.
In the event that delivery of the Equipment is delayed for a
period in excess of 60 days beyond the Estimated Delivery Date (because of the
occurrence of an event described in clause (i) or (ii) above) Lessee or Lessor
shall have the right to terminate this Lease upon written notice to the other
and neither Lessee nor Lessor shall have any further obligations to the other
hereunder except that Lessor or the Beneficiaries shall return the Security
Deposit to Lessee subject to and in accordance with Section 21(a) hereof.
(d) ACCEPTANCE OF AIRCRAFT. The Aircraft to be leased
hereunder shall be delivered to Lessee "AS IS, WHERE IS" and SUBJECT TO EACH
AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTION
5(a) HEREOF. Representatives of Lessee shall inspect the Aircraft on or prior
to the Estimated Delivery Date to verify that the Aircraft is in the condition
required by Section 2(d). In the event the Aircraft does not fulfill all of the
conditions set forth in Section 2(d) and if Lessee does not accept delivery of
the Aircraft with discrepancies to be corrected pursuant to Section 2(d)(5),
then Lessor shall have (A) with respect to any matter which affects the
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airworthiness of the Aircraft, fifteen (15) days within which to cure any
deficiency in the Aircraft, without cost to Lessee, and (B) with respect to any
other matter, sixty (60) days within which to cure any deficiency with the
Aircraft, without cost to Lessee; Lessee shall then reinspect the Aircraft and
if the Aircraft is then in compliance with the conditions set forth in Section
2(d), Lessee shall accept delivery of the Aircraft. In no event shall Lessor or
the Beneficiaries have the right pursuant to the foregoing paragraph (c) or
this paragraph (d) or both to extend the Delivery Date beyond the date that is
sixty (60) days after the Estimated Delivery Date. Upon acceptance of the
Aircraft Lessee shall thereupon indicate and confirm its acceptance of the
Aircraft by delivery to Lessor of a Lease Supplement, dated the Delivery Date,
in the form set forth as Exhibit D hereto.
The execution by Lessee of the Lease Supplement shall
constitute Lessee's acknowledgment that the Aircraft is in the condition
required hereby on the Delivery Date and Lessee's absolute, unconditional and
irrevocable acceptance of the Aircraft hereunder for all purposes of this
Lease.
(e) TERM OF LEASE. The Term of this Lease shall commence on
the Delivery Date and shall continue for 96 months until the Expiration Date
set forth in the Lease Supplement, subject to earlier termination by Lessor or
a Beneficiary following the occurrence of an Event of Default, as hereinafter
provided or pursuant to paragraph 2(ii) of the Supplemental Agreement.
Section 4. RENT.
(a) RENT. Lessee covenants and agrees to pay to Lessor, or
its assigns, the following as Rent:
(i) BASIC RENT: The Basic Rent as set forth on Exhibit C-1
hereto throughout the Term hereof, payable in consecutive installments in
advance on each Basic Rent Payment Date.
(ii) SUPPLEMENTAL RENT: Any and all Supplemental Rent as and
when the same becomes due.
(b) PLACE AND METHOD OF PAYMENT. All Basic Rent and
Supplemental Rent and other amounts payable under this Lease shall be paid on
the due date in immediately available funds in Dollars by wire transfer, at
the Payment Locations specified on Exhibit C-2 hereto, or at such other
location as Lessor shall designate in writing. Any Rent due on a day other than
a Business Day (in New York, Dublin, London and Honolulu only) shall be due on
the next preceding Business Day.
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(c) PROHIBITION AGAINST SETOFF, COUNTERCLAIM, ETC. This Lease
is a net lease. Subject to Section 20(f), Lessee's obligation to pay all Rent
hereunder shall be absolute and unconditional and shall not be affected or
reduced by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which Lessee may have against
Lessor, any Beneficiary, the Manufacturer, the Engine Manufacturer, any seller
of or person providing services with respect to the Aircraft or any other
Person, for any reason whatsoever; (ii) any defect in the title, airworthiness
or eligibility for registration under applicable Law, or any condition, design,
operation or fitness for use of, or any damage to or loss or destruction of,
the Aircraft, or any interruption or cessation in the use or possession thereof
by Lessee for any reason whatsoever, whether arising out of or related to an
act or omission of Lessee, or any other Person; (iii) any Liens with respect to
the Aircraft; (iv) the invalidity or unenforceability or lack of due
authorization or other infirmity of this Lease or any absence of right, power
or authority of Lessor or Lessee to enter into this Lease; (v) any insolvency,
bankruptcy, reorganization or similar proceedings by or against Lessor or
Lessee; (vi) any other circumstance or happening of any nature whatsoever,
similar to any of the foregoing; or (vii) any Taxes (other Taxes to which
Lessee's indemnity does not extend pursuant to the provisions of Section 10);
it being the express intention of Lessor and Lessee that all Rent payable
hereunder shall be payable in all events, unless the obligation to pay the same
shall be terminated pursuant to the express provisions of this Lease. Nothing
in this paragraph (c) shall constitute a waiver by Lessee of any right or claim
that Lessee may separately assert against Lessor or any Beneficiary.
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 Law or otherwise, to terminate this Lease or any
obligation imposed upon Lessee hereunder or in relation hereto.
If for any reason whatsoever this Lease shall be terminated
in whole or in part by operation of law (other than termination under any
bankruptcy laws as now or hereafter in effect), Lessee nonetheless agrees to
pay to Lessor amounts equal to the Rent payments hereunder at the time such
payments would have become due and payable in accordance with the terms hereof
had this Lease not been terminated so long as Lessee is able to use, possess
and quietly enjoy the Aircraft, and so long as such payments are made and all
other terms and conditions hereof are complied
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with by Lessor and Lessee, Lessor and Lessee will deem this Lease to remain in
full force and effect.
Section 5. REPRESENTATIONS AND WARRANTIES.
(a) WARRANTIES AND DISCLAIMER OF WARRANTIES.
LESSOR AND EACH BENEFICIARY HAVE NOT AND SHALL NOT BE 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), AND LESSOR AND EACH BENEFICIARY HEREBY SPECIFICALLY
DISCLAIM, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE
(EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY, FREEDOM FROM CLAIMS OF INFRINGEMENT OR THE LIKE, OR FITNESS
FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE
MATERIAL OR WORKMANSHIP OF THE AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR
OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, OR AS TO 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; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND
DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH. WARRANTY OR WARRANTIES.
LESSOR AND EACH BENEFICIARY SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY TO
LESSEE OR ANY OTHER PERSON, WHETHER ARISING IN CONTRACT OR TORT OUT OF ANY
NEGLIGENCE OR STRICT LIABILITY OF LESSOR OR SUCH BENEFICIARY OR OTHERWISE, FOR
(i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR
INDIRECTLY BY THE AIRCRAFT OR ANY ENGINE OR BY ANY INADEQUACY THEREOF OR
DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION
THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS
RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR
ANTICIPATED PROFITS OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION,
SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE
WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS SECTION ARE EXCLUSIVE AND IN
LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED,
AND LESSOR AND EACH BENEFICIARY SHALL NOT BE DEEMED TO HAVE MADE BY OTHER
WARRANTIES, EXCEPT THAT EACH BENEFICIARY MAKES THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN THE SUPPLEMENTAL AGREEMENT AND:
(b) LESSOR REPRESENTATIONS AND WARRANTIES.
Lessor hereby makes the following representations and
warranties:
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(i) the Aircraft is duly registered with the FAA in the name
of Lessor and, on the Delivery Date, Lessor shall be the FAA-registered
owner of the Aircraft and the Aircraft shall be free and clear of any and
all Lessor Liens attributable to it other than the interests of the
Beneficiaries under the Trust Agreement;
(ii) Lessor is a banking corporation duly organized and
validly existing and in good standing under the laws of Delaware, and has
the corporate power and authority to carry on its business as presently
conducted and to perform its obligations under this Lease;
(iii) the making and performance by Lessor of this Lease and
any other Operative Document to which Lessor is a party have been duly
authorized by all necessary corporate action on the part of Lessor and
will not violate any provision of any law, governmental rule or
regulation of the State of Delaware or of the United States of America
governing the banking and trust powers of Lessor or its Certificate of
Incorporation or By-Laws;
(iv) this Lease has been duly entered into and delivered by
Lessor, and this Lease does, and each other Operative Document when
executed and delivered by Lessor hereunder will, constitute legal, valid
and binding obligations of Lessor, enforceable in accordance with their
respective terms except as may be limited by bankruptcy, insolvency,
reorganization, moratorium 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 (regardless of whether such enforceability
is considered in a proceeding in equity or at law) 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 the
substantial realization of the benefits provided herein;
(v) neither the execution and delivery by Lessor of this
Lease and any other Operative Document to which it is a party nor the
performance by it of any of its obligations hereunder or thereunder, nor
the compliance by it with the terms and conditions hereof or thereof,
will violate, conflict with or result in any breach of any terms,
conditions or provisions of, or provisions of, or
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constitute a default under, any law of the State of Delaware or the
United States of America governing the banking and trust powers of Lessor
or court judgment or decree applicable to it or pursuant to which it was
organized or any agreement or instrument to which it is a party or by
which it or any of its property is bound, or result in the creation or
imposition of any Lessor's Lien attributable to it on the Aircraft other
than as provided for in this Lease (such representation being made in
reliance upon and subject to the accuracy of the representation and
warranty contained in the last sentence of Section 5(d)(xvi));
(vi) neither the execution and delivery nor the performance
by Lessor of this Lease and any Operative Document to which Lessor is a
party requires any consent or approval of, giving of notice to,
registration with, or taking of any other action in respect of any
governmental authority or agency in the State of Delaware;
(vii) no registration, recording, filing or notarization of
this Lease in the State of Delaware and no other action by Lessor is
necessary to be taken in the State of Delaware to ensure the validity or
enforceability of the obligations of Lessor or the rights of Lessee
hereunder;
(viii) there are no pending or, to the knowledge of Lessor,
threatened actions or proceedings before any court, governmental or
administrative agency or arbitral body which actions or proceedings could
have a material and adverse effect on Lessor's ability to perform its
obligations under this Lease or any other Operative Document to which it
is a party;
(ix) Lessor shall obtain, make and maintain in full force and
effect, promptly renew from time to time and comply with the terms of all
consents, permissions, licenses, authorizations, approvals, registrations
and filings which may from time to time be required in the State of
Delaware in order to enable it to perform its obligations hereunder or
for the enforceability or admissibility in evidence hereof; and
(x) Lessor is a "citizen of the United States" within the
meaning of Section 40102(a)(15) of the Federal Aviation Act.
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(c) MANUFACTURERS' WARRANTIES. So long as no Default and no
Event of Default shall have occurred and be continuing and so long as the Term
shall remain in effect, Lessee may exercise for the account of Lessor such
rights as Lessor may have under any warranty, express or implied, with respect
to the Aircraft made by the Manufacturer or the Engine Manufacturer, to the
extent that the same may be assigned or otherwise made available to Lessee;
provided, however, that upon an Event of Default all such rights shall
immediately revert to Lessor including all claims thereunder whether or not
perfected, and such reversion shall occur at the earlier of (A) written notice
from Lessor to Lessee to such effect, and (B) the expiration or any termination
of the Term. Lessor agrees to execute and deliver such further documents and
instruments and to do such further acts, deeds, matters or things (at Lessee's
expense) as may be necessary to enable Lessee to obtain whatever warranty
service furnished for the Aircraft or the Engines by the Manufacturer or the
Engine Manufacturer, respectively, as is available to the Lessor.
(d) LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee hereby
makes the following representations and warranties, which representations and
warranties shall survive the execution and delivery of this Lease and the
delivery of the Aircraft:
(i) Lessee is a corporation duly organized and existing under
the Laws of the State of Hawaii and has the corporate power and authority
to carry on its business as presently conducted and to perform its
obligations under this Lease;
(ii) this Lease has been duly authorized by all necessary
corporate action on the part of Lessee and does not require any approval
of stockholders of Lessee (or if such approval is required, such approval
has been obtained), and neither the execution and delivery hereof nor the
consummation of the transactions contemplated hereby nor compliance by
Lessee with any of the terms and provisions hereof will contravene any
Law applicable to Lessee or the corporate charter or by-laws of Lessee-or
result in any breach of, or constitute any default under, or result in
the creation of any Lien upon any property of Lessee under, any credit
agreement or instrument, or other agreement or-instrument to which Lessee
is a party or by which Lessee or its properties or assets are bound or
affected;
(iii) Lessee has received every consent, approval or
authorization of, and has given every
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notice to, each Governmental Entity having jurisdiction with respect to
the execution, delivery or performance of this Lease that is required for
Lessee to execute and deliver this Lease and to perform the transactions
contemplated hereby and each such consent, approval or authorization is
valid and effective and has not been revoked;
(iv) this Lease has been duly executed and delivered by
Lessee, and the Lease does, and the Lease Supplement when executed and
delivered by Lessee will, constitute legal, valid and binding obligations
of Lessee, enforceable in accordance with their respective terms, except
as enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium 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 (regardless of whether such enforceability
is considered in a proceeding in equity or at law) as a court having
jurisdiction may impose and by Laws which may affect some of such
remedies but which do not make the available remedies inadequate for the
substantial realization of the benefits provided herein;
(v) there are no suits or proceedings (other than those
heretofore disclosed in writing to each Beneficiary) pending or, to the
knowledge of Lessee, threatened in any court or before any regulatory
commission, board or other administrative governmental agency against or
affecting Lessee which might have a materially adverse effect on the
current business or financial condition of Lessee;
(vi) Lessee has filed or caused to be filed all tax returns
which are required to be filed by it, and has paid or caused to be paid
all Taxes shown to be due or payable on said returns or on any assessment
received by Lessee, except to the extent being contested in good faith by
appropriate proceedings, and for the payment of which adequate reserves
have been provided;
(vii) except for the filing for recordation of the FAA Bills
of Sale, an application for registration of the Aircraft on AC Form
8050-1 in the name of the Lessor, the Trust Agreement, the affidavit of
citizenship of the Lessor and this Lease and the Lease Supplement with
the FAA, the
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filing with the Hawaii Bureau of Conveyances, Hawaii of precautionary UCC
financing statements and continuation statements at periodic intervals
with respect to the Aircraft and the placing on the Aircraft and on each
Engine of the plates containing the legends referred to in Section 6(f)
hereof, no further filing or recording of this Lease or of any other
document and no further under the Laws of any Governmental Entity in
order to (A) fully protect and establish Lessor's title to, interest in
and property rights with respect to the Aircraft as against Lessee or
any third party or (B) ensure the validity, effectiveness and enforce
ability of this Lease;
(viii) Lessee is not in default in the performance of any of
its obligations (a) for the payment of indebtedness for borrowed money or
of any interest or premium thereon or (b) for the payment of rent under
any lease or agreement to lease real, personal or mixed property;
(ix) the Maintenance Program for the Aircraft complies with
all FAA requirements;
(x) the consolidated financial statements of Aloha Airgroup,
Inc. (including Lessee), including the balance sheets and audited
statements of income and retained earnings of Lessee, for the preceding
two fiscal years and for the period ending September 30, 1995, copies of
which have been furnished to Lessor, are prepared in accordance with
generally accepted accounting principles, and present fairly the
financial position and operations of Lessee, and subsequent to the
conclusion of the last such period, there has been no material adverse
change in such position or operations;
(xi) there are no withholding or other Taxes to be deducted
from any payment to be made by Lessee under this Lease (other Taxes to
which Lessee's indemnity does not extend pursuant to the provisions of
Section 10);
(xii) Lessee is a Certified Air Carrier and holds all
licenses, certificates, permits and franchises from the appropriate
agencies of the United States of America and/or all other governmental
authorities having jurisdiction which are necessary to authorize the
Lessee to engage in air transport and to carry on its business as
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presently conducted and to be conducted with the Aircraft;
(xiii) Lessee is a "citizen of the United States" as defined
in Section 40102(a)(15) of the Federal Aviation Act;
(xiv) Lessor is entitled to the benefits of Section 1110 of
Title 11 of the united States Code with respect to the Aircraft and the
Engines;
(xv) Lessee's chief executive office (as such term is defined
in Article 9 of the Uniform Commercial Code) and the place where it keeps
its corporate records concerning the Aircraft, all its interest in, to
and under any Operative Document and its contracts relating thereto, are
located in Honolulu, Hawaii;
(xvi) Neither Lessee nor any Person who was at such time a
Commonly Controlled Person has terminated any Plan or withdrawn from any
multiemployer plan (as defined in Section 4001(a)(3) of ERISA) in a
manner which has or could reasonably be expected to result in any
liability under Title IV of ERISA, and no event or condition has occurred
or exists as a result of which any such liability could reasonably be
expected to be incurred. No Plan maintained or contributed to (or
required to be contributed to) by Lessee or any Person who was at such
time a Commonly Controlled Person has incurred an "accumulated funding
deficiency" (as defined in Section 302 of ERISA). No Lien imposed under
the Code or ERISA on the assets of Lessee or any Commonly Controlled
Person exists or is reasonably likely to arise on account of any Plan. No
prohibited transaction (as defined in Section 406 of ERISA or Section
4975 of the Code) has occurred which has subjected or could subject
Lessee or any Commonly Controlled Person to any liability under Section
502(i) of ERISA or Section 4975 of the Code. The execution and delivery
by Lessee of this Lease and the consummation of the transactions
contemplated hereby will not constitute a prohibited transaction within
the meaning of Section 406 of ERISA or Section 4975 of the Code; and
(xvii) No part of the Rent or other payments made by Lessee
under the Operative Documents will be made with the assets of any plan
(or its related trust) as defined in Section 4975(e) of the Code or of
any employee benefit plan (or its
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related trust) as defined in Section 3(3) of ERISA.
Section 6. POSSESSION AND USE; REGISTRATION.
(a) POSSESSION.
(i) SUBLEASE, ASSIGNMENT AND TRANSFER. Without the prior
written consent of Lessor and each Beneficiary, Lessee will not assign this
Lease or sublet, transfer or relinquish possession of the Aircraft, Airframe or
any Engine or install any Engine or permit any Engine to be installed on any
airframe other than the Airframe or under any circumstances permit the
Aircraft, Airframe or any Engine to be used by any other Person for any purpose
whatsoever, provided that so long as (A) no Default or Event of Default shall
have occurred and be continuing, (B) the action to be taken shall not affect
the registration of the Aircraft with the FAA and (C) all necessary approvals
of each Governmental Entity having jurisdiction over the Aircraft have been
obtained, then Lessee, without the prior written consent of Lessor and each
Beneficiary, may:
(1) subject any Engine to normal interchange or pooling
agreements or similar arrangements in each case customary in the airline
industry and entered into in the ordinary course of its business with
Permitted Sublessees or an air carrier approved by Lessor and each
Beneficiary or an FAA licensed engine overhaul agency, provided that
Lessee shall give the Beneficiaries 30 days' prior notice thereof
(together with a copy of the applicable pooling or interchange
agreement); and provided further, however, that: (A) no such agreement or
arrangement results in or requires the transfer of title to such Engine;
or (B) if Lessor's title to such Engine shall be divested under any such
agreement or arrangement, such divestiture shall be deemed to be a
Casualty occurrence with respect to such Engine and Lessee shall comply
with Section 11(b) hereof in respect thereof;
(2) deliver possession of the Aircraft, the Airframe or any
Engines to the manufacturer thereof for testing or other similar purposes
or to any organization for service, repair, maintenance, testing or
overhaul work on the Aircraft, Airframe or Engine or any Part thereof or
for alterations or modifications in or additions to the Aircraft,
Airframe or Engine to the extent required or permitted by the terms of
Section 9 hereof;
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(3) install an Engine on an airframe (other than the
Airframe) owned by Lessee free and clear of all Liens except: (A) those
of the type permitted under Section 14 hereof and those which apply only
to the engines (other than Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment (other than
Parts) installed on such airframe (but not to the airframe as an
entirety); and (B) the rights of the participants under normal
interchange agreements which are customary in the airline industry and do
not contemplate, permit, result in or require the transfer of title to
theairframe, engines or parts installed thereon;
(4) install an Engine on an airframe leased to Lessee or
owned by Lessee subject to a conditional sale or other security
agreement, provided, that: (A) such airframe is free and clear of all
Liens except the rights of the parties to the lease or conditional sale
or other security agreement covering such airframe and except Liens of
the type permitted by clauses (A) and (B) of Section 6(a)(i)(3), and the
Lien of any mortgage which either by its terms does not apply to the
Engine or which effectively provides that each Engine leased to Lessee
hereby shall not become subject to the Lien thereof or to any rights of
any party thereunder other than Lessee (with respect to Lessee's rights
expressly granted hereunder), notwithstanding the installation of such
Engine on any airframe subject to the Lien of such mortgage, unless and
until Lessee shall become the owner of such Engine and Lessor shall have
no further interest therein, all pursuant to the express terms of this
Lease (as evidenced by a written instrument signed by Lessor); and (B)
there shall be in effect a written agreement of the lessor or secured
party of such airframe (which may be the lease or conditional sale or
other security agreement covering such airframe) substantially similar
in effect to the agreement of Lessor in Section 6(b) below whereby such
lessor or secured party effectively and expressly agrees that neither it
nor its successors or assigns will acquire or claim any right, title or
interest in any Engine by reason of such Engine being installed on such
airframe at any time while such Engine is subject to this Lease, and a
copy of such agreement shall be provided to Lessor or any Beneficiary
upon its request;
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(5) sublease the Airframe and the Engines or the engines then
installed on the Airframe or any Engine to any Permitted Sublessee;
PROVIDED, that such Permitted Sublessee shall not (i) have consented to
the appointment of a receiver, trustee or liquidator or admitted in
writing its inability to pay its debts generally as they become due or
filed a voluntary petition in bankruptcy or a voluntary petition seeking
reorganization in a proceeding under any bankruptcy laws, (ii) have had
an involuntary order, judgment or decree entered against such Permitted
Sublessee by any court appointing a receiver, trustee or liquidator for
such Permitted Sublessee or (iii) be in default under any lease or
financing agreement to which such Permitted Sublessee is a party; and
(6) enter into a Wet Lease for the Aircraft in the ordinary
course of its business for a term or terms (including any renewal terms
or extensions) that do not extend beyond the Term.
(ii) CERTAIN LIMITATIONS ON TRANSFERS. With respect to any
assignment, sublet, transfer or relinquishment of possession pursuant to
Section 6(a)(i) (other than a transfer of an Engine which is deemed a Casualty
Occurrence) or any other assignment, sublet or transfer of possession consented
to in writing by Lessor and the Beneficiary:
(1) Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if
such transfer had not occurred, and no sublease or other relinquishment
of possession of the Equipment shall in any way discharge or diminish any
of Lessee's obligations to Lessor under this Lease or any of Lessor's
rights hereunder and such rights shall continue as if such sublease or
transfer had not occurred;
(2) the term of any sublease (including, without limitation,
any option of the sublessee to renew or extend the sublease), interchange
or pooling arrangement shall not continue beyond the end of the Term;
(3) any sublease permitted by this Section 6 shall in
addition expressly provide that (v) such sublease is subject and
subordinate to all of the terms of this Lease and all rights of Lessor
under this Lease, including without limitation Lessor's
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rights to repossession pursuant to Section 18 and to void such Permitted
Sublessee's right to possession upon such repossession, shall apply, (w)
such Permitted Sublessee consents to the security assignment by Lessee to
Lessor of all of Lessee's right, title and interest in such sublease for
purposes of securing Lessee's obligations hereunder and that Permitted
Sublessee, upon receipt of a written notice from Lessor that an Event of
Default has occurred and is continuing, will make all payments under such
sublease to, and, if this Lease has been declared in default pursuant to
Section 18 hereof, will return the Equipment only to, Lessor, or as
directed by Lessor, for so long as such Event of Default shall continue,
(x) the maintenance, operation and insurance provisions of such sublease
shall be substantially the same as the provisions of this Lease (whether
by requiring such obligations to be performed by such Permitted
Sublessee, by Lessee or by both), (y) the Aircraft shall not be operated
or used other than as provided in this Lease, and (z) the Lessor may void
or terminate such sublease following an Event of Default hereunder but
only during the period as such Event of Default shall continue;
(4) prior to the commencement of any sublease to a Permitted
Sublessee, Lessee shall give Lessor and each Beneficiary no less than 10
days written notice of the proposed sublease of the Airframe or Engine,
as the case may be, which notice shall include the identity of the
Permitted Sublessee, the term and rental rate of the sublease and a copy
of such sublease; PROVIDED, HOWEVER, that Lessee shall use its reasonable
efforts to give such notice earlier than such 10 days if practicable
under the circumstances and to advise Lessor and the Beneficiaries at any
time at which Lessee commences substantial discussions or negotiations
with any Permitted Sublessee with respect to the potential sublease of
the Aircraft;
(5) any sublease shall-expressly prohibit any assignment or
further sublease of the Aircraft or any assignment of the rights under
such sublease;
(6) any Wet Lease shall have a term that does not exceed
beyond the end of the Term; and
(7) the Person with which and for which any Wet Lease is
entered into shall be an airline that is a
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resident of, is domiciled in, and maintains its principal base of
operations in, a Permitted Jurisdiction.
Prior to entering into any sublease of the Airframe and any Engine or engine or
any Engine to a Permitted Sublessee, Lessee shall (A) execute and deliver to
Lessor and each Beneficiary an assignment of and grant of a security interest
in all of Lessee's right, title and interest in such sublease, which assignment
shall be in form and substance reasonably satisfactory to Lessor and each
Beneficiary, contain the consent to such assignment of such Permitted
Sublessee, and be recordable under the Federal Aviation Act and shall be
executed, delivered and filed with the FAA for recordation at Lessee's expense
on or before commencement of such sublease (provided that such assignment may
specify that Lessor may not exercise any of the rights or remedies of the
Lessee under such sublease including, without limitation, any right to receive
rentals under such sublease or to interfere with the rights of the Lessee to
grant waivers or consents under, or to amend the provisions of, any such
sublease) unless, and only so long as, an Event of Default hereunder shall have
occurred and be continuing, and (B) execute and deliver to Lessor an
appropriately completed Uniform Commercial Code financing statement, for filing
in Hawaii and each other applicable jurisdiction, evidencing the assignment by
Lessee to Lessor of such sublease. In connection with such a sublease of the
Aircraft, Lessee shall provide to Lessor and each Beneficiary, at Lessee's or
Permitted Sublessee's expense and on or before commencement of such sublease, a
legal opinion from counsel to the Permitted Sublessee in form and substance
reasonably satisfactory to Lessor and each Beneficiary, as to the due execution
and delivery and enforceability of such sublease and assignment of sublease and
as to such other matters as Lessor or such Beneficiary may reasonably request.
Lessee agrees that any such security assignment granted to the Lessor may be
assigned to the Lender, if any, it being understood that such assignment shall
be consistent and not contravene the foregoing provisions. Any monies received
by Lessor or Lender pursuant to the exercise of its rights under the assignment
of any sublease shall be held by Lessor or the Lender as additional security
for the performance by Lessee of its obligations under this Lease and, to the
extent not applied against amounts due and owing by Lessee hereunder and the
exercise of remedies hereunder, shall be returned to Lessee at such time as no
Event of Default shall be continuing. All costs and expenses (including
reasonable legal fees and expenses) incurred by Lessor, Lender or any
Beneficiary in connection with any sublease or the assignment thereof shall be
borne by Lessee and reimbursed by Lessee upon demand.
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(b) RECIPROCAL RECOGNITION OF RIGHTS. In the event Lessee
shall have received from the lessor or secured party of any airframe leased to
Lessee or owned by Lessee subject to a conditional sale or other security
agreement a written agreement complying with clause (B) of Section 6(a)(i)(4)
hereof (which agreement may be contained in the lease, conditional sale
agreement or security agreement relating to such airframe), and such lease or
conditional sale or other security agreement covering such airframe also covers
an engine or engines owned by the lessor under such lease or subject to a
security interest in favor of the secured party under such conditional sale or
other security agreement, Lessor hereby agrees for the benefit of such lessor
or secured party that Lessor will not acquire or claim, as against such lessor
or secured party, any right, title or interest in any such engine as the result
of such engine being installed on the Airframe at any time while such engine is
subject to such lease or conditional sale or other security agreement and owned
by such lessor or subject to a security interest in favor of such secured
party. Lessor also hereby agrees for the benefit of the mortgagee under any
mortgage complying with clause (A) of Section 6(a)(i)(4) hereof, relating to
installation of an Engine on an airframe leased to Lessee, that Lessor will not
acquire or claim, as against such mortgagee, any right, title or interest in
any engine subject to the Lien of such mortgage as the result of such engine
being installed on the Airframe at any time while such engine is subject to the
Lien of such mortgage.
(c) LAWFUL INSURED OPERATIONS. Lessee will not permit the
Aircraft to be maintained, used or operated in violation of any Law of any
Governmental Entity, or in violation of any airworthiness certificate, or
license or registration issued by any such authority, or contrary to the
Manufacturer's or Engine Manufacturer's operating manuals or instructions for
the Aircraft or the Engines. In the event that any such Law requires alteration
of the Aircraft, then, subject to Section 1 of the Supplemental Agreement,
Lessee shall comply therewith at its sole expense and shall maintain the same
in proper condition for operation under such Laws. Lessee agrees not to operate
the Aircraft, or permit the Aircraft to be operated, (i) unless the Aircraft is
covered by insurance as required by the provisions hereof or (ii) contrary to
the terms of such insurance. Lessee also agrees not to operate or locate the
Aircraft or suffer or permit the Aircraft to be operated or located in any area
excluded from coverage by any insurance policy issued pursuant to the
requirements of this Lease.
(d) MAINTENANCE. Lessee, at its own cost and expense, shall,
or shall cause a maintenance contract center that is FAA certified for the
contracted maintenance of the
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Aircraft and located in the united States of America or Canada, to:
(i) service, repair, maintain, overhaul and test, or cause
the same to be done to, each Item leased hereunder (A) so as to keep such
Item in the same condition as when delivered to Lessee hereunder, fair
wear and tear excepted, and in good operating condition, (B) so as to
keep the Aircraft in the condition necessary to enable the airworthiness
certification of the Aircraft to be maintained in good standing at all
times under all applicable FAA rules and regulations, (C) so as to meet
the standards observed by Lessee with respect to aircraft of similar type
owned or leased by Lessee and operated on similar routes, and in a manner
which does not adversely discriminate against the Aircraft compared to
similar aircraft operated by Lessee and in a similar manner and with care
as that undertaken by the majority of airlines based in the United States
of America which operate Boeing 737-200ADV aircraft (it being understood
that the obligations hereby imposed upon Lessee by reference to the
manner and care undertaken by other airlines is not intended to supersede
Lessee's obligations herein with respect to the specific and express
terms of this Lease), (D) in strict compliance with Lesseel's
FAA-approved Maintenance Program applicable to the Aircraft (including
the corrosion prevention control program (CPCP/D6-38528) and aging
aircraft program (D6-38505 revision H as applicable per airworthiness
directive or per effectivity)), a true and complete copy of which shall
be delivered by Lessee to the Lessor which Maintenance Program shall be
in substantial conformance with the Manufacturer's recommended
maintenance planning document;
(ii) maintain all records, logs and other materials required
by the FAA or the Maintenance Program in respect of the Aircraft with all
such records, logs and other material being maintained in the English
language;
(iii) promptly furnish to Lessor or each Beneficiary such
information, in English, as may be required to enable Lessor or such
Beneficiary to file any reports required to be filed by such Lessor or
Beneficiary with any governmental authority concerning the Aircraft;
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(iv) incorporate into the Aircraft all manufacturer mandatory
requirements, orders, "alert" and, to the extent scheduled for a majority
of Lessee's other owned or leased aircraft of the same model,
"recommended" service bulletins issued by the manufacturers and vendors
of the Items (so far as such manufacturers and vendors issue such service
bulletins) which become due for compliance during the Term without
waiver, exception, deferment or carryover and, in addition, all other
service bulletins that Lessee adopts during the Term for a majority of
other aircraft of the same model in Lessee's fleet;
(v) carry out, on each Item, all applicable regulatory
regulations, mandatory requirements, orders and airworthiness directives
which the FAA may from time to time issue and which become due during or
within three months following the expiration of the Term (or within six
months following the expiration of the Term if requested by the
Beneficiaries at Beneficiaries' cost; however, the Term will not be
deemed extended solely as a result of the additional work to terminate
the airworthiness directives due after three months after the expiration
of the Term and requested by the Beneficiaries) with respect to such
Item, without waiver, exception, deferment or carryover beyond the
expiration of the Term (except as expressly set forth in the Supplemental
Agreement); provided that any inspections and terminating action required
by such regulatory regulations, mandatory requirements, orders and
airworthiness directives to be performed by a particular date shall be
performed by such date;
(vi) maintain, service, repair and overhaul the Airframe and
all Engines to comply with all warranty requirements;
(vii) except when required by maintenance or expressly
permitted by Section 6(a) above, equip the Airframe at all times with two
Engines;
(viii) make available to Lessor upon its reasonable request
during the Term, one or more persons with sufficient technical knowledge
to assist the Lessor or each Beneficiary in its examination of such
materials and documents relating to the maintenance and condition of the
Aircraft as the Lessor or each Beneficiary shall from time to time
reasonably request; and
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(ix) without prejudice to Lessee's obligations to repair the
Aircraft pursuant to the terms hereof, if any damage occurs to the
Aircraft which results in the need for repairs where the costs of such
repairs are expected to exceed US$500,000, Lessee shall promptly notify
Lessor and each Beneficiary of the details of the repairs required and
shall furnish them with a workscope relating thereto, and Lessee shall
comply with any reasonable direction of Lessor or each Beneficiary as to
the conduct of the repairs to the Aircraft; PROVIDED, HOWEVER, that the
Beneficiaries shall review such workscope and inform Lessee of any
comments thereon or objections thereto within three Business Days after
their receipt thereof; PROVIDED FURTHER, HOWEVER, that Lessee shall be
permitted to use a maintenance contractor to perform its obligations
pursuant to this Section 6(d) so long as such maintenance contractor is a
repair facility approved by the FAA for the contracted repair of the
Aircraft which is located in the United States of America or Canada, or
other facility acceptable to the Lessor and each Beneficiary.
(e) REGISTRATION. So long as no Event of Default shall have
occurred and be continuing, Lessor shall cause the Aircraft to be duly
registered in the name of Lessor with the FAA under the Federal Aviation Act as
at the Delivery Date, shall take such actions as are reasonably appropriate (so
long as such actions pose no material burden or risk to Lessor or the
Beneficiaries) to maintain such registration during the Term, and shall not
take any action to interfere with or cancel such registration; provided that,
after the Delivery Date, Lessee shall monitor and, to the extent not relating
to the U.S. citizenship of the Beneficiaries, maintain such registration;
PROVIDED, FURTHER, HOWEVER, that (i) if Lessor shall at any time cease to be a
"citizen of the United States" (as defined in the Federal Aviation Act) and if
such requirement shall then be necessary to maintain such registration, then
the Beneficiaries shall take such action as shall be reasonable and appropriate
to maintain such registration (including by appointing a successor trustee
under the Trust Agreement or establishing a voting trust covering the
Aircraft), (ii) Lessee and Lessor shall cooperate reasonably and in good faith
to maintain such registration, and (iii) Lessee shall, at Lessee's expense,
be responsible for the filing and registration of the Lease (as supplemented by
the Lease Supplement) and for maintaining such registration throughout the
Term.
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(f) INSIGNIA. Upon delivery of the Aircraft, Lessee agrees to
promptly place the Lease Identification in the cockpit in a prominent location
and to place the Lease Identification on each Engine. Lessee agrees to make
such reasonable changes to the Lease Identification as Lessor may request from
time to time.
Section 7. INFORMATION.
During the term of this Lease, Lessee agrees to furnish
Lessor and each Beneficiary the following:
(i) within sixty (60) days following the end of each quarter
of Lessee's fiscal year, except the last such quarter of such year, an
unaudited consolidated balance sheet of Aloha Airgroup, Inc. (including
Lessee) prepared as of the close of each quarterly period, together with
the related unaudited profit and loss statement for such period;
(ii) within one hundred twenty (120) days or such longer
period as reasonably justified after the close of each fiscal year of
Lessee, an audited consolidated balance sheet, profit and loss statement
and statement of stockholders' equity of Aloha Airgroup, Inc. (prepared
on a consolidated basis including Lessee), as of the close of such fiscal
year, reported on by Lessee's independent certified accountants of
recognized standing;
(iii) within one hundred twenty (120) days after the close of
each fiscal year of Lessee, a certificate signed by a duly authorized
officer of Lessee, stating (a) that such officer is familiar with the
relevant terms of this Lease and has made a review of Lessee's compliance
herewith during the preceding fiscal year and (b) that no event has
occurred which constitutes a Default, or, if such an event has occurred,
the nature thereof and action Lessee has taken or is taking to cure the
same;
(iv) from time to time upon request, Lessee will at no cost
to Lessor or each Beneficiary provide Lessor or each Beneficiary
certified true and complete copies in the English language of the
Maintenance Program; provided that Lessor or such Beneficiary shall
maintain the confidentiality thereof and shall not disclose the contents
thereof to any Person, except as permitted by Section 20(k) and except to
the extent necessary
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to bridge the Aircraft from the Maintenance Program to the maintenance of
a subsequent lessee or buyer of the Aircraft or as required by the Law of
a jurisdiction in which the Aircraft will be based, operated or
registered;
(v) Lessee will use its reasonable efforts to provide the
Beneficiaries on or before the fifth day of each calendar month
commencing with the next calendar month of the Delivery Date, and shall
in any event provide to the Beneficiaries upon request of a Beneficiary,
with a properly completed Monthly Aircraft Utilization and Status Report
in the Form of Exhibit J hereto for the preceding calendar month
operation of the aircraft;
(vi) Lessee will use its reasonable efforts to provide the
Beneficiaries, on or before the 15th day of January of each year
(commencing with January 1996), and shall in any event provide Lessor and
the Beneficiaries upon request of a Beneficiary in English, the
information and documentation for the preceding calendar year as listed
in Exhibit K hereto; PROVIDED, HOWEVER, that if (i) a Default or an Event
of Default shall have occurred and be continuing or (ii) Lessee's
financial condition changes adversely from its financial condition at the
time of the Delivery Date, then, upon notice and a request from Lessor or
a Beneficiary, Lessee shall provide such information on a quarterly basis
on the 15th day of each January, April, July and October, commencing with
the first of such dates to follow the date of such notice.
(vii) Lessee will use its reasonable efforts to provide the
Beneficiaries, within forty-five (45) days prior to the scheduled
performance of a block C or D check on the Aircraft, and shall in any
event provide Lessor and the Beneficiaries upon request of a Beneficiary
with written notice of the time and location of such scheduled block C or
D check; and
(viii) from time to time such other information regarding the
business, operations or the financial condition of Lessee as the Lessor
or any Beneficiary may from time to time reasonably request, including
reports from time to time as to location, condition, use, operation,
maintenance and insuring of the Aircraft and the Engines
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(including total time spent in the air and time between overhauls).
Lessee shall permit Lessor, each Beneficiary and their
respective designees on at least seven (7) days' prior written notice to visit
and inspect the Aircraft, its condition, use and operation and the records
maintained in connection therewith during normal business hours; PROVIDED,
HOWEVER, that this shall not unreasonably interfere with Lessee's quiet use and
enjoyment of the Aircraft PROVIDED FURTHER, HOWEVER, that Lessor or the
Beneficiaries may conduct such visit and inspection at any time and with or
without notice if an Event of Default has occurred and is continuing. Lessor
and each Beneficiary shall have no duty to make any such inspection and shall
not incur any liability or obligation by reason of not making any such
inspection. Lessor's or any Beneficiary's failure to object to any condition
or procedure observed or observable in the course of an inspection hereunder
shall not be deemed to waive or modify any of the terms of this Lease with
respect to such condition or procedure. If such inspection is carried out
during a C Check or D Check, then Lessee will open any areas of the Aircraft
upon reasonable request of Lessor or a Beneficiary; PROVIDED, HOWEVER, that,
with respect to any C Check (other than the last C Check to occur prior to the
Return Occasion) the areas to be opened will be limited to those areas that are
in the zones of the Aircraft in which Lessee or its maintenance contractor are
working; provided further, however, that, with respect to the last C Check to
occur prior to the Return Occasion, Lessee will open any areas of the Aircraft
upon the reasonable request of Lessor or a Beneficiary.
Section 8. COVENANTS OF LESSEE.
Lessee covenants and agrees that:
(i) MAINTENANCE OF CORPORATE EXISTENCE. Except as provided in
Section 8(iv) below, during the term of this Lease, Lessee will preserve and
maintain its corporate existence. Lessee shall also preserve and maintain its
rights, privileges, licenses and franchises in all jurisdictions where the
failure to do so would have a materially adversely effect upon the Lessee's
ability to meet its obligations under this Lease and the other Operative
Documents.
(ii) MAINTENANCE OF STATUS. Lessee is, and shall remain so long
as it shall be Lessee under this Lease, duly qualified to operate the Aircraft
under applicable Law.
(iii) PAYMENT OF TAXES. Lessee will pay or cause to be paid all
taxes, assessments and governmental charges
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or levies imposed upon it, or upon its income or profits, or upon any property
belonging to it, prior to the date on which penalties attached 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.
(iv) CONSOLIDATION, MERGER, ETC. Without the prior written
consent of Lessor and each Beneficiary, Lessee shall not consolidate with,
merge with or merge into any other Person or convey, transfer or lease
substantially all of its assets as an entirety to any other Person unless, upon
and after giving effect to such transaction, (A) the surviving entity has at
least the same net worth and gross assets as the Lessee immediately prior to
such transaction, such surviving entity is Certified Air Carrier and a "citizen
of the United States" as defined in Section 101(16) of the Federal Aviation
Act, (C) Lessor shall continue to be entitled to the benefits of Section 1110
of the United States Bankruptcy Code, as in effect from time to time, and (D)
each of the Operative Documents shall continue in full force and effect and
shall constitute the legally binding and enforceable obligation of such
surviving entity.
(v) PLACE OF BUSINESS. Lessee will notify Lessor in writing
prior to any change of its principal place of business or chief executive
office.
(vi) NOTICE OF DEFAULT. Promptly after a responsible officer of
Lessee obtains knowledge of an event or circumstance that such officer knows
constitutes a Default hereunder, Lessee shall notify Lessor in writing of such
Default.
(vii) GOVERNMENTAL CONSENTS. Lessee undertakes to maintain in
full force and effect all governmental consents, licenses, authorizations,
approvals, declarations, filings and registrations obtained or effected in
connection with this Lease (other than those relating to the perfection of a
Lender's interest herein and subject to Section 5(b)(i) and Section 6;
provided, however, if so requested by a Beneficiary, Lessee shall cooperate
with the Beneficiary, at Beneficiary's cost, to perfect the interest of the
Lender) and every document or instrument contemplated hereby (including without
limitation foreign exchange and transfer permits regarding Dollar amounts due
hereunder and thereunder) and to take all such additional action as may be
proper or advisable in connection herewith or therewith. Lessee further
undertakes to obtain or effect any new or additional governmental consents,
licenses, authorizations, approvals, declarations, filings or registrations as
may become necessary for the performance of any of the terms and conditions of
this Lease or any other document or instrument contemplated hereby; PROVIDED,
HOWEVER, that Lessee shall
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not be required to effect or maintain any governmental consent, authorization
or license that is required by a governmental authority in Delaware, Japan,
Ireland, New York or the United Kingdom unless required in connection with the
conduct of Lessee's business, the operation or maintenance by Lessee of the
Aircraft or the performance of Lessee's other obligations under this Lease.
(viii) SUSPENSION, CESSATION, ETC. Lessee shall not (i) voluntarily
suspend all or substantially all of its certificated operations; or (ii)
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.
(ix) CERTIFIED AIR CARRIER. Lessee shall at all times remain a
Certified Air Carrier.
Section 9. REPLACEMENT OF PARTS; ALTERATIONS, MODIFICATIONS
AND ADDITIONS.
(a) REPLACEMENT OF PARTS. Lessee, at its own cost and
expense, will promptly replace all Parts which may from time to time become
worn out, 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 at its own cost and expense cause to be removed any Parts, whether
or not worn out, destroyed, damaged beyond repair or permanently rendered unfit
for use, provided that Lessee shall replace at its own cost and expense such
Parts as promptly as practicable. All replacement Parts shall be free and clear
of all Liens, other than Liens permitted by Section 14 hereof, shall be in at
least the same modification status and service bulletin accomplishment status,
shall be fully interchangeable as to form, fit and function, shall have been
overhauled or repaired and inspected by an agency acceptable to the FAA and
shall be in as good an operating condition as, and have a utility at least
equal to and a value and remaining warranty reasonably approximating, the Parts
replaced (assuming such replaced Parts were in the condition and repair in
which they were required to be maintained by the terms hereof) and all
historical records since new or last overhaul relating to such Parts (and all
historical records since manufacture with respect to Engines, Landing Gears,
the APU and all life limited parts installed on any Engine, Landing Gear or
APU) shall be maintained by Lessee.
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All Parts owned by Lessor which are at any time removed from
the Aircraft 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
which have been incorporated or installed in or attached to the Aircraft and
which meet the requirements for replacement Parts specified above. Immediately
upon any replacement Part becoming incorporated or installed in or attached to
the Aircraft as above provided, (i) title to the removed Part shall thereupon
vest in Lessee, free and clear of all rights of Lessor, (ii) title to such
replacement Part shall thereupon vest solely in Lessor and (iii) such
replacement Part shall become subject to this Lease and be deemed a Part for
all purposes hereof to the same extent as the Part which it has replaced.
(b) ALTERATIONS, MODIFICATIONS AND ADDITIONS. Lessee, at its
own expense, shall make such alterations and modifications and additions to the
Aircraft as may be required from time to time to meet the applicable standards
of the FAA or to comply with any Law, or, if performed by Lessee with respect
to a majority of its 737 fleet, any bulletin of the manufacturer of the
Aircraft, Engines or Parts. In addition, Lessee, at its own expense, may from
time to time make alterations and modifications in and additions to the
Aircraft, provided no such alteration, modification or addition diminishes the
remaining warranty, value or utility, or impairs the condition or
airworthiness, of the Aircraft. Title to all Parts incorporated or installed in
or attached or added to the Aircraft as the result of such alteration,
modification or addition shall vest immediately in Lessor and become subject to
this Lease, without the necessity for any further act of transfer, document or
notice. Notwithstanding the foregoing sentence of this Section 9(b), Lessor
agrees that so long as no Event of Default shall have occurred and be
continuing, Lessee may, at such time during the Term, remove any Part of the
Aircraft without replacement, provided that (i) such Part is in addition to,
and not in replacement or substitution for, any Part originally incorporated or
installed in or attached to the Aircraft at the time of delivery thereof
hereunder or any Part in replacement of, or substitution for, any such
originally incorporated or installed or attached Part, (ii) such Part is not
required to be incorporated or installed in or attached or added to the
Aircraft pursuant to the terms of this Section 9 and (iii) such Part can be
removed from the Aircraft without diminishing or impairing the value, utility,
condition, cosmetic appearance or airworthiness which the Aircraft would have
had at such time had such alteration, modification or addition not occurred.
Upon the removal by Lessee of any such Part as provided in the preceding
sentence, title thereto shall, without further act, vest in Lessee and such
Part shall no longer be deemed part
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of the Aircraft (such a part is herein called a "Removable Part"). Lessee, at
its sole expense, shall repair any damage to the Aircraft resulting from any
such removal. Any Part not removed by Lessee as above provided prior to the
return of the Aircraft to Lessor hereunder whether pursuant to Section 16,
Section 18 or otherwise shall remain the property of Lessor. If any Removable
Part is (i) owned by any third party and leased to Lessee, (ii) sold to Lessee
subject to a conditional sales contract or other security interest or (iii)
leased to Lessee pursuant to a lease which is subject to a security interest in
favor of any third party, then Lessor will not acquire or claim, as against
such lessor, conditional vendor or secured party, any right, title or interest
in any such Removable Part as the result of such Removable Part being installed
in the Aircraft; provided, however, (a) that Lessor's inability to so acquire
or claim is subject to the express condition that such lessor, conditional
vendor or secured party shall not acquire or claim, as against Lessor, any
right, title or interest in the Aircraft, or any Part other than its interest
in such Removable Part by reason of such Removable Part being installed
thereon, and (b) that all of Lessee's right, title and interest in and to any
Removable Part not removed by Lessee within sixty (60) days after an Event of
Default shall, at such time, automatically become the property of Lessor and be
subject to this Lease.
In addition, with the prior written consent of the
Beneficiaries, Lessee may, at its own expense, substitute or replace any Part
that is originally installed on the Aircraft on the Delivery Date with another
Part provided that (i) no such substitution or replacement diminishes the
remaining warranty, value or utility, or impairs the condition or
airworthiness, of the Aircraft, (ii) title to all Parts incorporated or
installed in or attached or added to the Aircraft as the result of such
substitution or replacement shall vest immediately in Lessor free and clear of
Liens, other than those permitted by Section 14, and become subject to this
Lease, without the necessity for any further act of transfer, document or
notice, (iii) such substituted or replacement Parts can be removed from the
Aircraft without diminishing or impairing the value, utility, condition,
cosmetic appearance or airworthiness which the Aircraft would have had at such
time had such substitution or replacement not occurred, (iv) Lessee, at its
sole expense, shall repair any damage to the Aircraft resulting from any such
removal, and (v) nothing herein shall diminish or alter any of Lessee's
obligations under Section 16 or Exhibit E hereof to return the Aircraft on the
Return Occasion with all Parts (or substitution or replacement Parts of the
same make and model) that were originally installed on the Aircraft in the
condition required thereby (and including within this clause (v)
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Lessee's obligation by the Return Occasion to re-install any Part for which a
substitution or replacement Part was installed on the Aircraft pursuant to this
paragraph).
In no event shall Lessor bear any liability or cost for any
alteration, modification or addition to, or for any grounding or suspension of
certification of, the Aircraft, or for any loss of revenue arising therefrom.
Lessee shall make no material alterations, modifications or additions to the
Aircraft (such as removal of seats, galleys, lavatories, major avionics
equipment or the like) that would affect the marketability of the Aircraft
without Lessor's and each Beneficiary's prior written consent. if Lessor and
each Beneficiary grant such consent, title to such removed Parts shall remain
with Lessor and Lessor and the Beneficiaries may request Lessee to reinstall
such Parts prior to termination of this Lease. If Lessor or Beneficiaries
request Lessee to reinstall such Parts, title to the Parts removed shall vest
in Lessee. All costs associated with such removal and reinstallation shall be
borne by Lessee.
Section 10. GENERAL TAX INDEMNITY.
(a) CERTAIN UNITED STATES TAXES. Lessee shall indemnify and
hold each Indemnitee harmless from and against all United States Withholding
Taxes (as defined herein) and United States Transportation Taxes (as defined
herein) which are imposed on such Indemnitee after the date hereof as a result
of a Tax Law Change (as defined herein). All payments required to be made by
Lessee under this Lease or any other Operative Document to any Indemnitee shall
be made free and clear of, and without deduction for or on account of, any such
United States Withholding Taxes or United States Transportation Taxes. If any
such United States Withholding Taxes or United States Transportation Taxes are
required to be withheld or deducted from any such payments, Lessee shall (i)
within the period for payment permitted by applicable law pay to the
appropriate Governmental Entity or taxing authority the full amount of such
United States Withholding Taxes or United States Transportation Taxes (and any
such additional United States Withholding Taxes or United States Transportation
Taxes in respect of the payment required under clause (ii) hereof) and make
such reports and filings in connection therewith in the manner required by
applicable Law, and (ii) pay to the relevant Indemnitee an additional amount
which (after deduction of all Taxes of any nature incurred by reason of the
payment or receipt of such additional amount) will be sufficient to yield to
the relevant Indemnitee the full amount which would have been received by it
had no deduction or withholding been made. Lessor will, and will cause each
Indemnitee to, provide Lessee with such forms or certificates as may from time
to
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time be requested by Lessee (and required by applicable law) in order to
establish an exemption from (or reduced rate of) any such United States
Withholding Taxes or United States Transportation Taxes. As used herein, (x)
the term "TAX LAW CHANGE" means any change after the date hereof in the Code or
any treaty or other international agreement to which the United States is a
party, any proposed, final or temporary regulations thereunder, or the judicial
or official administrative interpretation of any of the foregoing; (y) the term
"UNITED STATES TRANSPORTATION TAXES" means the Taxes described in Section 887
of the Code or any successor to such Section; and (z) the term "UNITED STATES
WITHHOLDING TAXES" means Taxes imposed by the United States and which are
collected by withholding at source, or deduction from, any payments by Lessee
hereunder. Notwithstanding the foregoing, Lessee shall have no responsibility
for, and shall be entitled to withhold and deduct from payments hereunder or
any other Operative Documents, any such United States Withholding Taxes or
United States Transportation Taxes:
(A) which are imposed by reason of a voluntary transfer or
other disposition by the relevant Indemnitee of the Aircraft or this
Lease or any interest in either thereof (but not including any transfer
or disposition which occurs pursuant to the exercise of remedies arising
out of an Event of Default) or which exceed the amount of such United
States Withholding Taxes or United States Transportation Taxes which
would have been imposed had there not been such a transfer or
disposition;
(B) which are imposed on an Indemnitee by reason of a failure
by such Indemnitee to comply with its obligations set forth in the second
preceding sentence of this Section 10(a) or as a direct result of the
breach by such Indemnitee of this Lease or the gross negligence or
willful misconduct of such Indemnitee;
(C) which are imposed solely as a direct result of events or
circumstances occurring or arising after return of the Aircraft to Lessor
in accordance with this Lease and the performance by Lessee of all of its
obligations hereunder; or
(D) which the relevant Indemnitee is entitled to utilize as a
credit against or in reduction of its liability, if any, for Taxes
imposed by the United States for which Lessee is not responsible under
Section 10(b) hereof.
(b) GENERAL TAX INDEMNITY. In addition, and whether or not
any of the transactions contemplated by any of the Operative Documents
are consummated, except as set
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forth in Section 10(c), Lessee agrees for the express benefit of each
Indemnitee to pay promptly when due, and to indemnify and hold harmless such
Indemnitee from, all Taxes (whether imposed upon such Indemnitee, the Aircraft,
the Airframe, the Engines, this Lease or any other Operative Document or
otherwise), by any Governmental Entity or taxing authority in the United States
of America or any other country or any taxing authority or political
subdivision thereof or therein or by any international taxing authority, upon
or with respect to, based upon or measured by any of the following:
(i) (x) the Aircraft, the Airframe, any Engine or any Part thereof, or
interest therein, this Lease or any of the other Operative Documents, (y) the
importation, exportation, condition, manufacture, purchase (under the
Operative Documents or otherwise), ownership, delivery, redelivery,
nondelivery, acceptance, rejection, assignment, possession, repossession,
return, use, performance, operation, control, settlement of any insurance or
other claim, sale, mortgaging, pledging, financing, leasing, subleasing, liens,
rental, retirement, abandonment, registration, preparation, installation,
modification, repair, testing, maintenance, replacement, transportation,
storage, location, condition, registration, reregistration, deregistration,
sale, transfer of title or other application or disposition of the Aircraft,
the Airframe, any Engine or any Part thereof or (z) the rentals, receipts or
earnings arising therefrom (including without limitation the Rent) and any
other amounts paid or payable with respect thereto or under any Operative
Document, or
(ii) the Lease or the other Operative Documents, or
(iii) otherwise with respect to or in connection with the transactions
contemplated by the Lease and the other Operative Documents.
(c) EXCEPTIONS TO INDEMNITY. The indemnity provided for in
Section 10(b) does not extend to any of the following Taxes:
(i) Taxes imposed on any Indemnitee in any jurisdiction in which such
Indemnitee is subject to such Taxes solely as a result of transactions or
activities unrelated to the transactions or activities contemplated by the
Operative Documents;
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(ii) Taxes imposed on an Indemnitee as a result of a voluntary
transfer or other disposition of the Aircraft or this Lease or any interest in
either thereof by the Lessor or such Indemnitee unless such transfer or
disposition occurs pursuant to the exercise of remedies arising out of an Event
of Default (provided that Lessor and such Indemnitee shall in such event
consider in good faith any reasonable request by Lessee concerning an
appropriate jurisdiction in which such sale, transfer or disposition shall be
made);
(iii) Taxes attributable solely to events or circumstances occurring
or arising after return of the Aircraft to Lessor in accordance with this Lease
and the performance by Lessee of all of its obligations hereunder;
(iv) Taxes on an Indemnitee resulting solely as a direct result of the
breach of this Lease, gross negligence or willful misconduct of such
Indemnitee;
(v) Taxes which (A) are United States federal income Taxes (other than
United States Withholding Taxes or United States Transportation Taxes) or any
value added, consumption or similar Taxes which are imposed in lieu of or in
replacement of United States federal income Taxes to which the relevant
Indemnitee was theretofore subject or (B) are Taxes on, based on, or measured
by the net income of an Indemnitee and are imposed by any Governmental Entity
(other than the United States) or taxing authority thereof (or any Taxes which
are expressly imposed by such Governmental Entity or taxing authority in lieu
of Taxes on, based on, or measured by net income) except to the extent that
such Taxes are imposed by reason of the use or operation of the Aircraft, the
presence of Lessee or the making of payments by Lessee from, such jurisdiction;
PROVIDED, HOWEVER, that this exclusion shall not apply to Taxes which are, or
are in the nature of, sales, use, excise and similar Taxes;
(vi) Taxes (other than Taxes described in Section 10(c)(v)) which are
imposed in any taxing jurisdiction except to the extent that (A) such Taxes are
imposed solely by reason of the use or operation of the Aircraft, the presence
of Lessee or the making of payments by Lessee from, such jurisdiction ("Use
Jurisdiction Taxes") and (B) such Use Jurisdiction Taxes exceed in the
aggregate the amount of Taxes which would have been payable in such
jurisdiction in the absence therein of the use or operation of the Aircraft,
the presence of Lessee or the making of payments by Lessee from, such
jurisdiction;
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(vii) Taxes arising out of, with respect to, based on or measured by
the granting by any Indemnitee of a security interest in the Aircraft or any
portion thereof or the value or principal amount of any debt created by any
Indemnitee; or
(viii) Taxes for which the relevant Indemnitee has expressly assumed
responsibility under this Lease or any other Operative Document.
(d) AFTER TAX BASIS. The amount which Lessee is required to
pay or indemnify against with respect to any amounts required to be paid or
indemnified against under this Section 10 or Section 13 shall include an
additional amount necessary to hold the recipient of the payment or indemnity
harmless on an after-tax basis from all Taxes (whether or not such taxes are
excluded under Section 10(a) or 10(c)), required to be paid by such recipient
with respect to such payment or indemnity, so as to restore the recipient on an
after-tax basis to the same position such recipient would have been in had such
amounts not been incurred or payable, after giving credit to Lessee for any
savings by such recipient in respect to any such Taxes by reason of deductions,
credits, allocations, or allowances in respect of the payment or accrual of the
amount indemnified against, including, without limitation, amounts described in
Section 10(a), Section 10(b) and/or this Section 10(d). All determinations as
to the amount and timing of realization of such tax savings shall be made by
the relevant Indemnitee in its sole good faith discretion, it being understood
that (i) Lessee shall have no right to examine or inspect any tax returns or
reports of such Indemnitee or any documents or records relating thereto, and
that (ii) a failure by the relevant Indemnitee to comply with its obligations
under this Section 10(d) shall not excuse Lessee from the performance of its
obligations under this Section 10 or Section 13.
(e) TIMING OF PAYMENT. Any amount due and payable to the
relevant Indemnitee pursuant to this Section 10 will be paid within 10 days
after receipt of a written demand therefor from such Indemnitee accompanied by
a written statement describing in reasonable detail the basis for such
indemnity and the computation of the amount so payable; PROVIDED, HOWEVER, that
such amount need not be paid by Lessee prior to the later of (i) five days
prior to the date the applicable Tax is payable to the appropriate Governmental
Entity or taxing authority or (ii) in the case of amounts which are being
contested by Lessee in good faith or by Lessor pursuant to Section 10(f), the
date such contest is finally resolved. If requested in writing by Lessee, and
at Lessee's sole cost and expense, any calculations by an Indemnitee of any
amount due and payable
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hereunder shall be subject to review and verification by a firm of independent
certified public accounts of internationally recognized stature selected by
such Indemnitee and reasonably acceptable to Lessee (such approval not to be
unreasonably withheld or delayed). Such Indemnitee shall make available to such
accounting firm such information as shall be necessary for purposes of such
review and verification (but such information shall be held by such accounting
firm in strictest confidence and shall not in any event be disclosed or made
available to Lessee). If the result of such review is that Lessee was liable
for a smaller amount, the excess payment shall be returned by such Indemnitee
forthwith.
(f) TAX CONTESTS. (i) If written claim is made against an
Indemnitee for, or any Indemnitee acquires actual knowledge of a claim relating
to, Taxes with respect to which Lessee is or may be liable for a payment or
indemnity hereunder, such Indemnitee will, and Lessor shall cause such
Indemnitee to, promptly give Lessee notice in writing of such claim or Tax;
PROVIDED, HOWEVER, that such Indemnitee's failure to give notice will not
relieve Lessee of its obligations hereunder, except as to Taxes and expenses
which would have been avoidable in the absence of, and penalties resulting
from, such Indemnitee's failure to give such notice. So long as (i) a contest
of such Taxes does not involve any danger of the sale, forfeiture or loss of
the Aircraft or any interest therein, (ii) Lessee has provided Lessor with an
opinion of independent tax counsel acceptable to such Indemnitee that a
meritorious basis exists for contesting such claim and (iii) Lessee has made
adequate reserves for such Taxes or, if required by the relevant Indemnitee, an
adequate bond has been posted by Lessee, then the Indemnitee at Lessee's
written request will in good faith, with due diligence and at Lessee's sole
cost and expense, contest (or, upon Lessee's written request, permit Lessee to
contest in the name of the Indemnitee) the validity, applicability or amount of
such Taxes. If such contest is to be initiated by the payment of, and the
claiming of a refund for, any Taxes, Lessee shall advance to the relevant
Indemnitee sufficient funds (on an interest-free basis) to make such payments
and shall have agreed to indemnify such Indemnitee for any tax consequences
resulting from such advance of funds. Although the relevant Indemnitee may
consult in good faith with Lessee concerning the conduct of any contest, such
Indemnitee shall control the conduct of all proceedings relating to any such
contest which is brought by or on behalf of such Indemnitee. Any contest
initiated hereunder may be settled or discontinued by the relevant Indemnitee
at any time provided that such Indemnitee shall have waived any right to
indemnification for the Taxes being contested. Notwithstanding the foregoing,
if (x) a claim relates solely to Taxes for which
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the Lessee has acknowledged in writing that it is liable under this Section 10,
(y) such claim can be severed and contested separately from all other claims
asserted against the relevant Indemnitee by the same taxing authority, and (z)
Lessee has made adequate reserves for the Taxes claimed or, if requested by
such Indemnitee, has posted an adequate bond for the payment of such Taxes,
then Lessee may, at its sole cost and expense, assume control of the contest of
such claim, provided that Lessee shall keep such Indemnitee fully informed as
to the conduct of all proceedings relating to such contest.
(g) REFUNDS. Upon receipt by the relevant Indemnitee of a
refund of all or any part of any Taxes (including without limitation any
deductions or withholdings referred to in Section 10(a)) which Lessee has paid,
such Indemnitee will, and Lessor will cause such Indemnitee to, pay to Lessee
the net amount of such taxes refunded, together with any interest (and, to the
extent previously paid by Lessee, any attorneys' fees or other costs awarded as
a result of a contest pursuant to Section 10(f)) received by such Indemnitee
with respect thereto; PROVIDED, HOWEVER, that no amount shall be payable to the
Lessee under this Section 10(g) if a Default or an Event of Default shall have
occurred and be continuing or prior to the time that Lessee shall have paid to
the relevant Indemnitee all amounts then due and owing to such Indemnitee under
this Section 10.
(h) COOPERATION IN FILING TAX RETURNS. In case any report or
return is required with respect to any Taxes which are subject to
indemnification by Lessee under this Section 10, Lessee will either make such
report or return in such manner as will show the respective interests of Lessor
and/or each relevant Indemnitee in the Aircraft, and send a copy of such report
or return to Lessor and such Indemnitee or will notify the Lessor or such
Indemnitee of such requirement, prepare such report or return in such manner as
shall be reasonably satisfactory to the Lessor or such Indemnitee, and present
such report or return to Lessor or such Indemnitee for execution and proper
filing. If actual notice is given by any taxing authority to an Indemnitee that
a report or return is required to be filed with respect to any such Taxes
referred to in this Section 10, the Indemnitee shall, and Lessor shall cause
the Indemnitee to, promptly notify Lessee of such required report or return.
Each Indemnitee agrees, and Lessor shall cause each Indemnitee, to respond to
any reasonable request of Lessee for information within the control of such
Indemnitee with respect to the filing of any such report or return, but Lessee
agrees to pay any reasonable costs, fees or other charges of independent
counsel or independent accountants incurred in connection with such response or
request. Lessee will cooperate with each Indemnitee in providing
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information which may reasonably be required to fulfill such Indemnitee's tax
filing requirements and any audit information request arising from such filing.
Each Indemnitee shall, and Lessor shall cause each Indemnitee to, cooperate
with Lessee in providing information which may reasonably be required to
fulfill Lessee's tax filing requirements and any audit information request
arising from such filing.
(i) 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 promptly
notify the Lessee that it has realized and recognized such savings and shall
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; PROVIDED, HOWEVER, that no amount shall be payable to the Lessee
under this Section 10(i) if a Default or an Event of Default shall have
occurred and be continuing or prior to the time that Lessee shall have paid to
the relevant Indemnitee all amounts then due and owing to such Indemnitee under
this Section 10 and that a subsequent disallowance of any such tax savings
shall be subject to indemnity hereunder without regard to any exclusions set
forth in this Section 10. All determinations as to the amount and timing of
realization of such tax savings shall be made by the relevant Indemnitee in its
sole good faith discretion, it being understood that (i) Lessee shall have no
right to examine or inspect any tax returns or reports of such Indemnitee
or any documents or records relating thereto, and that (ii) a failure by the
relevant Indemnitee to comply with its obligations under this Section 10(i)
shall not excuse Lessee from the performance of its obligations under this
Section 10.
(j) REVERSE INDEMNITY. If Lessee shall be required to pay any
amount attributable to Taxes of any Indemnitee for which Lessee is not
responsible under this Section 10, such Indemnitee shall reimburse Lessee for
the amount of any such excess payment within 5 days after demand therefor.
Section 11. CASUALTY OCCURRENCES.
(a) CASUALTY OCCURRENCE WITH RESPECT TO THE AIRFRAME.
Promptly (and in any event within seven (7) days) after a Casualty Occurrence
with respect to the Airframe and any Engine then installed thereon, Lessee
shall give Lessor and each Beneficiary written notice of such occurrence. On
the thirtieth (30th) day (or earlier if the insurance or
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other proceeds have been paid earlier) after the date of the Casualty
Occurrence, Lessee shall pay to Lessor in immediately available funds the
sum of (A) the Casualty Value of the Aircraft less an amount equal to the
daily equivalent of Basic Rent (computed on the basis of a 365-day year)
for each day during the period commencing the day after the payment of
Casualty Value and extending to the day before the Basic Rent Payment Date
immediately succeeding the date of payment of such Casualty Value and (B)
all other Rent, other than amounts paid pursuant to clause (A), then due
and payable. Upon such payment (i) the obligation of Lessee to make further
payments of Basic Rent hereunder shall terminate, (ii) the Term shall
terminate with respect to the Aircraft and (iii) Lessor will transfer to
Lessee or applicable insurer, free and clear of Lessor's Liens and all other
Liens arising by or through Lessor, any Beneficiary or any Lender but
otherwise without recourse or warranty, all of Lessor's right, title and
interest, if any, in and to the Airframe and Engines (if any) suffering the
Casualty Occurrence, as well as all of Lessor's right, title and interest in
and to any Engine constituting part of the Aircraft but not installed
thereon at the time of the Casualty Occurrence; provided, however, that
there shall be excluded from such transfer any and all claims against any
Persons which arose prior to the date of such transfer, including without
limitation any and all claims against any Persons who may have been
responsible, in whole or in part, for the events giving rise to such
Casualty Occurrence.
(b) CASUALTY OCCURRENCE WITH RESPECT TO AN ENGINE. Upon a
Casualty Occurrence with respect to an Engine only, Lessee shall give Lessor
and each Beneficiary prompt written notice thereof and shall, within forty-five
(45) days after such occurrence, convey to Lessor, as replacement for the
Engine suffering a Casualty Occurrence, title to a Replacement Engine;
PROVIDED, HOWEVER, that such 45-day period shall be extended to 180 days after
the occurrence of such Casualty Occurrence if Lessee shall, prior to the end of
such 45-day period, have delivered to Lessor or the Beneficiaries all proceeds
of the insurance payable with respect to such damaged Engine and the amount of
such proceeds is at least equal to the replacement value thereof (as determined
reasonably and in good faith by the Beneficiaries). Each Replacement Engine
shall be (i) free of all Liens, (ii) in as good an operating condition as the
Engine being replaced, assuming the Engine being replaced was in the condition
and repair required by the terms hereof immediately prior to the Casualty
Occurrence, and (iii) in a condition (including as to the status of all logs,
records and technical documents) acceptable to the Beneficiaries in their sole
discretion, as evidenced by their written acknowledgement thereof. Prior to or
at the time of any such conveyance, Lessee, at its own expense, will promptly
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(i) furnish Lessor with a full warranty bill of sale, in form and substance
reasonably satisfactory to Lessor and each Beneficiary, with respect to such
Replacement Engine; (ii) cause a supplement hereto, in form and substance
reasonably satisfactory to Lessor and each Beneficiary, subjecting such
Replacement Engine to this Lease, to be duly executed by Lessee, and recorded
pursuant to applicable Law; (iii) furnish Lessor and each Beneficiary with such
evidence of title to such Replacement Engine and of compliance with the
insurance provisions of Section 12 hereof with respect to such Replacement
Engine as Lessor or such Beneficiary may reasonably request; (iv) if reasonably
requested by Lessor or any Beneficiary, furnish Lessor with an opinion of
Lessee's counsel to the effect that title to such Replacement Engine has been
duly conveyed to Lessor and each Beneficiary, and that such Replacement Engine
is duly leased hereunder; (vi) furnish a certificate signed by a duly
authorized financial officer or executive of Lessee certifying that, upon
consummation of such replacement, no Default will exist hereunder; (vii)
furnish Lessor and each Beneficiary with such documents (including but not
limited to all technical documents) as Lessor or such Beneficiary may
reasonably request in connection with the consummation of the transactions
contemplated by this Section 11(b), in each case in form and substance
satisfactory to Lessor and such Beneficiary; and (viii) furnish such financing
statement covering the Replacement Engine as may be requested by Lessor or any
Beneficiary. Upon full compliance by Lessee with the terms of this Section
11(b), Lessor will transfer to Lessee all of Lessor's right, title and interest
in the Engine which suffered the Casualty Occurrence free and clear of Lessor's
Liens and all other Liens arising by or through Lessor, any Beneficiary or any
Lender. For all purposes hereof, each such Replacement Engine shall be deemed
part of the property leased hereunder, shall be deemed an "Engine" as defined
herein and shall be deemed part of the Aircraft. No Casualty Occurrence covered
by this Section 11(b) shall result in any reduction in Rent.
(c) APPLICATION OF PROCEEDS AND PAYMENTS. Any payments
received at any time by Lessor or by Lessee from any insurer under any policy
of insurance (other than liability insurance) shall be applied in the manner
specified in Section 12(d), 12(e) or 12(f) hereof as applicable. Subject to
Section 11(f) hereof, any payments received at any time by Lessor or Lessee
from any Governmental Entity or other Person with respect to a Casualty
Occurrence will be applied as follows:
(i) unless clause (ii) below is applicable, so much of such
payments as shall not exceed the Casualty Value required to be paid by
Lessee
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pursuant to Section 11(a) of this Lease shall be paid to Lessor in
reduction of Lessee's obligation to pay such Casualty Value if not
already paid by Lessee or, if already paid by Lessee (unless a Default
shall have occurred and be continuing), shall be applied by Lessor to
reimburse Lessee for its payment of such Casualty Value and the balance
of such payment, if any, remaining thereafter (if such payment is
received with respect to insurance other than liability insurance)
(unless a Default shall have occurred and be continuing) shall be paid
over to, or retained by, Lessee, except to the extent any such amount
is specifically allocable to an interest of Lessor; or
(ii) if such payments are received as a result of a Casualty
Occurrence with respect to an Engine which is being replaced pursuant
to Section 11(b), unless a Default shall have occurred and be
continuing (and except as otherwise contemplated by Section 11(b) if
the 45-day period specified for the replacement thereof is to be
extended to 180 days, as therein provided), all such payments shall be
paid over to, or retained by, Lessee if Lessee shall have fully
performed or, concurrently therewith has fully performed, the terms of
Section 11(b) and of Section 15 hereof with respect to the Casualty
Occurrence for which such payments are made.
(d) REQUISITION FOR USE BY GOVERNMENT WITH RESPECT TO THE
AIRCRAFT. In the event of the requisition for use by a Governmental Entity of
the Airframe or any Engine (other than a requisition constituting a Casualty
Occurrence), all Lessee's obligations under this Lease with respect to the
Airframe or Engine shall continue to the same extent as if such requisition had
not occurred. All payments received by Lessor or Lessee from the Governmental
Entity for the use of the Airframe or Engine during the Term therefor shall be
paid over to, or retained by, Lessee if no Default shall have occurred and be
continuing; and all payments received by Lessor or Lessee from the Governmental
Entity for the use of such item after the Term therefor shall be paid over to,
or retained by, Lessor.
(e) OTHER DISPOSITIONS. Any amounts not payable to or
retainable by Lessee pursuant to this Section 11 or Section 12 hereof because a
Default shall have occurred and be continuing shall be held by Lessor and shall
be paid over to Lessee when such Default shall cease to be continuing, except
that if Lessor shall have theretofore declared this Lease to be in default
pursuant to Section 18 hereof, such amounts shall be retained by Lessor and
disposed of in
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accordance with the provisions thereof, with any balance remaining to be paid
to Lessee.
(f) APPLICATION IN DEFAULT. Any amount referred to in clause
(i) or (ii) of Section 11(c) which is otherwise payable to Lessee shall not be
paid to Lessee, or, if it has been previously paid to Lessee, and not yet
applied by Lessee as permitted or required hereunder shall be delivered from
Lessee to Lessor if at the time of such payment a Default shall have occurred
and be continuing. In such case, all such amounts shall be paid to and held by
Lessor as security for the obligations of Lessee or, at the option of Lessor,
applied by Lessor toward payment of any of Lessee's obligations at the time due
hereunder, as Lessor may elect. At such time as there shall not be continuing
any such Default, all such amounts at the time held by Lessor in excess of the
amount, if any, which Lessor has elected for application as provided above
shall be paid to Lessee.
Section 12. INSURANCE.
(a) PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE. Lessee
will carry and maintain in effect, at its own expense, with Approved Insurers,
comprehensive public liability insurance (including, without limitation,
contractual liability and passenger legal liability) and property damage
insurance with respect to the Aircraft of the type usual and customary by
commercial scheduled airline standards for airline carriers operating similar
aircraft and providing for no less coverage than is carried by Lessee on
similar aircraft in its fleet. Such insurance shall be in an amount not less
than the amount applicable to similar passenger aircraft and engines which
comprise Lessee's fleet, and in any event not less than the amount under
"Public Liability and Property Damage Insurance" as set forth on Exhibit C-2
hereto Lessee shall not discriminate against the Aircraft in providing such
insurance.
(b) INSURANCE AGAINST LOSS OR DAMAGE. Lessee, at its own
expense, will maintain in effect with Approved Insurers "all-risk" ground and
flight aircraft hull insurance (which shall include, but not be limited to,
comprehensive war risk and allied perils, hijacking, a disappearance clause and
coverage against strikes, riots, commotions or labor disturbances, malicious
acts or acts of sabotage and unlawful seizure (including confiscation, arrest,
nationalization, seizure, restraint, detention, appropriation, requisition or
destruction thereat, by or under authority of any Governmental Entity), or
wrongful exercise of control of the Aircraft in flight by a person on board the
Aircraft acting without the consent of Lessee) covering the Aircraft and "all
risk" coverage insurance with
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respect to Engines and Parts while not installed on the Aircraft or an
aircraft, which in each case is at least as broad as coverage maintained by
passenger airlines similarly situated to Lessee and operating similar aircraft
and engines which comprise Lessee's fleet (it being understood that the
obligations hereby imposed upon Lessee by reference to coverage maintained by
other airlines is not intended to result in an increase in the definition of
Casualty Value). Such insurance shall be for an amount not less than the
Casualty Value for the Aircraft and, where "all-risk" hull and war risk are
insured separately, shall, in relation to the applicable policies, incorporate
a 50/50 clause based on AVS 103, between the underwriters. Such insurance may
include provisions for deductibles in an amount usual and customary by
commercial scheduled airline standards for airline carriers operating similar
aircraft provided that (i) the amount of such deductibles must be no greater
than the lowest deductible amount applying to any B737-25A aircraft in Lessee's
fleet and (ii) in no event shall the amount of such deductibles exceed the
amount under "Deductible Amount" set forth on Exhibit C-2 hereto.
(c) REQUIRED POLICY DESIGNATIONS AND PROVISIONS. Each and any
policy of insurance obtained and maintained pursuant to this Section, and each
and any policy obtained in substitution or replacement for any such policies,
shall: (i) designate Lessor as owner of the Aircraft covered thereby, and shall
designate Lessor (in its individual capacity and as Owner Trustee), each
Beneficiary and their assigns as additional insureds (and, with respect to each
policy of insurance obtained and maintained pursuant to Section 12(b) hereof,
Beneficiaries as loss payee), as their interests may appear warranted each as
to itself no operational interest (but without imposing upon Lessor, any
Beneficiary or their assigns, any obligation to pay any premiums for any such
policies); (ii) expressly provide that, in respect of the interests of Lessor,
each Beneficiary and their assigns, in such policies, the insurance shall not
be invalidated by any action or omission of Lessee, and shall insure Lessor,
such Beneficiary and their assigns, regardless of any breach or violation of
any warranty, declaration or condition contained in such policies by Lessee;
(iii) provide that if such insurance is canceled by the Approved Insurers for
any reason whatsoever, or is adversely changed in any way with respect to the
interests of Lessor, any Beneficiary or their assigns, or if such insurance is
allowed to lapse for nonpayment of premium, such cancellation, adverse change
or lapse shall not be effective as to Lessor, such Beneficiary and their
assigns, for thirty (30) days (seven (7) days or such lesser period as may be
applicable in the case of any war risks or allied perils coverage) after
receipt by Lessor and such Beneficiary of written notice by such insurer or
insurers to
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Lessor and such Beneficiary of such prospective cancellation, change or lapse,
(iv) include coverage for the territorial limits of any country in which the
Aircraft may at any time be located; (v) provide that, as against Lessor, each
Beneficiary and their assigns, the insurer waives any rights of set-off,
counterclaim or any other deduction, whether by attachment or otherwise, and
waives any rights it may have to be subrogated to any right of any insured
against Lessor, such Beneficiary or their assigns, with respect to the Aircraft
to the same extent that Lessee has waived its rights of subrogation by the
terms of its agreements to indemnify any such party pursuant to this Lease; and
(vi) provide that (a) unless Lessor or any Beneficiary shall provide written
notice to the Approved Insurers that an Event of Default shall have occurred
and be continuing, any payment in respect of any damage or loss not in excess
of $500,000 shall be payable directly to the Lessee or its order; PROVIDED,
that Lessor and each Beneficiary shall be given prompt written notice of any
payment in respect of any damage or loss to the Aircraft in excess of $150,000
and (b) any payment in respect of any damage or loss in excess of $500,000 (or
all proceeds whether or not in excess of $500,000 if an Event of Default shall
have occurred and be continuing), shall be payable directly to the
Beneficiaries or their assignees as loss payees, for the account of all
interests. Each such liability policy shall be primary without right of
contribution from any other insurance which may be carried by Lessor, any
Beneficiary or their assigns, and shall expressly provide that all of the
provisions thereof shall operate in the same manner as if there were a separate
policy covering each insured, provided that such provisions shall not operate
to increase the insurer's limit of liability.
Lessee shall have the right to carry insurance in reasonable
excess of the amounts required hereunder and the proceeds of such excess
insurance shall be payable to Lessee; PROVIDED that any such excess insurance
shall not prejudice the insurance required to be maintained by Lessee hereunder
and Lessee shall, upon request of a Beneficiary, notify the Beneficiaries of
the nature and amount of such excess insurance. Similarly, Lessor and each
Beneficiary shall have the right to carry additional and separate insurance for
its own benefit at its own expense, without, however, thereby limiting Lessee's
obligations under this Section 12.
(d) APPLICATION OF INSURANCE PROCEEDS FOR A CASUALTY
OCCURRENCE. It is agreed that insurance payments which arise from any policy of
insurance carried by Lessee and received as the result of the occurrence of a
Casualty Occurrence shall be applied as follows:
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(i) if such payments are received with respect to a Casualty
Occurrence relating to the Airframe and Engines or engines installed on
the Airframe, so much of such payments as shall not exceed the amounts
due under Section 11(a) hereof shall be paid to Lessor for immediate
application toward sums owed by Lessee, and the balance to Lessee; and
(ii) if such payments are received with respect to a Casualty
Occurrence relating to an Engine under circumstances contemplated by
Section 11(b) hereof, such payment shall be paid over to Lessee,
provided that Lessee shall have fully performed or, concurrently
therewith, fully performs the terms of Section 11(b) hereof.
(e) APPLICATION OF INSURANCE PROCEEDS FOR OTHER THAN A
CASUALTY OCCURRENCE. As between Lessor and Lessee all insurance payments in
excess of $500,000 that are received by Lessor or the Beneficiaries under
policies required to be maintained by Lessee pursuant to Section 12(b) as a
result of any property damage or loss to the Airframe or any Engine not
constituting a Casualty Occurrence, or to any Part will be held by Lessor or
the Beneficiaries until Lessee furnishes Lessor with satisfactory evidence
that the repairs or replacement property Lessee is required to perform or
obtain in accordance with the terms of Section 9 of this Lease have been made
or obtained by Lessee or, to the extent necessary to enable Lessee to make
required progress payments in accordance with the workscope relating to the
repair of the Aircraft, Lessor or the Beneficiaries shall make such interim
progress payments upon receipt of copies of appropriate invoices or other
evidence of the completion of the related work or the purchasing of related
materials in accordance with the terms of such workscope or the related
repair contract. Upon receipt of such evidence of repair or replacement,
Lessor shall pay Lessee the amount of the insurance payment received with
respect to such loss less the amount of any progress payments made to Lessee
pursuant to this Section 12(e).
(f) APPLICATION IN DEFAULT. Any amount referred to in
Section 12(d)(i) or (ii) or Section 12(e) which is otherwise payable to
Lessee shall not be paid to Lessee, or, if it has been previously paid to
Lessee, shall be delivered by Lessee to Lessor, if at the time of such
payment, an Event of Default shall have occurred and be continuing. In either
case, all such amounts shall be held by Lessor as security for the
obligations of Lessee or, at the option of Lessor, applied by Lessor toward
payment of any of Lessee's obligations at the time due hereunder. At such
time as
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there shall not be continuing any such Event of Default, all such amounts at
the time held by Lessor in excess of the amount, if any, which Lessor has
elected for application as provided above shall be paid to Lessee.
(g) CERTIFICATES OF INSURANCE. On or before the Delivery
Date, and thereafter on each renewal by Lessee of the insurance required
hereby, but not less often than annually, Lessee will furnish to Lessor and
each Beneficiary a certificate executed and delivered by an Approved Insurance
Broker who is authorized by an Approved Insurer, appointed by Lessee,
describing in reasonable detail insurance carried on the Aircraft and
certifying that the insurance then maintained on the Aircraft complies with
Section 12 of this Lease. Lessee will cause such Approved Insurance Broker who
is authorized by an Approved Insurer to agree to advise Lessor and each
Beneficiary in writing at least thirty (30) days (seven (7) days or such lesser
period as may be applicable in the case of any war risk and allied perils
coverage) prior to the termination or cancellation by the underwriters for any
reason (including, without limitation, failure to pay the premium therefor) of
any such insurance. Lessee further agrees to cause such Approved Insurance
Broker (i) to advise Lessor and each Beneficiary in writing (x) as soon as such
Approved Insurance Broker has knowledge that any insurance coverage carried and
maintained on the Aircraft pursuant to this Section 12 will not be renewed or
available upon expiration of the then existing insurance and (y) not later than
seven (7) days prior to the expiration of the then existing insurance if Lessee
has not given notice renewal instructions to the Approved Insurance Broker, and
(ii) to deliver directly to Lessor and each Beneficiary the certificate of
insurance described above in this paragraph (g) upon such renewal.
(h) Any insurance described above shall be placed and
maintained throughout the Term in the London, Tokyo, United States, French or
German aviation insurance markets with Approved Insurers, and Lessee's
obligations under this Section 12 shall not be terminated or diminished in any
respect for any reason, including any subleasing of the Aircraft; PROVIDED,
HOWEVER, that if, in connection with any sublease of the Aircraft permitted
hereby, the Permitted Sublessee is required by law to place or maintain some or
any part of the insurance required hereby in an aviation insurance market other
than the London, Tokyo, United States, French or German aviation insurance
market, then Lessee shall cause such Permitted Sublessee to place and maintain
in the London, Tokyo or United States aviation insurance market re-insurance
policies fully covering such insurance, and any such re-insurance policy shall
contain a "cut through" clause in form, scope and substance reasonably
satisfactory to Lessor and each Beneficiary. In the event
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of any sublease of the Aircraft, Lessee shall cause to be delivered to Lessor
and to each Beneficiary at least five Business Days prior to the commencement
of such sublease, appropriate certificates of insurance and re-insurance
complying with the requirements of CLAUSE (g) above.
(i) Notwithstanding anything in this Section 12 to the
contrary, during the period of any CRAF activation contemplated in Section
11(d) of this Lease, Lessor will accept the indemnification by the full faith
and credit of the United States government in lieu of the insurance coverage
required by this Section 12; provided, however, that (i) such indemnification
by the United States government shall provide coverage against the same risks
and on the terms as the risks and terms required by Section 12, (ii) such
indemnification shall be in amounts that are not less than the insurance
coverage contemplated in this Section 12, and (iii) Lessee shall not subject
the Aircraft to the CRAF program without the Beneficiaries, prior written
consent.
Section 13. INDEMNIFICATION.
Subject only to the limitations described in the last
paragraph of this Section 13, Lessee agrees to indemnify, reimburse, hold
harmless, protect and defend each Indemnitee for, from and against any and all
claims, damages, losses, liabilities, demands, suits, judgments, causes of
action, legal proceedings, whether civil or criminal, penalties, fines and
other sanctions, and any reasonable attorney's fees and other reasonable costs
and expenses in connection herewith or therewith, including any of the
foregoing arising or imposed with or without Lessor's or Beneficiaries' fault
or negligence (whether passive or active) or under the doctrine of strict
liability (any and all of which are hereafter referred to as "Claims") which in
any way may result from, pertain to or arise in any manner out of, or are in
any manner related to (i) the Aircraft or any this Lease or Operative Documents
or any document executed in connection herewith, or the breach of any
representation, warranty or agreement made by Lessee hereunder or under any
other such document, or (ii) the condition, manufacture, re-delivery, lease,
acceptance, rejection, possession, return, disposition, storage, maintenance,
use or operation of the Aircraft either in the air or on the ground, or (iii)
any defect in the Aircraft (whether or not discovered or discoverable by Lessee
or Lessor or any Beneficiary) arising from the material or any articles used
therein or from the design, testing or use thereof or from any maintenance,
service, repair, overhaul or testing of the Aircraft, whether or not the
Aircraft is in the possession of Lessee, and regardless of where the Aircraft
may then be located, or (iv) any transaction,
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approval or document contemplated by this Lease, Operative Documents or given
or entered into in connection herewith; provided, however, that Lessee shall be
subrogated to all rights and remedies which Lessor may have against the
Manufacturer of the Aircraft and its subcontractors or any other party as to
any such Claims, but only to the extent that Lessee satisfies its
indemnification to the Indemnitees with respect to such Claims. Nothing herein
shall require Lessee to indemnify any Indemnitee in respect of any Claim to the
extent the facts or circumstances that form the basis for such Claim arose or
existed prior to the Delivery Date, unless such Claim or any losses, costs
(including attorneys, fees or expenses) or damages arise or are increased as a
result of a breach by Lessee of its agreements herein or otherwise relate to
such a breach (including the breach of any obligation to remedy a fact or
circumstance that arose or existed prior to the Delivery Date). In the event
Lessee is required to indemnify any Indemnitee hereunder, Lessee shall, upon
demand, pay to such Indemnitee an amount which, after deduction of all Taxes
and like charges required to be paid by such Indemnitee in respect of such
payment, is equal to the amount of the indemnification required; provided,
however, that Lessee shall not be required to pay or discharge any Claim
brought by a third party so long as the validity or the amount thereof shall be
diligently contested in good faith and on reasonable grounds by Lessee, at no
cost or expense to Lessor.
Subject to Lessee's rights under Section 20(f), Lessee hereby
waives, and releases each Indemnitee from, any Claims (whether existing now or
hereafter arising) for or on account of or arising or in any way connected with
injury to or death of personnel of Lessee or loss or damage to property of
Lessee or the loss of use of any property which may result from or arise in any
manner out of or in relation to the ownership, leasing, condition, use or
operation of the Aircraft, either in the air or on the ground, or which may be
caused by any defect in the Aircraft from the material or any article used
therein or from the design or testing thereof, or use thereof, or from any
maintenance, service, repair, overhaul or testing of the Aircraft regardless of
when such defect may be discovered, whether or not the Aircraft is at the time
in the possession of Lessee, and regardless of the location of the Aircraft at
any such time.
The indemnities contained in this Section 13 shall continue
in full force and effect notwithstanding the expiration or other termination of
this Lease and are expressly made for the benefit of and shall be enforceable
by each Indemnitee; PROVIDED, that, unless an Event of Default shall have
occurred and be continuing, Lessee shall not be obligated to pay any indemnity
pursuant to this
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Section 13 with respect to any amount to the extent that such amount arises out
of or is measured by acts, failures to act, events or periods of time (or any
combination of the foregoing) that occur after the Aircraft has been
redelivered to Lessor pursuant to and in accordance with Section 16 hereof
(under circumstances not involving a repossession pursuant to Section 18
hereof) and is no longer subject to this Lease and all obligations of the
Lessee under this Lease have been discharged (other than obligations which by
their express terms survive the expiration of the Term of this Lease) unless
any such act or event shall itself result from or be attributable to an act or
omission of Lessee which occurred prior to the redelivery of the Aircraft and
the discharge of Lessee's obligations under the Lease.
Notwithstanding the foregoing provisions of this Section 13,
Lessee shall not be obligated to make any payment by way of indemnity to any
Indemnitee in respect of any Claims to the extent such Claims result from the
willful misconduct or gross negligence of such Indemnitee or to the extent
relating solely to the breach or misrepresentation of Lessor or a Beneficiary
under an Operative Document.
Section 14. LIENS.
Lessee shall not directly or indirectly create, incur,
assume or suffer to exist any Lien on or with respect to the Aircraft or
Engines, title thereto or any interest therein, except (i) the respective
rights of Lessor and Lessee as herein provided; (ii) Lessor's Liens or any
other Lien arising by or through Lessor, a Beneficiary or a Lender with
respect to the Aircraft or Engines; (iii) Liens for Taxes either not yet due
or being contested in accordance with Section 10 hereof, so long as adequate
reserves are maintained with respect to such Liens and so long as the
Aircraft or such Engine is not in danger of being lost, sold, confiscated,
forfeited or seized as a result of any such Lien or contest; and (iv)
inchoate materialmen's, mechanics', workmen's, repairmen's, employees' or
other like Liens arising in the ordinary course of business, which either are
not due and owing or are being contested in good faith by Lessee so long as
the Aircraft or such Engine is not in danger of being lost, sold,
confiscated, forfeited or seized as a result of any such Lien or contest.
Lessee shall promptly, at its own expense, take such action as may be
necessary to duly discharge any Lien (except for the Liens referred to in
clauses (i), (ii), (iii) and (iv) of this Section 14) if the same shall arise
at any time with respect to the Aircraft or any Engine (including any Part).
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Section 15. PERFECTION OF TITLE AND FURTHER ASSURANCES.
If at any time, any filing or recording is reasonably
necessary to protect the interests of Lessor or the Beneficiaries, Lessee, upon
request by Lessor or any Beneficiary, shall cause this Lease and any and all
additional instruments which shall be executed pursuant to the terms hereof, to
be kept, filed and recorded and to be re-executed, re-filed and re-recorded in
the appropriate office or offices pursuant to applicable Laws, to perfect,
protect and preserve the rights and interests of Lessor hereunder and in the
Aircraft. At the reasonable request of Lessor or any Beneficiary, Lessee shall
furnish to Lessor and each Beneficiary an opinion of counsel or other evidence
satisfactory to Lessor of each such filing or re-filing and recordation or
re-recordation. All costs (including attorneys' fees and expenses) relating to
effecting and maintaining the registration of this Lease, including the Lease
Supplement, or any related document, shall be borne and paid by Lessee. All
costs (including attorneys' fees and expenses) relating to effecting and
maintaining the registration of the Aircraft with the FAA shall be borne and
paid by Lessor or the Beneficiaries, provided that Lessee shall cooperate with
Lessor and the Beneficiaries in connection therewith as provided above and bear
the cost of changing the registration number of the Aircraft.
Without limiting the foregoing, Lessee shall do or cause
to be done, at Lessee's cost and expense, any and all acts and things which
may be required under the terms of the Mortgage Convention to perfect and
preserve the title and interest of Lessor in the Aircraft within the
jurisdiction of any signatory which has ratified the Mortgage Convention if
such jurisdiction is in the territory in which Lessee intends to operate the
Aircraft, as Lessor or any Beneficiary may reasonably request. Lessee shall
also do or cause to be done, at its own expense, any and all acts and things
which may be required of an aircraft operator under the terms of any other
Law involving any jurisdiction in which Lessee intends to operate, or any and
all acts and things which Lessor or any Beneficiary may reasonably request,
to perfect and preserve Lessor's ownership rights regarding the Aircraft
within any such jurisdiction.
In addition, Lessee will promptly and duly execute and
deliver to Lessor such further documents and assurances and take such further
actions as it may from time to time reasonably request in order to more
effectively carry out the intent and purpose of this Lease and to establish
and protect the rights and remedies created or intended to be created in
favor of Lessor hereunder, including, without limitation, if reasonably
requested by Lessor at the expense
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of Lessee, the execution and delivery or supplements or amendments hereto in
recordable form, subjecting to this Lease any Replacement Engine and the
recording or filing of counterparts thereof, in accordance with the Laws of any
appropriate jurisdiction.
Section 16. RETURN OF AIRCRAFT AND RECORDS.
(a) RETURN.
(i) On the Return Occasion, Lessee will, unless Casualty
Occurrence has occurred, at its expense, redeliver the
Aircraft to Lessor at the Return Location in a condition
complying with the requirements of Exhibit E and this
Section 16:
(A) free and clear of all Liens (other than Lessor's Liens
or any Lien arising by or through Lessor, any Beneficiary
or any Lender);
(B) having the benefits of any indemnities and warranties
which have been assigned to and are held by Lessee
relating to the Aircraft assigned to Lessor;
(C) duly registered in the name of Lessor with the FAA;
(D) unless otherwise agreed by the Beneficiaries in a
condition so as to ensure the Aircraft has either a
current, valid and existing certification of
airworthiness for airline operation or (at the
Beneficiaries, election) an export certificate of
airworthiness, in either case, issued by the FAA; and
(E) if specified by the Beneficiaries, Lessee shall cooperate
with Lessor to ensure that the Aircraft is deregistered
from the FAA;
provided that Lessee complies with the foregoing and with all
of its obligations under this Lease, Lessor shall technically
accept redelivery of the Aircraft from Lessee at Lessee's
maintenance facilities in Honolulu, Hawaii before the
commencement of any storage period (it being understood that
if during the ferry flight to the Return Location any defect
or non-compliance which was purportedly corrected in connection
with the Final Inspection shall reoccur, Lessee shall be
responsible for rectifying such defect or non-compliance);
PROVIDED, HOWEVER, that if a C Check shall be performed in
connection with the Return
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Occasion, then such technical inspection and acceptance shall
occur at the location of the facility in the United States of
America or Canada approved by FAA for C Check of 737-200
aircraft at which such C Check is performed.
(ii) In the event that Lessee does not return the Aircraft to
Lessor on the specified date of expiration or earlier
termination of this Lease, for any cause (other than due
to the fault of Lessor, any Beneficiary or the Lender),
then the obligations of Lessee under this Lease shall
continue and such continued use shall not be considered a
renewal of the terms of this Lease or a waiver of any
right of Lessor hereunder and Lessor may terminate
Lessee's right as to the Aircraft on written notice to
Lessee and Lessee shall fully indemnify Lessor, the
Lender and each other Indemnitee on demand against all
losses, liabilities, actions, proceedings, costs and
expenses thereby suffered or incurred by Lessor, the
Lender or any other Indemnitee. During such continued
use, damages in an amount equal to Basic Rent (as
provided below) shall continue to be paid by Lessee to
Lessor, and the performance of other obligations of
Lessee to Lessor shall continue hereunder. Basic Rent
shall be pro-rated on a daily basis 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 promptly
upon presentation of Lessor's invoice and any failure to
pay shall constitute a default of Lessee.
(b) FINAL INSPECTION. At least 10 days prior to redelivery of the
Aircraft, Lessee will take the Aircraft out of service and make the Aircraft
and all Aircraft Documents available to Lessor and the Beneficiaries for
inspection at Lessee's facilities in Honolulu, Hawaii (or at the location of
the facility in the United States of America or Canada approved by FAA for
the C Check of 737-200 aircraft at which the C Check shall be performed, as
provided in Section 16(a)(i) above, if applicable) (the "Final Inspection")
in order to verify that the condition of the Aircraft complies with this
Lease, and Lessor's and the Beneficiaries, representatives shall use their
reasonable efforts to cause their representatives to commence such compliance
verification as promptly as practicable at or following the beginning of such
10-day period. Lessee agrees, at the Beneficiaries, request, to furnish due
evidence that all service, maintenance, repairs, overhauls and modifications
required under this Lease have been duly
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performed. Lessee shall make available to Lessor and the Beneficiaries at
Lessee's principal maintenance base, not less than fifteen (15) Business Days
prior to commencement of the Final Inspection, such documentation regarding the
condition, use, maintenance, operation and history of the Aircraft during the
Term, as requested by the Beneficiaries in order to enable Lessor and the
Beneficiaries to verify that the condition of the Aircraft complies with this
Lease. To the fullest extent possible, the Final Inspection shall be carried
out during the C Check referred to in paragraph 2(a) of Exhibit E. The Final
Inspection will consist of and be long enough to permit Lessor and the
Beneficiaries to:
(i) generally review, test (as observer) and inspect the
Aircraft to Lessor's and the Beneficiaries, satisfaction
(which will include the opening of any areas of the
Aircraft if Lessor or the Beneficiaries reasonably
believe, based on prior inspections or other evidence,
that the opening of such areas would reveal that the
Aircraft does not completely comply with the requirements
of Exhibit E and this Section 16), to satisfy Lessor and
the Beneficiaries that the Aircraft completely complies
with the requirements of Exhibit E and this Section 16;
(ii) inspect the Aircraft Documents;
(iii) inspect the un-installed Parts;
(iv) observe a two hour demonstration flight (with up to four
of Lessor's or the Beneficiaries' representatives as
on-board observers);
(v) inspect the Engines, including, without limitation (i) by
observing a performance test in accordance with limits set
forth in the engine section of the Aircraft Maintenance
Manual and (ii) by performing a full and complete
borescope inspection of (a) the low pressure and high
pressure compressors and (b) turbine area; and
(vi) inspect the APU, including, without limitation (i) an APU
condition run (as observer) and (ii) by a full and
complete borescope inspection.
The actions contemplated by the foregoing clauses (i) through (iv) shall be
performed at Lessee's expense; provided that, unless an Event of Default
shall have
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occurred or any inspection carried out under the foregoing clauses (i)
through (iv) reveals discrepancies which require a further inspection, Lessee
shall not be required to bear the travel and lodging expenses of Lessor's or
the Beneficiaries, representatives.
(c) NON-COMPLIANCE. To the extent that, at the time of Final
Inspection, the condition of the Aircraft does not comply with this Lease,
Lessee will at the Beneficiaries, option:
(i) immediately rectify the non-compliance and, to the
extent the non-compliance extends beyond the Return
Occasion, the Term will be automatically extended
(including the obligation to pay Rent as referred to
in Section 16(a)(ii)) and this Lease will remain in
force until the non-compliance has been rectified; or
(ii) redeliver the Aircraft to Lessor and pay to Lessor
such amount as is mutually agreed to put the Aircraft
into the condition required by this Lease. Lessor
shall make all reasonable efforts to minimize such
costs.
(d) REDELIVERY. If applicable, upon redelivery Lessee will
provide to Lessor and the Beneficiaries all documents (other than those as may
be required to be supplied by Lessor or the Beneficiaries) necessary to export
the Aircraft from the United States (including, without limitation, a valid and
subsisting export license, if applicable, for the Aircraft) and required in
relation to the deregistration of the Aircraft with the FAA.
In the event that Beneficiaries request Lessee to secure an
export license (a) such request must be made upon sufficient notice in order to
grant Lessee adequate time to procure such export license, (b) Lessor will
render such timely assistance as is reasonably necessary, and (c) this may be
requested in relation to the Return Occasion or subsequent to the Return
Occasion.
(e) ACKNOWLEDGEMENT. Upon return of the Aircraft in
accordance with the terms of this Lease, Lessor shall execute and deliver a
Redelivery Acknowledgement in the form of Exhibit I hereto to Lessee.
(f) MAINTENANCE PROGRAM.
(i) Prior to the Return Occasion (unless the Aircraft has
suffered a Casualty Occurrence) and upon Lessor's or a
Beneficiary's request,
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Lessee will provide Lessor or such Beneficiary or its
agent, in either case at Lessee's cost, reasonable
access to the Maintenance Program and the Aircraft
Documents in order to facilitate the Aircraft's
integration into any subsequent operator's fleet.
(ii) Lessee will, if requested by Lessor or a Beneficiary
to do so, upon return of the Aircraft deliver to
Lessor or the Beneficiaries a certified true, current
and complete copy of the Maintenance Program in
English. Lessor and the Beneficiaries agree that they
will not disclose the contents of the Maintenance
Program to any person or entity except to the extent
necessary to monitor Lessee's compliance with this
Lease and/or to bridge the maintenance program for the
Aircraft from the Maintenance Program to another
maintenance program after the Return occasion.
(g) FUEL. The amount of fuel in the Aircraft shall be no less
than the amount of fuel upon Delivery Date. If requested by Lessor, Lessee will
fuel the Aircraft in excess of the required amount by the preceding sentence at
the Return Location, and Lessor will pay for the fuel exceeding such
requirement on board the Aircraft on the Return Occasion at the direct cost
paid by Lessee (without mark-up).
(h) STORAGE. If the Final Inspection is carried out in
Honolulu, Hawaii and a Beneficiary requests in writing then Lessee shall, at
Lessee's cost and expense during the first sixty (60) days and thereafter
Lessor's cost and expense, provide Lessor with, or assist Lessor in procuring,
storage facilities for the Aircraft for up to one hundred twenty (120) days.
Such storage shall be at Lessee's maintenance base or if such maintenance base
will be eventually unable to perform the required maintenance, any other
location agreed between Lessor and Lessee which base or location is capable of
performing any required maintenance on the Aircraft. With respect to the
Aircraft while in storage, Lessee will maintain, or procure the maintenance
of, an amount of fuel in each tank as required in accordance with the storage
procedures at the storage location and as set forth herein. Lessee agrees,
during such storage period, to perform, or procure the performance of, such
maintenance required to maintain the airworthiness of the Aircraft (i) in
accordance with the storage procedures prescribed by the Manufacturer or
Lessee's Maintenance Program and (ii) in a condition required to be
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maintained at redelivery pursuant to the terms of Section 16(a). Risk of loss
or damage to the Aircraft shall pass to Lessor at the commencement of storage,
but Lessee will carry insurance, with Lessor and each Beneficiary named as an
additional insured, on the Aircraft during such storage period as though the
Aircraft were to remain in Lessee's fleet in accordance with the provisions of
Section 12, except that Lessee shall not be required to maintain "all risks"
flight insurance during such storage period but shall maintain insurance
policies that cover the Aircraft in storage and test flights of the Aircraft on
an hourly basis (as typically available and maintained under similar
circumstances involving the storage and maintenance of aircraft). All amounts
hereunder relating to storage, insurance and maintenance work for the first 60
days of such storage period shall be for the account of Lessee and thereafter,
shall be for the account of Lessor. Incremental costs incurred by Lessee after
the first 60 days of storage which would not have been incurred had such
storage period not exceeded 60 days shall be reimbursed by Lessor. Lessee
further agrees to perform, or procure the performance of, at Lessor's cost, any
other maintenance that Lessor may reasonably request. If, following the storage
of the Aircraft in Hawaii, the Beneficiaries ferry the Aircraft to a location
designated by the Beneficiaries in the Western Continental United States (the
"Designated Location"), Lessee will reimburse the Beneficiaries for the cost of
the ferry flight of the Aircraft from the storage location in Hawaii to such
Designated Location. If the Aircraft is ferried to a location other than in the
Western Continental United States, other than following a Default or an Event
of Default, then (i) the Beneficiaries will bear any additional ferry flight
costs and expenses incurred that are beyond the costs and expenses that would
have been incurred if the Aircraft were ferried to a location in the Western
Continental United States, and (ii) Lessee will bear the ferry flight costs and
expenses that are equivalent to the ferrying of the Aircraft to a location in
the Western Continental United States and shall pay such amount to Lessor or
the Beneficiaries upon demand by Lessor or the Beneficiaries therefor.
(i) MAINTENANCE FOR RE-REGISTRATION. Lessee, at Lessee's
cost, will, upon written notice from a Beneficiary not less than sixty (60)
days prior to a Return Occasion, carry out such extra maintenance, repair or
modification as may be required to enable the Aircraft to be in a condition
to ensure that the Aircraft will meet and comply with (i) the requirements of
any other country selected by the Beneficiaries and (ii) all civil aviation
regulations, orders, rules and airworthiness directives of such country to
permit the immediate re-registration and securing of a certificate of
airworthiness in such country for the
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Aircraft (provided such regulations, orders, rules and airworthiness directives
are no more restrictive than those of the FAA, and, so long as Lessee is
otherwise in compliance with this Section 16 and Exhibit E, the time required
to perform such extra maintenance shall not constitute an extension of the
Term). If the cost of such maintenance, repair or modification exceeds the cost
of the maintenance, repair or modification which Lessee would otherwise have
incurred to ensure the Aircraft shall be in condition to comply with the terms
of this Lease, Lessor shall promptly pay Lessee the difference between such
costs at actual cost (without mark-up) to Lessee.
(j) ASSISTANCE FOR FUTURE LEASING/SALE.
(i) Lessor or any Beneficiary may, from time to time
during the last year of the Term, wish to make the
Aircraft available for inspection to designated
representatives or technical teams evaluating the Aircraft
for use after the end of the Term. Lessor or any
Beneficiary agrees to give Lessee not less than five (5)
days, advance notice of such inspection and Lessee agrees
to co-operate fully with Lessor's or such Beneficiary's
requests in making the Aircraft and Aircraft Documents
available to such authorized technical team. Lessor agrees
to be responsible for its costs in connection with any
such inspection and that such request will be reasonable
and will be coordinated with Lessee so as not to
unreasonably interfere with the operation or maintenance
of the Aircraft or the conduct of Lessee's business
(unless an Event of Default shall have occurred and be
continuing); PROVIDED, HOWEVER, that, unless an Event of
Default shall have occurred and be continuing, no such
inspection shall result in the delay of a scheduled flight
of Lessee;
(ii) Subject to prior coordination between the
Beneficiaries and Lessee, Lessee agrees that, during the
last year of the Term and following redelivery of the
Aircraft to Lessor, Lessee shall at any Beneficiary's
reasonable request and Lessee's cost make available to
Lessor and the Beneficiaries for such reasonable period as
the Beneficiaries may reasonably require technical and
engineering personnel qualified to provide the
Beneficiaries and any subsequent lessee or purchaser of
the Aircraft with such information as will enable any
subsequent lessee or purchaser of the Aircraft to be able
to bridge the Aircraft onto the maintenance program of
such subsequent lessee or purchaser.
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Section 17. EVENTS OF DEFAULT.
Any one or more of the following occurrences or events shall
constitute an Event of Default:
(a) Lessee shall fail to make any payment of Rent to Lessor
when due under this Lease and such payment shall be overdue for a period of
five (5) Business Days;
(b) Lessee shall fail to obtain and maintain any insurance
required under the provisions of Section 12 hereof; or shall operate the
Aircraft outside of the scope of the insurance coverage maintained with respect
to the Aircraft;
(c) Any representation or warranty made by Lessee herein or
in any document or certificate furnished to Lessor in connection herewith or
therewith or pursuant hereto is incorrect at the time given in any material
respect and such failure shall continue unremedied for a period of three (3)
Business Days after notice thereof has been given to Lessee hereunder or Lessee
otherwise has notice thereof;
(d) Lessee shall fail to timely comply with the provisions of
Section 21 (Security Deposit) hereof;
(e) Lessee shall directly or indirectly create, incur, assume
or suffer to exist any Lien on or with respect to the Aircraft or Engines,
title thereto or any interest therein, except as expressly permitted by Section
14;
(f) Lessee shall at any time not be a Certified Air Carrier
holding all licenses, certificates, permits and franchises from the appropriate
agencies of the United States of America and all other governmental authorities
having jurisdiction over Lessee and its operations which are necessary to
authorize the Lessee to engage in air transport and to carry on its intra-state
passenger operations within Hawaii as presently conducted and in connection
with the operation of aircraft, including the Aircraft; or Lessee shall lose or
suffer a suspension of its United States air carrier license or certificate
under Part 121 of the FAA Regulations or certificate under Chapter 411 of
Subtitle VII, Part A of Title 49 of the United States Code, as amended;
(g) Lessee shall fail to perform or observe in any material
respect any other covenant, condition or agreement to be performed or observed
by it pursuant to this Lease and such failure shall continue for a period of
thirty (30) days after the earlier to occur of (1) Lessee's attaining or having
knowledge thereof and (2) written notice thereof is given to Lessee;
(h) Lessee consents to the appointment of a receiver,
trustee or liquidator of itself or of a
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substantial part of its property, or Lessee admits in writing its inability to
pay its debts generally as they come due or makes a general assignment for the
benefit of creditors, or Lessee files a voluntary petition in bankruptcy or a
voluntary petition seeking reorganization in a proceeding under any bankruptcy
laws (as now or hereafter in effect), or an answer admitting the material
allegations of a petition filed against Lessee in any such proceeding, or
Lessee by voluntary petition, answer or consent seeks relief under the
provisions of any bankruptcy or other similar law providing for the
reorganization or winding-up of corporations, or provides for an agreement,
composition, extension or adjustment with its creditors;
(i) An order, judgment or decree is entered by any court,
with or without the consent of Lessee, appointing a receiver, trustee or
liquidator for Lessee or of all or any substantial part of its property (save
for the purposes of an amalgamation, merger or reconstruction not involving
insolvency), or all or any substantial part of the property of Lessee is
sequestered, and any such order, judgment or decree of appointment or
sequestration remains in effect, undismissed, unstayed or unvacated for a
period of sixty (60) days after the date of entry thereof;
(j) A petition against Lessee in a proceeding under the
bankruptcy, insolvency or other similar Laws (as now or hereafter in effect) of
any Governmental Entity is filed and is not withdrawn or dismissed within sixty
(60) days thereafter, or if, under the provisions of any Law providing for
reorganization or winding-up of corporations which may apply to Lessee, any
court of competent jurisdiction assumes jurisdiction over, or custody or
control of, Lessee or of all or any substantial part of its property and such
jurisdiction, custody or control remains in effect, unrelinquished, unstayed or
unterminated for a period of sixty (60) days;
(k) (i) A final judgment for the payment of money not covered
by insurance in excess of $500,000, or (ii) final judgments for the payment of
money not covered by insurance in excess of $500,000 in the aggregate, shall be
rendered against Lessee and the same shall remain undischarged for a period of
ninety (90) days during which execution thereof shall not be effectively stayed
by agreement of the parties involved, stayed by court order or adequately
bonded;
(1) Attachments or other Liens shall be issued or entered
against substantially all of the property of Lessee and shall remain
undischarged or unbonded for forty-five (45) days except for security interests
created in connection with monies borrowed or obligations agreed to by Lessee
in the ordinary course of its business;
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(m) Lessee shall default in the payment of any obligation for
the payment of borrowed money, for the deferred purchase price of property or
for the payment of rent or hire under any lease of aircraft when the same
becomes due, in any such case if the outstanding amount thereof (or, in the
case of a lease, if the aggregate rentals during the term thereof) exceeds
$500,000; or Lessee shall default in the performance of any other term,
agreement or condition contained in any material agreement or instrument under
or by which any such obligation having any unpaid balance of at least
$1,000,000 is created, evidenced or secured, if the effect of such default is
to cause such obligation to become due prior to its stated maturity; or Lessee
shall default in the payment when due of any other amount owed to Lessor or
each Beneficiary;
(n) Lessee voluntarily suspends all or substantially all of
its operations 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 of any of the
foregoing the predominant business activity of Lessee shall cease to be that of
a commercial airline; or
(o) An "Event of Default" (as therein defined) shall have
occurred and be continuing under any Other Lease.
Section 18. REMEDIES.
Upon the occurrence of any Event of Default and any time
thereafter so long as the same shall be continuing, Lessor may, at its option
and without notice to Lessee, exercise one or more of the following remedies as
Lessor in its sole discretion shall elect, to the extent available and
permitted by, and subject to compliance with any mandatory requirements of,
applicable Law then in effect:
(a) Demand that Lessee, and Lessee shall upon the written
demand of Lessor and at Lessee's expense, immediately return the Aircraft to
Lessor at any location in Hawaii or in the continental United States as
specified by Lessor or the Beneficiaries and in the manner specified in such
notice and in the condition specified in Section 16, in which event such return
shall not be delayed for purposes of complying with the return conditions
specified in Section 16 hereof (none of which conditions shall be deemed to
affect Lessor's possession of the Aircraft) or delayed for any other reason.
Notwithstanding the foregoing, at Lessor's option Lessee shall be required
thereafter to take such actions as would be required by the provisions of this
Lease if the Aircraft were being returned at the end of the Term hereof. In
addition, Lessor, at its option and to the extent permitted by applicable Law,
may enter upon the premises where all or any part of the Aircraft is located
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and take immediate possession of and, at Lessor's sole option, remove the same
(and/or any engine which is not an Engine but which is installed on the
Airframe, subject to the rights of the owner, lessor or secured party thereof)
by summary proceedings or otherwise, all without liability accruing to Lessor
or any Beneficiary for or by reason of such entry or taking of possession
whether for the restoration of damage to property, or otherwise, caused by such
entry or taking, provided that all actions of Lessor in this respect are
reasonable in the circumstances and excepting damages caused by gross
negligence or willful misconduct.
(b) Sell at private or public sale, as Lessor may determine,
or hold, use, operate or lease to others the Aircraft as Lessor in its sole
discretion may determine, all free and clear of any rights of Lessee; PROVIDED,
HOWEVER, that nothing herein shall be construed as limiting any right of Lessor
or any Beneficiary to sell, lease, assign or otherwise dispose of all or any
part of the Aircraft under any circumstances (whether or not during the
existence or continuance of an Event of Default) during the Term, subject only
to Lessee's rights under SECTION 20(f).
(c) Whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) of this Section 18, Lessor, by thirty (30) days written notice to
Lessee specifying a payment date, may demand that Lessee pay to Lessor, and
Lessee shall pay to Lessor, on the payment date specified in such notice, as
liquidated damages for loss of bargain and not as a penalty (in lieu of the
Basic Rent due for the period commencing after the date specified for payment
in such notice), any unpaid Rent for the Aircraft (prorated in the case of
Basic Rent on a daily basis) to and including the payment date specified in
such Notice, plus the aggregate amount of all payments of Basic Rent for the
remainder of the Term, discounted periodically (equal to installment frequency)
to present worth at the interest rate of four percent (4%) per annum.
(d) In the event Lessor, pursuant to Section 18(b) above,
shall have sold the Aircraft, then Lessor, in lieu of exercising its rights
under Section 18(c) above, may, if it shall so elect, demand that Lessee pay
Lessor, and Lessee shall pay to Lessor, as liquidated damages for loss of
bargain and not as a penalty (in lieu of the Basic Rent due for the period
commencing after such sale occurs), any unpaid Rent for the Aircraft due to and
including the date of sale, plus the amount by which the Appraised Value (as
hereafter defined) of the Aircraft, computed as of the date of such sale,
exceeds the net cash proceeds of such sale. As used herein, "Appraised Value"
means the fair market sales value of the Aircraft, as determined by an
internationally recognized aircraft appraiser selected by the Beneficiaries (i)
on the basis of either a physical inspection of the Aircraft or on the basis of
a "desk top"
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appraisal, as the Beneficiaries shall determine, (ii) on the assumption that
the Aircraft has been maintained in accordance with the requirements of this
Lease and is in the condition required by Section 16 and Exhibit E, whether or
not any such assumption is in fact the case, and (iii) at Lessee's cost and
expense.
(e) De-register the Aircraft from the Aircraft Registry at
the FAA, and proceed to re-register the Aircraft with the FAA or any other
aircraft registry of any jurisdiction, in any case, in the name of Lessor,
either or both Beneficiaries or any other Person, as the Beneficiaries shall
determine.
(f) In the event that Lessor, pursuant to Section 18(b)
above, shall, after having exercised reasonable efforts under the
circumstances, have re-let the Aircraft under a lease which extends at least to
the date upon which the Term for the Aircraft would have expired but for
Lessee's default, Lessor, in lieu of exercising its rights under Section 18(c)
above with respect to the Aircraft, may, if it shall so elect, demand that
Lessee pay Lessor, and Lessee shall pay Lessor, as liquidated damages for loss
of bargain and not as a penalty (in lieu of the Basic Rent for the Aircraft due
after the time of re-letting) any unpaid Rent for the Aircraft due up to the
date of re-letting, plus the amount, if any, by which the aggregate Basic Rent
for the Aircraft (such Basic Rent being computed on the assumption that the
Basic Rent as in effect on the date of such demand shall remain in effect at
all times thereafter), which would otherwise have become due over the Term,
discounted periodically (equal to installment frequency) to present worth as of
the date of re-letting at the interest rate of four percent (4%) per annum,
exceeds the aggregate basic rental payments to become due under the re-letting
from the date of such re-letting to the date upon with the Term for the
Aircraft would have expired but for Lessee's default, discounted periodically
(equal to installment frequency) to present worth as of the date of the
re-letting at the interest rate of four percent (4%) per annum.
(g) Proceed by appropriate court action or actions, either at
law or in equity, to enforce performance by Lessee of the applicable covenants
of this Lease and to recover damages for the breach thereof and to rescind this
Lease.
(h) Terminate Lessee's right to possession and use of the
Aircraft under this Lease by written notice (which notice shall be effective
upon dispatch) and repossess the Aircraft, whereupon, Lessee shall forthwith
deliver the Aircraft and all Aircraft Documents to Lessor or the Beneficiaries
at such location as Lessor or the Beneficiaries shall specify.
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(i) Seize or foreclose upon any collateral pledged to secure
the obligations of Lessee hereunder; liquidate, dispose of, and realize upon
any such collateral; and apply the proceeds thereof to the obligations of
Lessee hereunder, in any case, as Lessor shall determine.
(j) Draw any amount available to be drawn under any Security
Deposit or the Security Letter of Credit, and to apply the proceeds thereof to
the obligations of Lessee hereunder, in any case, as Lessor shall determine.
In addition to the foregoing, Lessee shall be liable for any
and all unpaid Rent during or after the exercise of any of the aforementioned
remedies, together with interest on such unpaid amounts at the Overdue Rate,
and until satisfaction of all of Lessee's obligations to Lessor hereunder and
for all reasonable legal fees and other reasonable costs and expenses incurred
by Lessor by reason of the occurrence of any Event of Default or the exercise
of Lessor's remedies with respect thereto, including all costs and expenses
incurred in connection with the return of the Aircraft in accordance with the
terms of Section 16 hereof or in placing the Aircraft in the condition and with
airworthiness certification as required by such Section.
In effecting any repossession, each of Lessor and each
Beneficiary and its representatives and agents, to the extent permitted by law,
shall: (i) have the right to enter upon any premises where it reasonably
believes the Aircraft, the Airframe, an Engine or Part to be located and Lessee
shall cooperate in giving Lessor such access; (ii) not be liable, in conversion
or otherwise, for the taking of any personal property of Lessee which is in or
attached to the Aircraft, the Airframe, an Engine or Part which is repossessed;
provided, however, that Lessor shall return to Lessee all personal property of
Lessee or its passengers which were on the Aircraft at the time Lessor re-takes
possession of the Aircraft; (iii) not be liable or responsible, in any manner,
for any inadvertent damage or injury to any of Lessee's property in
repossessing and holding the Aircraft, the Airframe, an Engine or Part, except
for that caused by or in connection with Lessor's gross negligence or willful
acts; and (iv) have the right to maintain possession of and dispose of the
Aircraft, the Airframe an Engine or Part on any premises owned by Lessee or
under Lessee's control.
If requested by Lessor, Lessee, at its sole expense, shall
assemble and make the Aircraft, the Airframe, an engine or Part available at a
place designated by Lessor in accordance with Section 16 hereof. Lessee hereby
agrees that, in the event of the return to or repossession by Lessor of the
Aircraft, the Airframe, an Engine or Part, any rights in any warranty (express
or implied) heretofore assigned to Lessee or otherwise held by Lessee shall
without further act, notice or writing be assigned or-reassigned to
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Lessor, if assignable. Lessee shall be liable to Lessor for all reasonable
expenses (including reasonable attorneys, fees and expenses), disbursements,
costs and fees incurred in (i) re-possessing, storing and shipping the
Aircraft, the Airframe, an Engine or Part and maintaining, repairing and
refurbishing the Aircraft, the Airframe, an Engine or Part to the condition
required by Section 16 hereof and (ii) preparing the Aircraft, the Airframe, an
Engine or Part for sale or lease, advertising the sale or lease of the
Aircraft, the Airframe, an Engine or Part and selling or releasing the
Aircraft, the Airframe, an Engine or Part. Lessor is hereby authorized and
instructed, at its option, to make reasonable expenditures which Lessor
considers advisable to repair, restore, store, insure or maintain the Aircraft,
the Airframe, an Engine or Part to the condition required by Section 16 hereof,
all at Lessee's sole expense.
Lessee shall cooperate reasonably and in good faith with
Lessor and any Beneficiary in connection with the exercise by Lessor or either
Beneficiary of the rights and remedies provided hereby or at law upon and
following the occurrence of an Event of Default, including by executing and
delivering such instruments as Lessor or any Beneficiary shall reasonably
request. In furtherance of the foregoing, Lessee hereby constitutes and
appoints Lessor as the true and lawful agent and attorney-in-fact for Lessee
for purposes of executing and delivering any instrument that may be necessary
or appropriate in order to carry into effect any right or remedy of Lessor or
any Beneficiary hereunder upon and following the occurrence of an Event of
Default, including any consent to the de-registration of the Aircraft from the
FAA. Any such instrument signed pursuant to the foregoing appointment may be
signed in Lessee's name or in the name of Lessor. The foregoing appointment is
coupled with an interest and is irrevocable.
No remedy referred to in this Section 18 is intended to be
exclusive, but, to the extent permissible hereunder or under applicable Law,
each shall be cumulative and in addition to any other remedy referred to above
or otherwise available to Lessor at Law or in equity; and the exercise or
beginning of exercise by Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Lessor of any or all of such
other remedies. No express or implied waiver by Lessor of any Default shall in
any way be, or be construed to be, a waiver of any future or subsequent
Default.
Section 19. ALIENATION.
Lessor and each Beneficiary shall have the right at its sole
cost and expense to assign, sell, encumber or otherwise dispose of any interest
of Lessor or such Beneficiary in, to or under the Aircraft, the Trust Agreement
or this Lease and/or the proceeds hereof, subject to the rights of Lessee under
the provisions of this Lease,
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including by sale, transfer, pledge, assignment or other disposition to any
Lender or to any other Person (other than an air carrier engaged in the airline
business); PROVIDED, HOWEVER, that unless an Event of Default shall have
occurred and be continuing, neither Lessor nor any Beneficiary shall undertake
any action that (i) interferes with Lessee's rights under Section 20(f) hereof,
(ii) disqualifies the Aircraft for registry with the FAA, or (iii) results in
an increase in any liability of Lessee under Section 10, unless Lessor and each
Beneficiary agree to waive their rights to be indemnified for any such increase
in liability. To effect or facilitate any such sale, transfer, pledge,
assignment, or other disposition, Lessee agrees to provide, at Lessor's sole
cost and expense, such agreements, consents, conveyances or documents as may be
reasonably requested by Lessor or such Beneficiary, which shall include,
without limitation, a consent to such disposition executed by Lessee and in the
case of an assignment of the Lease (other than an assignment for security
purposes) an unrestricted release of Lessor from any obligations under this
Lease arising after the date of such assignment; PROVIDED, HOWEVER, that such
release shall not affect any liability of Lessor or such Beneficiary arising on
or before the date of such assignment. Lessee hereby agrees that it will not
assert against an assignee any Claim or defense which it may have against
Lessor or such Beneficiary; PROVIDED, HOWEVER, that any such Claim or defense
will survive such assignment and continue to be maintained against Lessor or
such Beneficiary. No assignment or transfer hereunder shall result in Lessee
being obligated to pay for the account of Lessor or such Beneficiary any
greater amount than it would otherwise be obligated to pay hereunder, including
without limitation any obligation of Lessee to pay amounts pursuant to Section
10. 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. In the event this Lease is assigned, or otherwise
disposed of by Lessor or either Beneficiary, any assignee, transferee or
mortgagee shall agree in writing with Lessee as a condition precedent thereto
to be bound by the provisions of this Lease and not to disturb or otherwise
interfere with the quiet enjoyment of Lessee of the Aircraft in accordance with
the terms of this Lease so long as no Event of Default shall have occurred and
be continuing.
Lessee shall include each Lender or any Person to whom an
interest herein is assigned as an additional insured and loss payee in
accordance with the provisions of Section 12 hereof and indemnify such Lender
to the same extent Lessee has agreed to indemnify Lessor pursuant to Sections
10 and 13 hereof. No Lender or any Person to whom an interest herein is
assigned shall have any liability for the obligations of Lessor under any
provision of this Lease.
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Section 20. MISCELLANEOUS.
(a) SEVERABILITY, AMENDMENT AND CONSTRUCTION. 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; any
such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
To the extent permitted by Law, Lessee hereby waives any provisions of Law
which renders any provisions hereof prohibited or unenforceable in any
respect. Lessee may not assign this Lease or its rights hereunder. This
Lease supersedes any prior or contemporaneous agreements, whether oral or in
writing, of the parties hereto and shall constitute the entire agreements of
the parties hereto. No term or provision of this Lease may be changed,
waived, discharged or terminated orally, but only by an instrument in
writing expressed to be a supplement or amendment to this Lease signed under
hand by an officer of the party against which the enforcement of the change,
waiver, discharge or termination is sought. This Lease shall constitute an
agreement of lease, and nothing herein shall be construed as conveying to
Lessee any right, title or interest in the Aircraft or any Engine or Part
except as a lessee only. The headings in this Lease are for convenience of
reference only and shall not define or limit any of the terms of provisions
hereof. Whenever required by the context hereof, the singular shall include
the plural and vice versa. Reference to this Lease shall mean this Lease as
amended or supplemented from time to time.
(b) GOVERNING LAW; JURISDICTION. This Lease shall in all respects be
governed by, and construed in accordance with, the laws of the State of New
York, except that the provisions of Section 21(a) (Security Deposit) and
Section 21(b)(vi) shall be governed by the laws of the State of Delaware.
A. Lessee and Lessor each hereby irrevocably and expressly submit to
the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York and to the New York Supreme Court, New York
County for the purposes of any suit, action or proceeding arising out of
this Lease or the Operative Documents. Final judgment against Lessee or
Lessor in any such suit shall be conclusive, and may be enforced in any
other jurisdictions by suit on the judgment or as otherwise permitted by
applicable Law, a certified or true copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness or liability of
such party therein described; PROVIDED, HOWEVER, that Lessor or Lessee may
at its option bring suit, or institute other judicial proceedings against
the other party or any of its assets, in the courts of any
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country or place where such party or such assets may be found.
B. Each of Lessee and Lessor hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any suit,
action or proceeding brought in any court located in New York City, New York
and hereby further irrevocably waives any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.
C. The foregoing submission to jurisdiction shall not be construed so
as to limit the right of either party to take proceedings against the other
in whatsoever jurisdictions shall to it seem fit nor shall the taking of
proceedings in any one or more jurisdictions preclude the taking of
proceedings in any other jurisdiction, whether concurrently or not.
D. Lessee hereby irrevocably appoints CT Corporation System, Inc., 1633
Broadway, New York, New York 10019, as Lessee's agent and attorney-in-fact
(the "Agent"), upon whom all service of summonses and other legal processes
may be made with respect to any action, suit or proceeding relating to this
Lease or any other Operative Document. The appointment of such Agent shall
be irrevocable, and if the Agent revokes such relationship, prior to the
effective date of such revocation, Lessee shall appoint a successor, which
successor shall be in accordance with the provisions hereof. Prior to such
change Lessee shall notify Lessor of such change of Agent. Lessee consents
and agrees that any service under or in connection with this Lease shall be
duly completed and served if mailed to Lessee at its address specified below
or to the Agent at the address specified above, in either case, by
registered or certified mail.
(c) NOTICES. All notices required under the terms and provisions hereof
shall be in writing and any such notice shall become effective when
deposited in the mails, registered with proper postage for air mail prepaid,
or, if in the form of a telegram, telex or telecopy, when received,
addressed if to the Lessee, the Lessor or any Beneficiary at their
respective addresses set forth in Exhibit C-2 (or such other address as may
be designated by the Lessee, the Lessor or such Beneficiary to the others).
(d) LESSOR'S RIGHT TO PERFORM FOR LESSEE. if Lessee fails to make any
payment of Supplemental Rent required to be made by it hereunder or fails to
perform or comply with any covenant, agreement or obligation contained
herein, Lessor or any Beneficiary shall have the right but not the obligation
to make such payment or conform or comply with such agreement, covenant or
obligation, and the amount of such payment and the amount of the reasonable
expenses of Lessor or such Beneficiary incurred in connection with such
payment or the performance thereof or compliance therewith,
-76-
<PAGE>
together with interest thereon at the Overdue Rate, shall be payable by
Lessee to Lessor or such Beneficiary (as Supplemental Rent) upon demand.
Lessor agrees to notify Lessee in writing prior to making any payment under
this Section 20(d) (giving Lessee the opportunity to rectify the omission),
unless the Aircraft will be in danger of loss, sale, confiscation,
forfeiture or seizure should such payment not be made. The taking of any
such action by Lessor or any Beneficiary pursuant to this Subsection 20(d)
shall not constitute a waiver or release of any obligation of Lessee under
the Lease, nor a waiver of any Event of Default which may arise out of
Lessee's nonperformance of such obligation, nor an election or waiver by
Lessor of any remedy or right available to Lessor under or in relation to
this Lease.
(e) COUNTER PARTS. This Lease may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. To the extent,
if any, that this Lease constitutes chattel paper (as such term is defined in
the Uniform Commercial Code as in effect in any applicable jurisdiction) no
security interest in this Lease may be created through the transfer or
possession of any counterpart other than the counterpart which has been
marked "Counterpart No. 1 - Chattel Paper Original" on the cover page
thereof.
(f) QUIET ENJOYMENT. Lessor covenants that so long as an Event of
Default shall not have occurred and be continuing, Lessee shall be entitled
to quiet use, possession and enjoyment of the Aircraft in accordance with
the terms of this Lease, without interference by Lessor or by any Person
lawfully claiming by or through Lessor.
(g) BROKERS. Each party agrees to indemnify and hold the other harmless
from and against any and all claims, suits, damages, costs and expenses
(including, but not limited to, reasonable attorneys' fees) asserted by any
agent, broker or other third party for any commission or compensation of any
nature whatsoever based upon the lease of the Aircraft, if such claim,
damage, cost or expense arises out of any action or alleged action by the
indemnifying party, its employees or agents.
(h) FUNDING INDEMNITY. Without prejudice to any other rights Lessor or
each Beneficiary may have under the terms of this Lease or any of the
Operative Documents or otherwise,
(A) if Lessor or each Beneficiary (and/or any of Beneficiary's
Affiliates) enters into any Dollar based bank funding or
financing arrangement (including, without limitation, any swap,
hedge or similar arrangement, but excluding any currency swap or
currency hedge to which Lessee has not
-77-
<PAGE>
consented) in connection with the fixing of the Basic Rent,
which is payable during the Term, and if the Aircraft shall not
be delivered to Lessee in accordance with the terms of this
Lease (other than by reason of the willful default of Lessor),
Lessee shall indemnify Lessor or each Beneficiary (and/or any of
Beneficiary's Affiliates) against, and shall pay on an after tax
basis to Lessor or each Beneficiary (and/or any of Beneficiary's
Affiliates) forthwith on demand, subject to the proviso set
forth below, all costs, fees (including, without limitation,
legal fees) expenses, obligations, liabilities and any other
amounts notified by the Beneficiaries to the Lessee (which
notification shall set out in reasonable detail the calculation
of the amounts claimed therein and such notification shall, in
the absence of manifest error, be conclusive) as having been
incurred, suffered or expended by Lessor or any Beneficiary
(and/or any of Beneficiary's Affiliates) or arising in connection
with the amendment, variation, rolling over, termination,
reconstitution, hedging, unwinding, covering or other adjustment
of any Dollar based bank funding or financing arrangement
(including, without limitation, any swap, hedge or similar
arrangement, but excluding any currency swap or currency hedge to
which Lessee has not consented) entered into or committed by
Lessor or any Beneficiary (and/or any of Beneficiary"s Affiliates)
for the purposes of the financing of the Aircraft and/or its
leasing to Lessee on the basis of the Basic Rent provided for
under this Lease; PROVIDED, HOWEVER, that if the interruption of
the Beneficiaries' funding results in a gain to the Beneficiaries
(net of Taxes or other charges incurred in connection therewith),
then, so long as no Default exists, the Beneficiaries shall remit
the amount of such gain (net of their costs relating to the
negotiation, preparation and execution of this Agreement and the
consummation of the transactions contemplated hereby) to Lessee;
(B) if an Event of Default occurs and the Aircraft is not delivered
or is repossessed in accordance with the terms of this Agreement
or otherwise, or if the Term is terminated earlier than the
Expiration Date by any reason including but not limited to the
early termination of the Term referred in clause 2(ii)(B) of the
Supplemental Agreement or a Casualty Occurrence (if such Casualty
Occurrence is covered by the insurance required by Section 12),
then Lessee shall indemnify Lessor or each Beneficiary (and/or
Beneficiary's Affiliate) against and shall pay on
-78-
<PAGE>
an after tax basis to Lessor (and/or Beneficiary's Affiliate)
forthwith on demand, subject as provided below, all reasonable
costs, fees (including, without limitation, legal fees), expenses
obligations, liabilities and other amounts notified by the
Beneficiaries to Lessee (which notification shall set out the
calculation of the amounts claimed therein and such notification
shall, in the absence of manifest error, be conclusive) as having
been incurred, suffered or expended in connection with the
amendment, variation, rolling over, termination, reconstitution,
hedging, unwinding, covering or other adjustment of any Dollar
based bank funding or financing arrangement (including, without
limitation, any swap, hedge or similar arrangement, but excluding
any currency swap or currency hedge to which Lessee has not
consented) entered into or committed by Lessor or each Beneficiary
(and/or any of Beneficiary's Affiliates) for the purposes of the
financing of the Aircraft by Lessor or each Beneficiary and/or its
leasing of the Aircraft to Lessee on the basis of the fixed Basic
Rent provided for under this Lease;
PROVIDED THAT the provisions of (A) or (B) shall not impose or be
deemed to impose on Lessee any obligation for payment of any
amount representing the principal amount of any bank funding
or financing arrangement.
(i) PAYMENTS IN U.S. DOLLARS. All amounts to be paid hereunder to
Lessor or Lessee shall be paid in Dollars, in immediately available funds.
Lessee acknowledges that the specification of Dollars in this transaction is
of the essence and that Dollars shall be the currency of account in any and
all events. The obligations of Lessee or Lessor hereunder, to Lessor or
Lessee, respectively, shall not be discharged by an amount paid in another
currency, whether pursuant to a judgment or otherwise, to the extent that the
amount so paid on prompt conversion to Dollars under normal banking
procedures does not yield the amount of Dollars owing to Lessor. In the
event that any payment by Lessee or Lessor, respectively, whether pursuant
to judgment or otherwise to Lessor or Lessee, respectively, upon conversion
does not yield such amount of Dollars, Lessor or Lessee, as the case may be,
shall have a separate cause of action against Lessee or Lessor, as the case
may be, for the additional amount necessary to yield the amount of Dollars
due and owing to Lessor or Lessee, as the case may be.
(j) COSTS. Each party hereto shall bear its own costs in respect of the
preparation, negotiation and execution of this Lease, the Lease Supplement
and any document ancillary thereto; PROVIDED, HOWEVER, that Lessor shall bear
-79-
<PAGE>
the costs and expenses incurred in connection with the registration of the
Aircraft with the FAA (including the legal fees and expenses of special FAA
counsel) and Lessee shall bear the costs and expenses incurred in connection
with the filing and registration of the Lease and any change in the FAA
registration number of the Aircraft requested by Lessee and approved by the
Beneficiaries (including, without limitation, the legal fees and expenses of
special FAA counsel).
(k) CONFIDENTIALITY. Neither Lessor nor Lessee hereto shall, at any
time during the Term or after its termination or expiration, disclose to any
Person any information relating to the matters set forth in this Lease or
the business, financial or other affairs a confidential nature relating to
the other party which may, in the course of the transactions contemplated
hereby, have been disclosed or discovered, except that any such information
may be so disclosed (i) with the written authority of the other party
hereto, (ii) so far as may be necessary for the proper performance of its
obligations hereunder, including the filing of this Lease with the FAA,
(iii) to the extent required by law, ordered by a court of competent
jurisdiction or by the relevant Governmental Entity responsible for taxation
or any other applicable regulatory authority, (iv) to such party's auditors,
counsel or other professional advisers, (v) to any Affiliate of a
Beneficiary and (vi) to the extent required in connection with a public
offering of debt or equity securities by Lessee. The parties hereto shall
use all reasonable endeavors to prevent any such disclosure as aforesaid,
except that Lessor or any Beneficiary may provide any potential purchaser of
the Aircraft, any Lender or any potential assignee of this Lease or any of
the Operative Documents with such information that any such person shall
reasonably request of Lessor or such Beneficiary.
(l) SECTION 1110. The parties agree that Lessor and the Beneficiaries
are entitled to the benefits and protections of Section 1110 of the U.S.
Bankruptcy Code ("Section 1110"), and Lessee shall take such actions and
effect such filings as may be necessary to enable Lessor and the
Beneficiaries to continue to be entitled to such benefits and protections at
all times from the date of the execution and delivery hereof until such time
as the Aircraft is returned to Lessor or the Beneficiaries in compliance
with the return conditions herein and this Lease is terminated. Lessee
acknowledges that this Section is of fundamental importance to the
transactions contemplated hereby and that neither Lessor nor the
Beneficiaries would have entered into this Lease but for the rights intended
to be conveyed to Lessor and the Beneficiaries by this Section and the
protection and benefits of Section 1110.
(m) CONCERNING THE LESSOR. Wilmington Trust Company is entering into
this Lease solely in its capacity
-80-
<PAGE>
as Trustee under the Trust Agreement and not in its individual capacity. As
such, Wilmington Trust Company shall not be liable for or on account of any
statements, representations, warranties, covenants or obligations stated to
be those of Lessor hereunder.
(n) TRUE LEASE. THIS LEASE SHALL CONSTITUTE AN AGREEMENT OF LEASE AND
IS A TRUE OPERATING LEASE, AND NOTHING HEREIN SHALL BE CONSTRUED AS
CONVEYING TO LESSEE ANY RIGHT, TITLE, OR INTEREST IN THE AIRCRAFT OR ANY
ENGINE OR PART EXCEPT AS A LESSEE ONLY. WITHOUT LIMITING THE FOREGOING,
LESSEE WILL NOT FILE A TAX RETURN OR TAKE ANY OTHER ACTION WHICH IS
INCONSISTENT WITH THE FOREGOING.
Section 21. SECURITY DEPOSIT.
(a) SECURITY DEPOSIT. Lessor hereby acknowledges Beneficiaries' receipt
from Lessee of the Security Deposit subject to the Security Deposit
Adjustment. In the event that the transactions contemplated by this Lease
are not consummated (other than due to the fault of Lessee or the occurrence
of an Event of Default), Lessor shall cause the Beneficiary to refund the
Security Deposit (so long as no Default or Event of Default has occurred,
without deducting any costs incurred by any Beneficiary or Lessor in
connection with the proposed leasing of the Aircraft hereunder but after
deducting the break funding costs incurred by the Beneficiaries and specified
in Section 20(h), if any) to Lessee. The Security Deposit is received by
Lessor or the Beneficiaries as security for the timely and faithful
performance by Lessee of all of Lessee's obligations under this Lease, and
Lessee hereby grants Lessor a security interest therein and in all other
sums deposited under this Section 21(a). Lessee agrees to execute and file
with the appropriate Governmental Entities any and all documents necessary
or reasonably requested by Lessor or any Beneficiary to evidence and perfect
such security assignment in favor of Lessor. If Lessee fails to pay Rent
hereunder when due or to pay any other sums due or to perform any of the
other terms and provisions of this Lease or is otherwise in Default
hereunder, in addition to all other rights Lessor shall have under the New
York Uniform Commercial Code as a secured party, Lessor may use, apply or
retain all or any portion of the Security Deposit in partial payment for
sums due to Lessor by Lessee, to compensate Lessor for any sums it may in
its discretion advance as a result of a Default by Lessee or to apply toward
losses or expenses Lessor may suffer or incur as a result of Lessee's
Default hereunder. If Lessor uses or applies all or any portion of such
Security Deposit, such application shall not be deemed a cure of any
Defaults, and Lessee shall within five (5) days after written demand
therefor deposit with Lessor in cash an amount sufficient to restore the
Security Deposit to the aggregate amount of such Security Deposit prior to
Lessor's use or application and the failure of Lessee to do so shall be a
material breach of
-81-
<PAGE>
this Lease by Lessee. Provided Lessee is not in Default under this Lease,
such Security Deposit, less any costs incurred by Lessor in connection with
the termination of the Lease or return of the Aircraft, shall be returned to
Lessee promptly after the Expiration Date and Lessee's return of the
Aircraft in compliance with Section 16 hereof. Lessee shall not be entitled
to any interest earned on the Security Deposit.
(b) SECURITY LETTER OF CREDIT.
(i) Lessee hereby agrees with Lessor that, subject to paragraph
(vi) below, Lessee shall deliver to Lessor (or if specified by
the Beneficiaries, the Beneficiaries) the duly executed Security
Letter of Credit for the amount specified in Exhibit C-1.
(ii) The Security Letter of Credit shall remain in full force and
effect from the date hereof until the date that is three months
after the Expiration Date, provided that it may be renewable
annually so long as Lessor or the Beneficiaries may draw upon the
Security Letter of Credit at any time if the Security Letter of
Credit is not renewed on or before thirty (30) days prior to its
stated expiration or if Lessor or a Beneficiary receives a
termination notice from the issuing bank or institution.
(iii) Lessor or the Beneficiaries may draw upon the Security Letter of
Credit upon the occurrence and during the continuation of an
Event of Default and apply the proceeds thereof in or towards the
satisfaction of any sum or obligation due to Lessor or any
Beneficiary by Lessee which either Lessee fails to pay on the
due date or, as the case may be, the date of demand or after any
applicable grace period permitted for the payment thereof and/or
under this Lease or any of the Operative Documents or to
compensate Lessor or any Beneficiary for any sum which it may in
its discretion advance or expend as a result of the failure of
Lessee to comply with any of its obligations under this Lease or
any of the Operative Documents or in respect of any Default or
Event of Default, in respect of any indemnity payments, in any
case by delivering to the issuing bank or institutions a notice
in accordance with the terms of the Security Letter of Credit.
No such drawing under the Security Letter of Credit shall operate
to relieve Lessee of any obligation hereunder or constitute the
satisfaction of any such obligation (except to the extent of the
proceeds of such payment actually received by Lessor and the
Beneficiaries).
-82-
<PAGE>
(iv) Upon any such drawing by Lessor or a Beneficiary, Lessee shall
reimburse the issuing bank and or a Beneficiary otherwise take
such action as may be necessary in order to restore the amount
available for drawing under the Security Letter of Credit to the
amount of such Security Letter of Credit specified in Exhibit C-1
promptly (and in any event within five Business Days) after such
Lessor's drawing and shall procure promptly that the issuing bank
or institutions forward a further letter of credit or guarantee
to Lessor evidencing that the amount has so been restored.
(v) Provided that no Default, or Event of Default has occurred and is
continuing, Lessor shall return the Security Letter of Credit to
Lessee for cancellation promptly after the date upon which the
Aircraft is redelivered to Lessor in accordance with the terms of
this Lease.
(vi) Notwithstanding the foregoing provisions of this Section 21(b),
Lessee may, on the Delivery Date, in lieu of the delivery to the
Beneficiaries of the Security Letter of Credit on the Delivery
Date, deposit with the Beneficiaries an amount in cash equal to
the amount of the Security Letter of Credit, as specified in
Exhibit C-1 (the "Security Letter of Credit Amount"). If Lessee
elects to make such deposit in lieu of the delivery of the
Security Letter of Credit, then Lessee shall effect such deposit
by wire transfer of funds to an account specified by one of the
Beneficiaries, and such Security Letter of Credit Amount shall
constitute part of the Security Deposit and shall be held by the
Beneficiaries as collateral security for the payment and
performance by the Lessee of its obligations hereunder and under
the other Operative Documents. The Beneficiaries shall have the
same rights, and shall be permitted to apply such Security Letter
of Credit Amount in the same manner, as is set forth in
Sections 18(i) and 21(a) above with respect to the Security
Deposit. Following the Delivery Date, Lessee shall have the
option of substituting the Security Letter of Credit described
above in this Section 21(b) in exchange for the Security Letter
of Credit Amount deposited with the Beneficiaries pursuant to
this clause (vi). To effect such substitution, Lessee shall
deliver the originally issued and executed Security Letter of
Credit (in the form and scope and in the amount required by
Exhibit C-1) to Lessor, and, promptly after Lessor's receipt
thereof, the Beneficiaries shall, so long as no Default or Event
of Default shall have occurred and be continuing, return the
Security Letter of
-83-
<PAGE>
Credit Amount paid on the Delivery Date pursuant to this
clause (iv) to Lessee. If Lessee does not substitute the Security
Letter of Credit Amount with the Security Letter of Credit, so
long as no Default or Event of Default shall have occurred and be
continuing, the Security Letter of Credit Amount will be returned
to Lessee promptly after the return of the Aircraft pursuant to
Section 21(a).
-84-
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee each have caused this Lease to be
duly executed by their authorized officers as of the day and year first
above written.
LESSOR:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Trustee f/b/o ITOCHU AirLease
(Europe) Limited and Marubeni
Airleasing (U.K.)
By: /s/ Myfanwy Phillips Bonilla
----------------------------
Name: Myfanwy Phillips Bonilla
Title: Assis. Vice President
LESSEE:
ALOHA AIRLINES, INC.
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee each have caused this Lease to be
duly executed by their authorized officers as of the day and year first
above written.
LESSOR:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Trustee f/b/o ITOCHU AirLease
(Europe) Limited and Marubeni
Airleasing (U.K.)
By:
----------------------------
Name:
Title:
LESSEE:
ALOHA AIRLINES, INC.
By: /s/ James M. King
----------------------------
Name: James M. King
Title: Vice President - Planning
and Development
By: /s/ Owen Sekimura
----------------------------
Name: Owen Sekimura
Title: Staff Vice President -
Finance and Controller
-15-
<PAGE>
EXHIBIT A
to
AIRCRAFT LEASE AGREEMENT
SCHEDULE AND DESCRIPTION OF AIRCRAFT
<TABLE>
<CAPTION>
U.S.
MODEL AND REGISTRATION MANUFACTURER'S
ITEM MANUFACTURER CONFIGURATION NUMBER SERIAL NUMBER
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aircraft The Boeing Company 737-25A N685MA* 23791
Engines Pratt & Whitney JT8D-17A P709529
Pratt & Whitney JT8D-17A P709530
Auxiliary
Power Unit Garret GTCP85-129 P35274
Landing Gears
Left Gear Menasco 65-46100-52 MC02895P1486
Right Gear Menasco 65-46100-52 MC02896P1486
Nose Gear BF Goodrich 65-46200-63 T01406P1486
</TABLE>
*To be changed to N819AL
<PAGE>
EXHIBIT B-1
to
Aircraft Lease Agreement
Aircraft Documents on the Delivery Date
<TABLE>
<CAPTION>
BOX 1: MIDWAY RECORDS
-----------------------------------------------------------------------
<S> <C> <C>
725ML C check 5/28/89 1 of 2, 2 OF 2 IS
MISSING
-----------------------------------------------------------------------
725ML Hrs / Cycles 1990 thru 4/30/91 1 of 1
-----------------------------------------------------------------------
725ML Log Pages Dec 89 - Jan / Feb 91
-----------------------------------------------------------------------
725ML Log Pages March 1991
-----------------------------------------------------------------------
725ML Log Pages Jan / Feb 91
-----------------------------------------------------------------------
725ML Log Pages Sept/Oct/Nov/Dec 90
-----------------------------------------------------------------------
725ML Log Pages July/Aug 90
-----------------------------------------------------------------------
725ML Log Pages April/May/June 90
-----------------------------------------------------------------------
725ML Log Pages Feb/March 90
-----------------------------------------------------------------------
725ML N Items Nov 90 / 1 of 1
-----------------------------------------------------------------------
725ML Job Cards 89/90 (structural repair
for aft cargo).
-----------------------------------------------------------------------
725ML Special Inspection 1 of 1
-----------------------------------------------------------------------
725ML Line, TS, B1, B2, B3, 1990/1991
B4, B5.
-----------------------------------------------------------------------
725ML CC1 Non-Routines 1 of 1
-----------------------------------------------------------------------
725ML Component Change Cardex files (copies)
Records
-----------------------------------------------------------------------
725ML Hrs / Cycles 1 book 88-89
-----------------------------------------------------------------------
725ML C check 11/23/90 (4 books)
-----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
BOX 2: MARKAIR RECORDS
-----------------------------------------------------------------------
<S> <C>
N685MA ROUTINE MAINT. LOGS/JAN. 1993 thru SEPT. 1995
-----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
BOX 3: MARKAIR RECORDS
-----------------------------------------------------------------------
<S> <C>
N685MA ROUTINE MAINT. LOGS/Jan. 1992 thru Dec. 1992
-----------------------------------------------------------------------
N685MA ROUTINE MAINT. LOGS/Oct. 1 thru Oct. 31, 1995
-----------------------------------------------------------------------
N685MA Midway Fire Block data
-----------------------------------------------------------------------
N685MA Aircraft Historical File
-----------------------------------------------------------------------
N685MA Certificates / Permits / Documents
-----------------------------------------------------------------------
N685MA Miscellaneous Brochure
-----------------------------------------------------------------------
N685MA Midway AD File
-----------------------------------------------------------------------
N685MA Fuel Quantity Data (Boeing D6-32037-1)
-----------------------------------------------------------------------
N685MA Detail Specification (737-25A-Rev. B)
-----------------------------------------------------------------------
N685MA Readiness Log
-----------------------------------------------------------------------
N685MA Deferred Maintenance Log
-----------------------------------------------------------------------
N685MA Junk Tags / 1992, 1993, 1994
-----------------------------------------------------------------------
N685MA Markair General Policies and Procedures Manual
-----------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT B-1
to
Aircraft Lease Agreement
Aircraft Documents on the Delivery Date
<TABLE>
<CAPTION>
BOX 4: MARKAIR RECORDS
-----------------------------------------------------------------------
<S> <C> <C>
N685MA B2, Inspection Check 4/7 - 4/10/92
-----------------------------------------------------------------------
N685MA B2, Inspection Check 7/1 - 7/22/92
-----------------------------------------------------------------------
N685MA B3, Inspection Check 9/15-9/17/92
-----------------------------------------------------------------------
N685MA B&C, Inspection Check 11/23/91-1/13/92 (2 BOOKS)
-----------------------------------------------------------------------
N685MA C, Inspection Check 1/22-25/93
-----------------------------------------------------------------------
N685MA B1, Inspection Check 7/21-7/23/93 (2 BOOKS)
-----------------------------------------------------------------------
N685MA B2, Inspection Check 10/19-10/21/93
-----------------------------------------------------------------------
N685MA B4, Inspection Check 4/17-4/22/93
-----------------------------------------------------------------------
N685MA B1, Inspection Check 7/6-7/7/94
-----------------------------------------------------------------------
N685MA B2, Inspection Check 9/22-9/23/94
-----------------------------------------------------------------------
N685MA B3, Inspection Check 12/6-12/8/94
-----------------------------------------------------------------------
N685MA B3, Inspection Check 1/4 - 1/5/94
-----------------------------------------------------------------------
N685MA B4, Inspection Check 4/2/94
-----------------------------------------------------------------------
N685MA C2, Inspection Check 4/12/94 - 4/22/94 (2 BOOKS)
-----------------------------------------------------------------------
N685MA C3, Inspection Check 4/25 - 5/8/95 (2 BOOKS)
-----------------------------------------------------------------------
N685MA B1, Inspection Check 7/22/95
-----------------------------------------------------------------------
N685MA B4, Inspection Check 2/12/95 - 2/15/95
-----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
BOX 5: MARKAIR RECORDS
-----------------------------------------------------------------------
<S> <C>
N685MA ESN: 709529 / GTC shop visit DTD 6/29/92
-----------------------------------------------------------------------
N685MA ESN: 700520 / GTC shop visit DTD 2/17/93
-----------------------------------------------------------------------
N685MA ESN: 709529 / Historical Records
-----------------------------------------------------------------------
N685MA ESN: 709529 / Engine AD Log
-----------------------------------------------------------------------
N685MA ESN: 709529 / C2 Disk Traceability
-----------------------------------------------------------------------
N685MA ESN: 709530 / Historical Records
-----------------------------------------------------------------------
N685MA ESN: 709530 / AD Log
-----------------------------------------------------------------------
N685MA ESN: 709530 / WO LR 9122 (4 ea) Aviall 7/20/90
-----------------------------------------------------------------------
N685MA ESN: 709530 / WO# LR 0181 (4 ea) Aviall 6/92
-----------------------------------------------------------------------
N685MA APU S/N P-35274 / Historical Records
-----------------------------------------------------------------------
N685MA APU S/N P-35274 / AD Log
-----------------------------------------------------------------------
</TABLE>
-2-
<PAGE>
EXHIBIT B-1
to
Aircraft Lease Agreement
Aircraft Documents on the Delivery Date
<TABLE>
<CAPTION>
BOX 6: MARKAIR RECORDS
-----------------------------------------------------------------------
<S> <C>
N685MA Airframe AD Log
-----------------------------------------------------------------------
N685MA Appliance AD Log
-----------------------------------------------------------------------
N685MA MEA Logs
-----------------------------------------------------------------------
N685MA Master Flight Log
-----------------------------------------------------------------------
N685MA SB Log
-----------------------------------------------------------------------
N685MA Galley Installation
-----------------------------------------------------------------------
N685MA EO and Drawings
-----------------------------------------------------------------------
N685MA Galley Manuals and Certification
-----------------------------------------------------------------------
N685MA MEA'S
-----------------------------------------------------------------------
N685MA S.B.'s
-----------------------------------------------------------------------
N685MA Windshear TCAS & Mode S Installation Data
-----------------------------------------------------------------------
N685MA Fleet Campaign's
-----------------------------------------------------------------------
N685MA Structural Repairs
-----------------------------------------------------------------------
N685MA Landing Gear Records
-----------------------------------------------------------------------
N685MA Weight & Balance Data
-----------------------------------------------------------------------
N685MA Markair Kardex File (Parts Tags)
-----------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT B-2
to
Aircraft Lease Agreement
------------------------
AIRCRAFT DOCUMENTS ON THE RETURN OCCASION
-----------------------------------------
All the Aircraft Documents delivered on the Delivery Date or any other
date (including without limitation those listed in Exhibit B-1) shall be
returned to Lessor along with the following:
A. Manuals (in U.S. units) to be delivered with aircraft, as required:
1. FAA Approved Airplane Flight Manual.
2. Weight and balance control and loading manual with supplements.
3. Operations Manual.
4. Aircraft Maintenance Manual.
5. DDPG including MEL.
B. In addition, one copy of each of the following manuals will be delivered
on the return occasion.
1. Structural repair manual and supplements.
2. Aircraft/engine/spare engine/APU Maintenance manual.
3. Aircraft/engine/spare engine/APU illustrated parts catalog.
4. Aircraft/engine/spare engine/APU wiring diagram, hook-up charts, wire
list and equipment list.
5. Maintenance and inspection procedures manual.
6. General Policies & Procedures Manual.
C. Airworthiness Directives Documentation. In accordance with 14 C.F.R.
Part 121.380, Lessee shall deliver to Lessor on the return occasion all
records associated with compliance airworthiness directives ("A.D."):
1. A single, complete and current A.D. status list of the airframe,
appliance, engines, spare engines and APU Airworthiness Directives and
mandatory FAA regulation applicable to the Airframe, Engines, Spare
Engines and APU. This list shall be provided in a format acceptable to
buyer and shall include, but not limited to:
a. A.D. number and revision number.
b. A.D. title.
c. Aircraft serial number, engine serial number and APU serial number.
d. Engineering documentation reference.
e. Manufacturers service bulletin references and cross-references, where
appropriate.
<PAGE>
f. Specifications of terminated or repetitive status.
g. Date of initial accomplishment.
h. Date of last maintenance accomplishment, if repetitive.
i. Name and serial number of the internal maintenance form used to
document accomplishment, if applicable.
j. Specification of means by which compliance was accomplished
(e.g., modified, repaired, inspected).
The list shall be typed, certified and signed by an authorized quality
assurance representative of the Lessee.
2. Legible copies of the completion documents that accomplish each A.D.
If the A.D. is a repetitive inspection, documentation of the last
accomplishment is sufficient. These documents must have the date of
accomplishment, the signature of a certified mechanic and/or inspector and
the mechanic's/inspector's certificate number or the repair station number
of the mechanic accomplishing the work. The document must reference the A.D.
number and company authorization which covered the A.D.
3. Exemptions or deviations granted by the FAA (or equivalent) to Lessor
or Lessee, as the case may be, on A.D. compliance, including copy of
exemption request.
4. Items 2 or 3 will be provided in individual document packages for
each A.D. Each package will contain all documents relative to that
A.D./Aircraft combination.
D. Engineering Documentation
1. A single, current list of airframe, engines, spare engines and APU
service bulletins, engineering orders, major repairs and supplemental
type certificates completed on the airframe, each engine, spare engine
or the APU including references to engineering documentation, shall be
provided with information similar to that described in item C.1 above.
2. A current copy of all engineering documentation related to aircraft
alterations and repair configuration changes. This shall include
documentation for work done by any previous owner or operator, the
manufacturer or any vendor. An index shall be provided. A current copy
of all repairs that require follow-up action.
3. Data package covering all non-manufacture/non-FAA approved repairs or
alterations, including the submittal to the FAA for an STC or Form 337,
if applicable.
4. All open engineering deviations or material review board (MRB) records
applicable to the airframe, engines, spare engines, APU's, parts,
components and piece parts.
-2-
<PAGE>
E. Additional Documentation
1. Maintenance program document.
2. Location map of emergency equipment, with description.
3. Interior configuration drawings.
4. Weight and balance current status.
5. FAA Export Certificate of airworthiness, if applicable.
6. FAA certification of all components.
7. FAA import certificate of airworthiness for all non-U.S. spare parts.
8. Complete set of maintenance operations specifications.
9. Master aircraft flight log.
F. Individual aircraft, engine and spare engine records
1. Major structural damage reports, if any.
2. FAA Form 337, or equivalent, for major repair and alterations, if any.
3. Engine/spare engine last shop visit report.
4. Documentation and records concerning the last aircraft overhaul.
5. Engine/spare engine trend monitoring data.
6. Log books for last 12 months.
7. List of open items, if any.
8. Declaration for aircraft accident and major repairs, if any.
9. Listing of aircraft, engine and spare engine components status by
P/N - S/N description position - TBO - TSI - TSO - total time.
10. Engine or spare engine life limited parts status and history (certified).
11. Engine or spare engine log book, if applicable.
12. APU - same documentation as items F. 10 and 11 above.
13. Delivery letter w/serial number, total time/total cycles, time to the
next inspection and the time to the inspection or removal of
engines/spare engines or components.
14. All engines, spare engines and APU records, up to and including the
last major overhaul or heavy maintenance and shop visits.
15. Manufacturers delivery document for engines, spare engine and APU.
16. Last test cell run documents for engines, spare engines and APU.
17. Borescope history for current installation for engines and spare
engine, if applicable.
18. Aircraft readiness log (manufacturers).
19. Component records - time controlled components historical records
w/installation and serviceability tags.
-3-
<PAGE>
EXHIBIT C-1
to
AIRCRAFT LEASE AGREEMENT
FINANCIAL INFORMATION
Basic Rent: The Basic Rent payable monthly in advance on
each of the Basic Rent Payment Dates shall be
$115,279.80 per month.
Basic Rent Payment Date: The Delivery Date and the date in each
subsequent month that numerically corresponds
to the Delivery Date; PROVIDED, that if any
such subsequent month does not have a date
that numerically corresponds to the Delivery
Date, the last day of such month; PROVIDED,
FURTHER, that if such date is not a Business
Day, then the Basic Rent Payment Date shall
be the next preceding Business Day.
Casualty Value: As at the Delivery Date and for the one year
period following the Delivery Date, the
Casualty Value shall be $14,000,000, and the
Casualty Value shall be reduced by $500,000
effective on each anniversary thereof which
reduced Casualty Value shall remain effective
for the one year period following the date of
such reduction, as follows:
<TABLE>
<CAPTION>
DATE OF CASUALTY
REDUCTION VALUE
--------------- -----------
<S> <C> <C>
Delivery Date $14,000,000
1st anniversary 13,500,000
2nd anniversary 13,000,000
3rd anniversary 12,500,000
4th anniversary 12,000,000
5th anniversary 11,500,000
6th anniversary 11,000,000
7th anniversary 10,500,000
and after
</TABLE>
Security Deposit: Means a cash deposit in the amount of U.S.
$115,000 paid by Lessee to Lessor or the
Beneficiaries on November 10, 1995, together
with any increases in such amount pursuant
to Section 21(a) of the Lease and the
following definition of Security Deposit
Adjustment.
Security Deposit Adjustment: The Security Deposit Adjustment Amount shall
be the amount, if any, by which the amount of
monthly Basic Rent specified above exceeds
the amount of the Security Deposit specified
above ($279.80), and an amount equal to such
difference shall be paid by Lessee to the
Beneficiaries on the Delivery Date for
application to the Security Deposit.
Security Letter of Credit: Means an irrevocable letter of credit or
guarantee in the amount at all times the
greater of US$ 230,000 and an amount equal to
the aggregate of two (2) months Basic Rent
payments ($230,559.60), issued by an
institution and in form and substance
acceptable to Lessor and Beneficiary.
<PAGE>
EXHIBIT C-2
to
AIRCRAFT LEASE AGREEMENT
DEFINITIONS AND VALUES
Beneficiary: Means each of ITOCHU AirLease (Europe)
Limited and Marubeni Airleasing (U.K.)
Limited as beneficiary under the Trust
Agreement, together in each case with its
successors and permitted assigns under the
Trust Agreement.
Beneficiary's Address: For ITOCHU AirLease (Europe) Limited:
Itochu AirLease (Europe)
Limited
1, Earlsfort Centre
Hatch Street
Dublin 2
Ireland
Fax: 353-1-661-3278
Attention: Secretary
with copy to:
ITOCHU AirLease Corporation
NXB Aoyama Building 5 Fl.,
26-37 Minami-Aoyama 2-Chome,
Minato-Ku,
Tokyo,
Japan
Telex: 2423154 TKAFCJ
Fax: (813) 3497 8145
Attention: the President
For Marubeni Airleasing (U.K.)
Limited:
120 Moorgate
London EC2M 6SS
United Kingdom
Telecopy No.: (44) 171-826-8835
Deductible Amount: $500,000
Delivery Location: such state in the continental United States
reasonably determined by the
<PAGE>
Trustee: means Wilmington Trust Company, a Delaware
banking corporation, not in its individual
capacity but solely as trustee under the
Trust Agreement or any successor Trustee
thereunder.
-6-
<PAGE>
COUNTERPART NO.____
EXHIBIT D
to
AIRCRAFT LEASE AGREEMENT
LEASE SUPPLEMENT NO. 1
TO AIRCRAFT LEASE AGREEMENT
DATED AS OF NOVEMBER 29, 1995
LEASE SUPPLEMENT NO. 1, dated December 1, 1995, between
Wilmington Trust Company, not in its individual capacity but solely as Trustee
f/b/o ITOCHU AirLease (Europe) Limited and Marubeni Airleasing (U.K.) Limited
("Lessor"), and Aloha Airlines, Inc., a company organized under the laws of
Hawaii ("Lessee").
Lessor and Lessee have previously entered into that certain
Aircraft Lease Agreement dated as of November 29, 1995 (herein called the
"Lease" and the defined terms therein being hereinafter used with the same
meaning). The Lease provides for the execution and delivery from time to time
of a Lease Supplement substantially in the form hereof for the purpose of
leasing the aircraft described below under the Lease as and when delivered by
Lessor to Lessee in accordance with the terms thereof.
The Lease relates to the Aircraft, Parts and Engines as more
precisely described below. A counterpart of the Lease is attached hereto and
this Lease Supplement and the Lease shall form one document.
In consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under the
Lease and Lessee hereby accepts and leases from Lessor under the Lease, that
certain Boeing Model B-737-25A commercial jet aircraft, Airframe and the two
Pratt & Whitney JT8D-17A Engines (each of which engines has 750 or more rated
takeoff horsepower or the equivalent of such horsepower) described in Schedule
1 attached hereto and made a part hereof (the "Delivered Aircraft"). The
status of the Aircraft and Engines upon delivery thereof to Lessee shall be as
described on Schedule 2 attached hereto and made a part hereof.
2. (A) The Delivery Date of the Delivered Aircraft is the
date of this Lease Supplement set forth in the opening paragraph hereof.
(B) The time of the delivery and acceptance of the
Delivered Aircraft is ____:____ __. m., at which time the
<PAGE>
Delivered Aircraft is located in the airspace over the State of Texas, United
States of America (such location is herein called the "Delivery Location").
3. The Term for the Delivered Aircraft shall commence on the
Delivery Date and shall end on the Expiration Date, which shall be December 1,
2003.
4. The amount of Basic Rent for the Delivered Aircraft is
payable in advance on each Basic Rent Payment Date.
5. Lessee hereby confirms to Lessor that (i) the Delivered
Aircraft and each Engine installed thereon or belonging thereto have been duly
marked in accordance with the terms of Section 6(f) of the Lease, (ii) Lessee
has accepted the Delivered Aircraft for all purposes hereof and of the Lease
and (iii) Lessee has inspected the Delivered Aircraft and the Delivered
Aircraft satisfies the conditions set forth in the Lease.
6. Lessor represents that all of its representations and
warranties contained in the Lease are true and correct on the date hereof.
7. All of the terms and provisions of the Lease Agreement are
hereby incorporated by reference in the Lease Supplement to the same extent as
if fully set forth herein.
8. The Lease Supplement may be executed in any number of
counterparts, each of such counterparts, except as provided in Section 20 (e)
of the Lease, shall for all purposes be deemed to be an original and all such
counterparts shall together constitute but one and the same Lease Supplement.
THIS LEASE SUPPLEMENT HAS BEEN EXECUTED IN MULTIPLE COUNTERPARTS, OF WHICH
THERE IS ONE COUNTERPART DESIGNATED AS "COUNTERPART NO. 1 - CHATTEL PAPER
ORIGINAL" AND ALL OTHER COUNTERPARTS SHALL BE DESIGNATED WITH NUMBERS OTHER
THAN 1. TO THE EXTENT THAT THIS LEASE SUPPLEMENT CONSTITUTES CHATTEL PAPER
UNDER THE UNIFORM COMMERCIAL CODE, AS IN EFFECT IN ANY APPLICABLE JURISDICTION,
NO SECURITY INTEREST MAY BE CREATED OR PERFECTED BY POSSESSION OF ANY
COUNTERPART OF THIS LEASE SUPPLEMENT OTHER THAN SAID COUNTERPART NO. 1.
-2-
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee each have caused this
Lease Supplement to be duly executed by their authorized officers as of the
day and year first above written.
LESSOR:
WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Trustee
By:__________________________________
Name:
Title:
LESSEE:
ALOHA AIRLINES, INC.
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
-3-
<PAGE>
SCHEDULE 1
TO
LEASE SUPPLEMENT NO. 1
BOEING 737-25A
AIRFRAME
<TABLE>
<CAPTION>
MANUFACTURER'S U.S. REGISTRATION
SERIAL NO. NUMBER TOTAL TIME* TOTAL CYCLES*
-------------- ----------------- ----------- -------------
<S> <C> <C> <C>
23791 N685MA 23,859 14,057
(to be changed to
N819AL)
</TABLE>
INSTALLED PRATT & WHITNEY
ENGINES
<TABLE>
<CAPTION>
MODEL NO. SERIAL NO. TOTAL TIME* TOTAL CYCLES*
-------------- ----------------- ----------- -------------
<S> <C> <C> <C>
JT8D-17A P709529 20,960 11,883
JT8D-17A P709530 22,100 12,908
</TABLE>
INSTALLED
AUXILIARY POWER UNIT
<TABLE>
<CAPTION>
MODEL NO. SERIAL NO. TOTAL TIME TOTAL CYCLES
-------------- ----------------- ----------- -------------
<S> <C> <C> <C>
GTCP85-129 P35274 (TACH Reading)
</TABLE>
<PAGE>
SCHEDULE 1
TO
LEASE SUPPLEMENT NO. 1 (cont'd)
B737 AVIONICS
COMPONENT INVENTORY
<TABLE>
<CAPTION>
ITEM PART NUMBER SERIAL NUMBER DESCRIPTION POSITION/QUANTITY
NO.
<S> <C> <C> <C> <C>
1 622-4096-001 4581 PA Amp E&E 1
2 5140-1-112 339 Remote Electronics Unit E&E 1
3 622-8971-020 2119 TCAS T/R E&E 1
4 622-1181-001 14400 VHF T/R E&E 1
5 622-1396-001 5023 VHF T/R E&E 1
6 622-7878-200 5128/5165 ATC E&E 2
7 NA 13UO2 255AKWO022 Selcal E&E 1
8 622-2921-001 10076/10061 DME E&E 2
9 080-20325-01 4603/4613/4602 T/Rectifier E&E 3
10 2-301-3 4782 Batt Charger E&E 1
11 39B168-1-0 3276 Static Inverter E&E 1
12 65-52811-109 D00485 Landing Gear Acc Unit E&E 1
13 42-651-01 443 Anti-Skid E&E 1
14 65-52810-25 D01002 Air Condition Relay Unit E&E 1
15 65-73606-69 D01029 Eng Acc Unit E&E 1
16 65-52808-7 D00496 Compartment Overheat Unit E&E 1
17 65-52806-235 D00870 Misc Solid State Switch E&E 1
18 165-52807-26 D00449 Slat Position Switch Unit E&E 1
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
ITEM PART NUMBER SERIAL NUMBER DESCRIPTION POSITION/QUANTITY
NO.
<S> <C> <C> <C> <C>
19 522-2996-011 2012 Marker Beacon E&E 1
20 777-1492-002 1582 ADF E&E 1
21 777-1492-004 4039 ADF E&E 1
22 965-0876-001 304 GPWS E&E 1
23 622-3890-003 1556 Radio Alt E&E 1
24 65-52801-31 D00446 APU Control Unit E&E 1
25 65-52809-15 D00306 Fire Detector Unit E&E 1
26 8TJ45-GAB X0062 34B3 Fuel Flow Power Supply E&E
27 231-2 5556/6517 Window Heat Control E&E 4
28 4314/7490 E&E
29 522-3949-001 3701 Monitor Comparator E&E 1
30 622-3257-001 5662/2275 ILS NAV RCVR E&E 2
31 172938-001 6620/6623 NAV SW Unit E&E 4
32 6630/6613 E&E
33 HG48B13 P255/G1711 ADC E&E 2
34 4030952-906 88062826 Yaw Damper E&E 1
35 163356-88-01 0000528 Performance Data Comp E&E 1
36 548376-6 097C-9045 Cabin Temp Controller E&E 1
37 87093613 P43 Pressure Controller E&E 1
38 2588424-902 84053253 Rate of Turn E&E 1
39 101 812802UA/9118557A Compass Rack E&E 2
40 622-2500-004 2343/1298 Steering Comp E&E 2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITEM PART NUMBER SERIAL NUMBER DESCRIPTION POSITION/QUANTITY
NO.
<S> <C> <C> <C> <C>
41 65-52805-317 D01011 Flight Inst Acc Unit E&E 1
42 172938-001 6624/6615 Switch Unit E&E 4
43 6595/2678 E&E
44 2590650-901 05872772 Mach Trim Comp E&E 1
45 2588810-904 01851529 Pitch Computer E&E 1
46 2588812-902 06871639 Roll Computer E&E 1
47 65-52812-107 D00496 Auto Pilot Acc Unit E&E 1
48 457300-0430 3394 Omega RPU E&E 1
49 25582-003 8305313 Battery E&E 1
50 2587335-11 84054627 Vert Gyro E&E 1
51 2587335-11 8415034 Vert Gyro E&E 1
52 2587335-11 0034163 Vert Gyro E&E 1
53 2588302-4 0067044 Direction Gyro E&E 1
54 2588302-4 84056507 Direction Gyro E&E 1
</TABLE>
<PAGE>
SCHEDULE 2
TO
LEASE SUPPLEMENT NO. 1
Aircraft Status
ON THE DELIVERY DATE
AIRFRAME HEAVIEST CHECK ("D" CHECK OR EQUIVALENT):
<TABLE>
<S> <C> <C>
Interval: 28,000 (Hrs)
Time Remaining: 4,141
LANDING GEAR OVERHAUL:
Interval: Main Gear 24,000 cycles
Nose Gear 24,000 cycles
Time Remaining: Left Gear 9,943 cycles
Right Gear 9,943 cycles
Nose Gear 9,943 cycles
ENGINES:
Overhaul Interval:
Time Remaining (S/N P709529):
Time Remaining (S/N P709530):
Hot Section Inspection:
Interval:
Time Remaining (S/N P709529):
Time Remaining (S/N P709530):
TIME REMAINING TO FIRST RESTRICTION:
Engine S/N: P709529
Hours: 9,040
Cycles: 3,117 (C07)
Engine SIN: P709530
Hours: 7,900
Cycles: 2,092 (C07)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
AUXILIARY POWER UNIT:
Hot Section Inspection:
Interval: On Condition
Time Remaining: On Condition
Time Remaining to Next Limited
or Scheduled Removal: On Condition
</TABLE>
-2-
<PAGE>
SCHEDULE 3
TO
LEASE SUPPLEMENT NO. 1
Aircraft Status on The Delivery Date
Time and Calendar Controlled Components
(excluding engines, landing gear, and APU).
Effective date: 10/20/95
<TABLE>
<CAPTION>
AIRCRAFT
COMPONENT PART HR.
POSITION NUMBER SERIAL # LIMIT TSI REMAINING
--------- -------- --------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C>
ATA 21
------
Valve, Safety 720737-5 L-0001 14000H 13,817.6 3,977.2
RH OH 7/3/92
Valve, Safety 720737-5 830678 14000H 13,817.6 3,977.2
LH OH 7/3/92
Gasper Fan 21520-1 063 6000H 22,594.7 4,735
OH 6/15/95
ATA 23
------
Recorder, 93A100-80 52428 72 Mo. 14, 623.2H 2 Yrs., 6 Mo.
Voice RPL
(Battery)
ATA 24
------
APU Generator 976J498-1 YK13122 6000H 20,471 2,602H
HT 10/20/94
Panel Bus 915F213-2 WE1347B 6000H 19,313.9 1,454H
Protection BC 6/11/94
Gen. Cont. 948F458-1 NM4963 6000H 19,616.8H 1,757H
Unit BC 7/18/94
APU
Gen. Cont. 948F458-1 PM5071 6000H 23,697H 5,838H
Unit BC 10/3/95
Left
Gen. Cont. 948F458-1 XJ2186 6000H 21,639.9H 3,780.9H
Unit BC 2/18/95
Right
ATA 25
------
Life Vest KSE-35L8 527-691 24 Mo. 8/30/95 9 Mos.
Rt. Aft OH 23,304H
Life Vest AV-35 541-064 24 Mo. 2/95 14 Mos.
Co-pilot O H 21,530H
Slide, Evac D31354- 1112 24 Mo. 8/23/94 10 Mos.
Rt. Aft 425 OH 19,939.7H
</TABLE>
<PAGE>
SCHEDULE 3
TO
LEASE SUPPLEMENT NO. 1
Aircraft Status on The Delivery Date
Time and Calendar Controlled Components
(excluding engines, landing gear, and APU).
<TABLE>
<CAPTION>
AIRCRAFT
COMPONENT PART HR.
POSITION NUMBER SERIAL # LIMIT TSI REMAINING
--------- -------- --------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C>
ATA 25
------
Slide, Evac D31354- 1613 24 Mo. 8/24/94 10 Mos.
Lt. Aft 433 OH 19, 949H
Slide, Evac 11611-143 123-1 24 Mo. 9/12/95 23 Mos.
Rt. Fwd OH 23,459H
Slide, Evac D31354- 0159 24 Mo. 2/15/95 7 Mos.
Lt. Fwd 403 OH 21,620H
Escape Slide SEE NOTE (1) OF THE MARKAIR MAINTENANCE PROGRAM
Bottles (4)
Life Vest KSE-35L8 50287 24 Mo. 3/17/95 9/96
Obs OH 21,942H 8 Mos.
Life Vest KSE-35L8 12323 24 Mo. 8/1/95 7/97
Capts OH 23,085H 22 Mos.
Life Vest KSE-35L8 527-691 24 Mo. 8/30/95 7/97
Aft Right OH 23,304H 21 Mos.
Life Vest KSE-35L8 29358 24 Mo. 2/3/95 12/96
Left Aft OH 21,474H 8 Mos.
Life Vest AC-2 535-380 24 Mo. 4/29/95 3/97
Fwd FA OH 22,259H 17 Mos.
Life Vest KSE-35L8 541-064 24 Mo. 2/7/95 1/97
Co-pilot OH 21,530.7 15 Mos.
Kit, Medical 017093 NHC1613 24 Mo. 11/28/94 11/96
OH 20,844H 13 Mos.
PEE 4566M378 E9134322 120 Mo. 12/31/91 1/2000
R/A Closet OH 60 Mos.
PEE 4566M378 E9134326 120 Mo. 12/31/91 1/2000
L/A Closet OH 60 Mos.
PEE 4566M378 E9134942 120 Mo. 1/13/92 1/2000
Aft Closet OH 60 Mos.
PEE 4566M378 E9134751 120 Mo. 12/22/91 1/2000
Row 10 OH 60 Mos.
PEE 4566M378 E9548209 120 Mo. 6/9/95 5/2002
Cockpit OH 70 Mos.
</TABLE>
-2-
<PAGE>
SCHEDULE 3
TO
LEASE SUPPLEMENT NO. 1
Aircraft Status on The Delivery Date
Time and Calendar Controlled Components
(excluding engines, landing gear, and APU).
<TABLE>
<CAPTION>
AIRCRAFT
COMPONENT PART HR.
POSITION NUMBER SERIAL # LIMIT TSI REMAINING
--------- -------- --------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C>
ATA 26
------
Cartridge, 30903828 AEN-1-3 72 Mos. 5/28/93 50 Mos.
Fire RPL
ext.: Rt.
Cartridge, 30903828 BTL23883B 120 Mos. 5/5/95 5/2005
Fire 1 RPL
ext.: APU
Cartridge, 30903828 09015DI 72 Mos. 4/27/95 2/2001
Fire RPL
ext.: Left
Fire Bottle 3307507 23883B1 WC/12 Mos 5/5/95 5/96
APU HST/60 Mo 5/5/95 5/2000
Fire Bottle 33600011 10124D1 WC/12 Mos 4/27/95 5/98
Rt Eng. HST/60 Mo 5/14/93 4/98
Fire Bottle 33600011 09015D1 WC/12 Mos 4/27/95 4/96
Left Eng. HST/60 Mo 2/16/95 2/2000
Fire Ext. 892480 672AC WC/12 Mos 5/1/95 5/96
Aft HST/60 Mo 7/96
Closet(H20)
Fire Ext. 898052 A-415392 WC/12 Mos 5/1/95 5/96
Aft. (halon) HST/60 Mo 11/91 7/96
Fire Ext. 898052 B-615379 WC/12 Mos 5/1/95 5/96
Lt row HST/60 Mo 7/96
10/halon
Fire Ext. 898052 V-343826 WC/12 Mos 4/26/95 5/99
Fwd/(halon) HST/60 Mo
Fire Ext. 898052 E494480 WC/12 Mos 4/29/95 4/96
cockpit/halon HST/60 Mo 5/99
Fire Bottle, A800100-1 26-904 WC/12 Mos 4/13/94 Over Due
Lav. Aft HST/60 Mo
Fire bottle, A800100-1 26-906 WC/12 Mos 4/13/94 Over Due
Lav. Fwd HST/60 Mo
</TABLE>
-3-
<PAGE>
SCHEDULE 3
TO
LEASE SUPPLEMENT NO. 1
Aircraft Status on The Delivery Date
Time and Calendar Controlled Components
(excluding engines, landing gear, and APU).
<TABLE>
<CAPTION>
AIRCRAFT
COMPONENT PART HR.
POSITION NUMBER SERIAL # LIMIT TSI REMAINING
--------- -------- --------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C>
ATA 27
------
Jackscrew, 65-49970- KE00301 8000H 19,946H 3,787H
Stab. trim 17 OH 8/24/94
Fuse assy 6213-4 219 22,400H 19,945H 18,487H
auto BC
brk/rudder
Transmission 65-50321- 0812 16000H 15,275H 7,416H
No 1 flap 5 OH
Transmission 65-50322- 0840 16000H 15,275H 7,416H
No 2 flap 12 OH
Transmission 65-50323- 0911 16000H 15,275H 7,416H
No 3 flap 5 OH
Transmission 65-50324- 0784 16000H 15,275H 7,416H
No 4 flap 3 OH
Transmission 65-50325- 50007 16000H 15,275H 7,416H
No 5 flap 5 OH
Transmission 65-50326- 62003 16000H 15,275H 7,416H
No 6 flap 6 OH
Transmission 65-50327- 72004 16000H 15,275H 7,416H
No 7 flap 14 OH
Transmission 65-50328- 82002 16000H 15,275H 7,416H
No 8 flap 7 OH
Gearbox assy 65-51510- 7417 16000H 15,275H 7,416H
Rt angle/Left 1 OH
Gearbox assy 65-51510- 1489 16000H 15,275H 7,416H
Rt angle/Rt 2 OH
Gearbox assy 65-51513- 4778 16000H 15,275H 7,416H
Flap dr./Left 1 OH
Gearbox assy 65-51513- 1877 16000H 15,275H 7,416H
Flap dr./Rt. 2 OH
Power Unit 65-63851- 7241 16000H 15,275H 7,416H
Flap dr GBX 7 OH
</TABLE>
-4-
<PAGE>
SCHEDULE 3
TO
LEASE SUPPLEMENT NO. 1
Aircraft Status on The Delivery Date
Time and Calendar Controlled Components
(excluding engines, landing gear, and APU).
<TABLE>
<CAPTION>
AIRCRAFT
COMPONENT PART HR.
POSITION NUMBER SERIAL # LIMIT TSI REMAINING
--------- -------- --------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C>
ATA 28
------
APU Fuel AV16EI209 H1842C 20000H 19,898H 16,025H
S/0 VLV D OH 8/19/94
Left Fuel 61185 128 200001-1 19,876H 16,003H
S/0 VLV OH 8/16/94
Right Fuel 61185 1813 20000H 20,015H 16,142H
S/0 VLV OH 8/31/94
CF Fuel 61185 609 20000H 20,005H 16,146H
S/0 VLV OH 8/31/94
ATA 31
------
ULB Batteries 9804100- 7040 6 Yrs. 12 Mar 94 41 Mos.
GXUS RPL
ATA 32
------
Fuse assy 6213-4 627 22,400H 19,917.7H 18,458H
Auto OH 8/21/94
Brk/Rudder
ATA 34
------
Altimeter, WL102AMS AG102 24 Mo. 12/20/94 14 Mo.
Stby 3 IN
Transponder TPR 720 5128 24 Mo. 4/27/95 18 Mo.
Mode S, Lt. IN
Transponder TPR 720 5165 24 Mo. 4/27/95 18 Mo.
Mode S, Rt. IN
</TABLE>
-5-
<PAGE>
SCHEDULE 3
TO
LEASE SUPPLEMENT NO. 1
Aircraft Status on The Delivery Date
Time and Calendar Controlled Components
(excluding engines, landing gear, and APU).
<TABLE>
<CAPTION>
AIRCRAFT
COMPONENT PART HR.
POSITION NUMBER SERIAL # LIMIT TSI REMAINING
--------- -------- --------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C>
ATA 35
------
02 Cylinder 801307-00 223879/ 36 Mo. 6/22/94 5/97
29668 HST 5/94 19 Mo.
Portable 02 5500A1A- 771X/3596 60 Mo. 5/11/92 3/96
Cyl BF23A 4 HST 5 Mo.
Portable 02 5500A1A- 151843P/1 60 Mo. 12/21/93 1/97
Cyl BF23A 3 HST 15 Mo.
Row 1 5454
Portable 02 56002C1AF 55934DB/2 60 Mo. 10/5/95 2/2000
Cyl 23AM 3832 HST 58 Mo.
Aft closet
Portable 02 5600-2ClA 74732DF/ 60 Mo. 1/12/93 1/98
Cyl 41819 HST 26 Mo.
Cockpit
02 Generators Varies 12 Yrs 22 Mo.
------------- ------ ------ ------
117003-17 12 Yrs 22 Mo.
117.00-12 12 Yrs 22 Mo.
803000-02 12 Yrs 22 Mo.
117003-12 12 Yrs 22 Mo.
</TABLE>
-6-
<PAGE>
SCHEDULE 4
TO
LEASE SUPPLEMENT NO. 1
A/C N685MA
R/H SIDE
<TABLE>
<CAPTION>
DESC. PART NUMBER SERIAL NUMBER MODEL NUMBER
----- ----------- ------------- ------------
<S> <C> <C> <C>
1. TRIPLE BURNS 86952102 310588 JB5.2-3-58
2. TRIPLE BURNS 86952024 310581 JB5.2-3-59
3. TRIPLE BURNS 86952022 310569 JB5.2-3-59
4. TRIPLE BURNS 86952022 310566 JB5.2-3-59
5. TRIPLE BURNS 86952022 310572 JB5.2-3-59
6. TRIPLE BURNS 86952022 310577 JB5.2-3-59
7. TRIPLE BURNS 86952022 310570 JB5.2-3-59
8. TRIPLE BURNS 86952022 310574 JB5.2-3-59
9. TRIPLE BURNS 86952022 310568 JB5.2-3-59
10. TRIPLE BURNS 86952016 310562 JB5.2-3-58
11. TRIPLE BURNS 86952022 310573 JB5.2-3-59
12. TRIPLE BURNS 86952022 310579 JB5.2-3-59
13. TRIPLE BURNS 86952022 310578 JB5.2-3-59
14. TRIPLE BURNS 86952022 310571 JB5.2-3-59
15. TRIPLE BURNS 86952022 310576 JB5.2-3-59
16. TRIPLE BURNS 86952022 310564 JB5.2-3-59
17. TRIPLE BURNS 86952022 310575 JB5.2-3-59
18. TRIPLE BURNS 86952026 310582 JB5.2-3-59
19. TRIPLE BURNS 86952014 310560 JB5.2-3-58
20. DOUBLE BURNS 86953201 306409 JB5.2-2-39
</TABLE>
-1-
<PAGE>
A/C N685MA
L/H SIDE
<TABLE>
<CAPTION>
DESC. PART NUMBER SERIAL NUMBER MODEL NUMBER
----- ----------- ------------- ------------
<S> <C> <C> <C>
1. TRIPLE BURNS 86952101 310587 JB5.2-3-58
2. TRIPLE BURNS 86952007 310556 JB5.2-3-58
3. TRIPLE BURNS 86952001 310548 JB5.2-3-59
4. TRIPLE BURNS 86952001 310545 JB5.2-3-59
5. TRIPLE BURNS 86952001 310541 JB5.2-3-59
6. TRIPLE BURNS 86952001 310542 JB5.2-3-59
7. TRIPLE BURNS 86952001 310539 JB5.2-3-59
8. TRIPLE BURNS 86952001 310550 JB5.2-3-59
9. TRIPLE BURNS 86952013 310559 JB5.2-3-58
10. TRIPLE BURNS 86952015 310561 JB5.2-3-58
11. TRIPLE BURNS 86952001 310544 JB5.2-3-59
12. TRIPLE BURNS 86952003 310554 JB5.2-3-59
13. TRIPLE BURNS 86952001 310547 JB5.2-3-59
14. TRIPLE BURNS 86952001 310543 JB5.2-3-59
15. TRIPLE BURNS 86952001 310553 JB5.2-3-59
16. TRIPLE BURNS 86952001 310538 JB5.2-3-59
17. TRIPLE BURNS 86952001 310538 JB5.2-3-59
18. TRIPLE BURNS 86952001 310549 JB5.2-3-59
19. TRIPLE BURNS 86952005 310555 JB5.2-3-59
20. TRIPLE BURNS 86952017 310563 JB5.2-3-56
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
AUDITED THRU L/P 165891 10/20/95
A/C TOTAL HOURS 23,859
A/C TOTAL CYCLES 14,057
INSTALLED ON N685MA POSITION 1
HOURS CYCLES
LIMIT SINCE SINCE TOTAL TOTAL TIME REMAINING
ITEM POS PART NO S/N HOURS CYCLES NEW NEW HOURS CYCLES HOURS CYCLES
<S> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c>
ENGINE LEFT JT8D-17A P7095308 30,000 15,000 22,100 12,908 22,100 12,908 7,900 2,092
HUB (DISK) C 01 817401G P78775 NO LIMIT 20,000 NO LIMIT 12,908 NO LIMIT 12,908 NO LIMIT 7,092
DISK C 02 5002402-01 N87756 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK C 03 800803 N58289 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK (HUB) C 04 799504 P44646 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK C 05 745705 P93696 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK C 06 745706 P93306 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK C 07 774407 P81245 30,000 15,000 22,100 12,908 22,100 12,908 7,900 2,092
DISK (HUB) C 08 5005808-01 N90080 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK C 09 701509 P97271 30,000 19,000 22,100 12,908 22,100 12,908 7,900 6,092
DISK C 10 772510 P97761 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK C 11 772511 P03600 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK C 12 772512 P97578 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK C 13 5003613-01 P59603 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK (SHAFT) T 01 5003601-01 N36371 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK T 02 5003102-01 P03367 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK T 03 5003103-01 N64721 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK T 04 5003104-01 N52111 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
LPT (SHAFT) NO LIMIT 20,000 22,100 14,558 22,100 14,558 NO LIMIT 5,442
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AUDITED THRU L/P 165891 10/20/95
A/C TOTAL HOURS 23,859
A/C TOTAL CYCLES 14,057
INSTALLED ON N685MA POSITION 2
HOURS CYCLES
LIMIT SINCE SINCE TOTAL TOTAL TIME REMAINING
ITEM POS PART NO S/N HOURS CYCLES NEW NEW HOURS CYCLES HOURS CYCLES
<S> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c>
ENGINE RIGHT JT8D-17A P7095308 NO LIMIT NO LIMIT 20,960 11,883 20,960 11,883 9,040 3,117
HUB (DISK) C 01 817401 P23654 NO LIMIT 20,000 NO LIMIT 13,372 NO LIMIT 13,372 NO LIMIT 6,628
DISK C 02 5002402-01C S56233 30,000 20,000 10,771 7,680 10,771 7,680 19,229 12,320
DISK C 03 800803 P68371 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK (HUB) C 04 799504 N90833 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK C 05 745705 P93614 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK C 06 745706 P93230 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK C 07 774407 P81364 30,000 15,000 20,960 11,883 20,960 11,883 9,040 3,117
DISK (HUB) C 08 5005808-01 P43608 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK C 09 701509 P97641 30,000 19,000 20,960 11,883 20,960 11,883 9,040 7,117
DISK C 10 772510 P97278 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK C 11 772511 P03553 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK C 12 772512 P97219 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK C 13 5003613-01 P92918 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK T 01 5003601-01 N36374 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK T 02 5003102-01 M12012 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK T 03 5003103-01 N64611 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK T 04 5003104-01 N52069 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
LPT (SHAFT) NO LIMIT NO LIMIT
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AUDITED THRU L/P 165891 TOTAL A/C HOURS 23859
INSTALLED ON: N685MA DATE 10/20/95 TOTAL A/C CYCLES 14057
<S> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c>
NLG ASSEMBLY 65-73762-5 T01406P1486 90,000 24,000 9,943
SHOCK STRUT ASSY 65-46200-63 T01408P1486 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
OUTER CYLINDER ASSY 65-46210-25 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
OUTER CYLINDER 65-46211- 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
STEERING PLATE, UPR 65-46210-27 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
STEERING PLATE, LWR (DRILLED) 65-46210-24 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
OUTER CYLINDER ASSY (DRILLED) 65-46215-14 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
METERING PIN ASSY 65-46200-54 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
METERING PIN 65-46219- 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
SUPPORT TUBE, METERING PIN 65-46229- 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
DRAIN TUBE 69-57991- 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
SUPPORT TUBE, UPPER ORIFICE 69-73038-1 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
TUBE, ORIFICE SUPPORT 65-46226-9 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
STEM, ORIFICE SUPPORT 65C25707- 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
GLAND NUT ASSY 65-46221-4 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
ORIFICE PLATE, UPPER 69-36622-2 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
TORSION LINK ASSY, UPPER 65-46202-9 JC-1917 90,000 24,000 08/28/92 14,378 7,445 23,971 6,612 9,481 65,028 17,388
TORSION LINK ASSY, LOWER 65-46288-5 32-58 90,000 24,000 08/28/92 14,378 7,445 28,383 6,612 9,481 61,617 17,388
STEERING COLLAR ASSY 65-46203-24 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
BOLT, STEERING COLLAR 69-61383-2 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
BOLT, STEERING COLLAR 69-61383- 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
PIN, UPPER TORSION LINK 69-72698-1 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
PIN, LOWER TORSION LINK 69-72698-1 486-2 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
BOLT, TORSION LINK APEX 69-35883-2 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
LOWER DRAG BRACE ASSY 65-46230-7 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
UPPER DRAG BRACE ASSY 65-80051-13 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
PIN, DRAG BRACE CENTER 69-35391- 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
BOLT, DRAG BRACE, CENTER NAS1110-68D 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
PIN, UPPER DRAG BRACE 69-35394-2 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
PIN, UPPER DRAG BRACE 66-35394-2 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
BOLT, LOWER DRAG BRACE 69-35396-2 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
LOCK BRACE ASSY, AFT 65-46240-11 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
LOCK LINK ASSY, FWD 65-46242-11 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
BOLT, NOSE GEAR LOCK JOINT NAS1105-52D 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
SHAFT, AFT LOCK MECHANISM 69-35385-1 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
TRUNNION PIN, LEFT HAND 69-35398-2 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
TRUNNION PIN, RIGHT HAND 69-41248- 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AUDITED THRU L/P 165891 TOTAL A/C HOURS 23859
INSTALLED ON: N685MA DATE 10/20/95 TOTAL A/C CYCLES 14057
<S> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c>
LEFT NLG ASSEMBLY 65-73761-87 MC026895P1488 100,000 24,000 9,943
SHOCK STRUT ASSY 65-46100-52 MC028958P1488 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
OUTER CYLINDER ASSY 65-61740-10 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
INNER CYLINDER ASSY 65-46116-47 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
ORIFICE SUPPORT TUBE ASSY 65-46159-7 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
SUPPORT TUBE, ORIFICE 65-46160-7 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
ORIFICE PLATE 69-38980-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
METERING PIN 65-46124-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
DRAIN TUBE 65-46156-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
GLAND NUT 69-39485-10 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TORSION LINK ASSY, LOWER 65-46102-22 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TORSION LINK ASSY, UPPER 65-87958-9 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
UPPER DRAG STRUT ASSY 65-46103-11 1486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LOWER DRAG STRUT ASSY 65-60579-3 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
UNIVERSAL ASSY, LWR SIDE 65-46108-7 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
ACTUATOR BEAM ARM ASSY 65-46109-12 5104 100,000 24,000 12/16/91 12,391 5931 8,865 8,126 11,488 91,135 15,874
TRUNNION PIN ASSY 65-46113-5 34ORGA 100,000 24,000 12/16/91 12,391 5931 66,508 8,126 11,488 31,492 15,874
TEE BOLT ASSY, DRAG STRUT 65-46140-6 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TRUNNION LINK ASSY 65-63378-9 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TORSION LINK PIN, LOWER 69-72023-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TORSION LINK PIN, UPPER 69-72023-2 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, TEE FITTING ATTACHMENT 69-51833-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT ASSY.: LOWER DRAG STRUT 69-39473-9 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
FUSE BOLT ASSY, UPR DRAG 69-39476-6 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
NUT, TRUNNION PIN 69-41633-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
UNIVERSAL ASSY, REACTION LINK 65-46107-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
UPPER SIDE STRUT ASSY 65-46138-5 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LOWER SIDE STRUT ASSY 65-63397-9 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
REACTION LINK ASSY 65-46135-13 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LINK ASSY, UPPER DOWNLOCK 65-46138-16 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LINK ASSY, LOWER DOWNLOCK 65-46139-9 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
SHAFT, SPRING SUPPORT 69-38999-2 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT ASSY, REACTION LINK 69-38148-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT ASSY, UPPER SIDE STRUT 69-68149-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT ASSY, SIDE STRUT 69-68150-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, DOWNLOCK LINK PIVOT 69-41628-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, DOWNLOCK 69-42193-2 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, ASSY, UPPER DOWNLOCK 69-62779-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
ACTUATOR BEAM ASSY 65-46108-3 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
SUPPORT LINK ASSY 65-46112-22 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LINK ASSY, UPLOCK 65-63887-5 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BELLCRANK ASSY 65-63663-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
HOOK ASSY 65-46142-2 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
SHAFT, UPLOCK SUPPORT 65-46146-2 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, REACTION LINK / UPLOCK 69-68148-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, ACTUATOR BEAM, OUTBD 69-39464-4 352 100,000 24,000 12/16/91 12,891 5931 8,126 8,126 11,468 91,874 15,874
BOLT ASSY, LOWER SIDE STRUT 69-68151-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
COLLAR, BELLCRANK RET, UPLOCK 69-51838-2 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
FUSE BOLT, FWD TRUNNION BRG 69-58854-3 486 (ORIG) 83,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, ACTUATOR BEAM, INBRD BACB301J20CD43 685 100,000 24,000 12/14/91 12,891 5931 8,126 8,126 11,468 91,874 9,943
BOLT, ACTUATOR ROD END BACB301J16CD48 685/1 100,000 24,000 12/14/91 12,891 5931 8,126 8,126 11,468 91,874 9,943
BEARING ASSY, FWD TRUNNION 69-58871-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
NUT, AFT TRUNNION 65-84161-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AUDITED THRU L/P 165891 TOTAL A/C HOURS 23859
INSTALLED ON: N685MA DATE 10/20/95 TOTAL A/C CYCLES 14057
<S> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c>
RIGHT NLG ASSEMBLY 65-73761-87 MC02665P1488 100,000 24,000 9,943
SHOCK STRUT ASSY 65-46100-52 MC02896P1488 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
OUTER CYLINDER ASSY 65-61740-10 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
INNER CYLINDER ASSY 65-46116-47 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
ORIFICE SUPPORT TUBE ASSY 65-46159-7 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
SUPPORT TUBE, ORIFICE 65-46160-7 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
ORIFICE PLATE 69-38980-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
METERING PIN 65-46124-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
DRAIN TUBE 65-46156-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
GLAND NUT 69-39485-10 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TORSION LINK ASSY, LOWER 65-46102-22 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TORSION LINK ASSY, UPPER 65-87958-9 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
UPPER DRAG STRUT ASSY 65-46103-11 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LOWER DRAG STRUT ASSY 65-60579-3 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
UNIVERSAL ASSY, LWR SIDE 65-46105-7 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
ACTUATOR BEAM ARM ASSY 65-46109-12 1507 100,000 24,000 12/14/91 12,391 5931 34,655 8,126 11,488 65,345 15,874
TRUNNION PIN ASSY 65-46113-16 32-118 100,000 24,000 12/14/91 12,391 5931 8,126 8,126 11,488 91,674 15,874
TEE BOLT ASSY, DRAG STRUT 65-46140-6 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TRUNNION LINK ASSY 65-63378-9 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TORSION LINK PIN, LOWER 69-72023-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TORSION LINK PIN, UPPER 69-72023-2 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, TEE FITTING ATTACHMENT 69-51833-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT ASSY.: LOWER DRAG STRUT 69-39473-3 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
FUSE BOLT ASSY, UPR DRAG 69-39476-6 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
NUT, TRUNNION PIN 69-41633-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
UNIVERSAL ASSY, REACTION LINK 65-46107-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
UPPER SIDE STRUT ASSY 65-46138-5 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LOWER SIDE STRUT ASSY 65-63397-9 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
REACTION LINK ASSY 65-46135-13 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LINK ASSY, UPPER DOWNLOCK 65-46138-16 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LINK ASSY, LOWER DOWNLOCK 65-46139-9 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
SHAFT, SPRING SUPPORT 69-38999-3 685 100,000 24,000 12/14/91 12,391 5931 8,126 8,126 11,468 91,874 15,874
BOLT ASSY, REACTION LINK 69-38148-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT ASSY, UPPER SIDE STRUT 69-68149-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT ASSY, SIDE STRUT 69-68150-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, DOWNLOCK LINK PIVOT 69-41628-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, DOWNLOCK 69-42193-2 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, ASSY, UPPER DOWNLOCK0 69-62779-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
ACTUATOR BEAM ASSY 65-46108-3 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
SUPPORT LINK ASSY 65-46112-22 HI-106 100,000 24,000 12/14/91 12,391 5931 8,126 8,126 11,468 91,874 15,874
LINK ASSY, UPLOCK 65-63887-5 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BELLCRANK ASSY 65-63663-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
HOOK ASSY 65-46142-2 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
SHAFT, UPLOCK SUPPORT 65-46146-2 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, REACTION LINK / UPLOCK 69-68148-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, ACTUATOR BEAM, OUTBD 69-39464-4 482 100,000 24,000 12/14/91 12,391 5931 8,126 8,126 11,468 91,874 15,874
BOLT ASSY, LOWER SIDE STRUT 69-68151-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
COLLAR, BELLCRANK RET, UPLOCK 69-51838-2 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
FUSE BOLT, FWD TRUNNION BRG 69-58854-3 486-2 (ORIG) 83,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, ACTUATOR BEAM, INBRD BACB301J20CD43 685/2 100,000 24,000 12/14/91 12,391 5931 8,126 8,126 11,468 91,874 15,874
BOLT, ACTUATOR ROD END BACB301J16CD48 685 100,000 24,000 12/14/91 12,391 5931 8,126 8,126 11,468 91,874 15,874
BEARING ASSY, FWD TRUNNION 69-58871-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
NUT, AFT TRUNNION 65-84161-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
</TABLE>
<PAGE>
EXHIBIT E
to
AIRCRAFT LEASE AGREEMENT
RETURN CONDITION REQUIREMENTS
On the Return Occasion the Aircraft, subject to fair wear and tear generally,
will be in the following condition:
1 GENERAL CONDITION
The Aircraft shall:
(a) be clean by United States commercial airline standards;
(b) have installed the full complement of Engines, Parts and
other equipment, parts and accessories and loose equipment
(i) which were installed on the Aircraft at the Delivery Date (or
any replacements thereof made in accordance with the terms of
this Lease);
(ii) as would be required by this Lease to be installed on the
Aircraft if Lessee were to continue operating the same in
continued regular service;
(iii) each operating within limits approved by the FAA and fully
functioning in accordance with its intended use;
(iv) which are in a condition suitable to permit immediate
operation of the Aircraft in commercial service under the
FAA; and
(v) be in strict compliance with the Maintenance Program,
including the corrosion prevention control program
(CPCP/D6-38528) and the aging aircraft program (D6-38505 as
applicable per the airworthiness directive or per
effectivity).
(c) (i) have in existence a current, valid and existing FAA
certificate of airworthiness for airline operation or an FAA
export certificate of airworthiness, as elected by the
Beneficiaries in accordance with the terms of Section 16(d);
(ii) comply with (A)(1), all the requirements of US FAR Part 36
Appendix C (Stage II) noise compliance (without waiver,
restriction, deferment or exception) and (2) all the
requirements for operation under United States FAR Part 121
or (B)(1) if requested by the Beneficiaries in order to
comply with the requirements of any other country selected by
the Beneficiaries which follows the FAA rules and regulations
contemplated by U.S. FAR Part 129, U.S. FAR
<PAGE>
Part 121 and U.S. FAR Part 36, Appendix C and (2) all civil
aviation regulations, orders, rules and airworthiness
directives of such country to permit the immediate
re-registration and securing of a certificate of
airworthiness in such country for the Aircraft (provided that
(i) such regulations, orders, rules and Airworthiness
Directives are no more restrictive than those of the FAA, and
(ii) to the extent the work, standards or requirements
required to comply with this clause (B) is beyond the work,
standards or requirements otherwise required by Section 16 or
this Exhibit E, such work, standards or requirements will be
performed pursuant to work orders and workscopes agreed upon
by Lessee and the Beneficiaries and at the Beneficiaries'
cost, and the Term will not be deemed extended as a result of
such additional work). If requested to do so by the
Beneficiaries, Lessee shall cooperate reasonably to comply
with all requirements for domestic and over-water operations
under U.S. FAR Part 129, provided that (i) the Beneficiaries
inform Lessee of such requirements, (ii) Lessee and the
Beneficiaries mutually agree upon the work required for such
compliance and (iii) the Beneficiaries bear the cost of such
compliance to the extent such compliance requires parts or
labor not otherwise required to be performed by Lessee
pursuant to Section 16 or this Exhibit E, and the Term will
not be deemed extended as a result of such additional work
solely to comply with the requirements for domestic and
over-water operations under U.S. FAR Part 129.
(d) (i) comply with the Detailed Specifications except and to the
extent that such specifications have been altered as required
or permitted by this Lease;
(ii) except as otherwise provided in the Lease or in the
Supplemental Agreement or as consented to by each
Beneficiary, shall be in substantially the same configuration
(including but not limited to, interior seating
configuration, galleys and lavatories) as when the Aircraft
was originally delivered to Lessee hereunder, save where
changes have been made which do not impair its marketability
or decrease its value, as determined by each Beneficiaries'
sole determination;
(e) (i) have had carried out on the Aircraft the final
completion and termination of all open, deferred or
continued maintenance items, and shall have had completed, on
a terminating action basis, where terminating action is due
for compliance, all outstanding mandatory, required, ordered
and "earliest convenience" airworthiness directives issued by
the FAA and all mandatory, alert, earliest convenience and
recommended service bulletins (so long as the Manufacturer
issues such service bulletins) (insofar, in the case of
recommended service bulletins, as required by the
Beneficiaries after consultation with Lessee, in which case
any such recommended service bulletin shall be carried out
(y) at Lessee's expense if Lessee shall be carrying or shall
have carried out such service bulletin with respect to a
majority of aircraft comprising its 737 fleet or (z) at the
Beneficiaries' expense pursuant to the workscope or work
order agreed upon by the Beneficiaries and Lessee, if Lessee
shall not be carrying out such service bulletin with respect
to a majority of aircraft comprising its 737 fleet) issued by
the Manufacturer in
-2-
<PAGE>
each case which have a compliance or termination date on or
before the date three (3) months (six (6) months upon request
of and at the cost of the Beneficiaries and the Term will not
be deemed extended solely as a result of such additional work
required to terminate the airworthiness directives that are
due after three (3) months following the Return Occasion and
requested by the Beneficiaries) after the date of the Return
Occasion (without waiver, restriction, deferment, exception,
carry over, watch or repetitive status items or being on
watch, except, in the case of airworthiness directives, (i)
as expressly provided in the Supplemental Agreement or (ii)
as Lessor shall otherwise specify in writing to Lessee);
(ii) have had permanently and properly repaired any damage to
the Aircraft caused by ground handling equipment or impact
damage caused by foreign objects which occurred during the
Term that exceeds Manufacturer's limits for operation without
restrictions or repetitive inspections;
(iii) not have any open, deferred, continued or placarded log book
items;
(f) all exterior logos and other proprietary marks shall be removed or
painted over in accordance with proper industry practice and in a
workmanlike manner; provided that, at the Beneficiaries' request,
Lessee shall have Lessee's paint and markings stripped and
re-painted white or in the livery selected by the Beneficiaries so
long as the Beneficiaries bear the cost of such stripping and
repainting, as mutually agreed by the Beneficiaries and Lessee
Lessor shall be responsible for supplying the new livery template
and sufficient paint; and the Term will not be deemed extended
solely as a result of the additional work required at the
Beneficiaries' request;
(g) have all signs and decals in English, clean, secure and legible;
(h) have heretofore been maintained in accordance with Section 6(d) of
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 and operation by Lessee (it being
understood that the obligations hereby imposed upon Lessee by
reference to the care and consideration by Lessee as if the
Aircraft were to be kept in continued regular service is not
intended to supersede Lessee's obligations herein with respect to
the specific and express terms of this Lease with respect to the
maintenance, repair, alteration or return of the Aircraft);
(i) have had all repetitive airworthiness directives and mandatory
orders and regulations in at least half-life or better condition;
and
(j) have, upon return of the Aircraft, returned at least one (1)
complete set of the Aircraft Documents related to the Aircraft and
its maintenance and operation records in up-to-date status.
Lessee shall deliver to Lessor, at no cost to Lessor or the Beneficiaries,
all service bulletin kits relating to the Aircraft which have been furnished
to Lessee free of charge by any manufacturer for installation on the Aircraft
and which have not been so installed. In the event that such uninstalled
-3-
<PAGE>
Beneficiaries, taking into consideration
and determination Tax consequence to Lessor
and the Beneficiaries, which state shall be
specified in the Lease Supplement.
Engine Manufacturer: Pratt & Whitney.
Estimated Delivery Date: November 30, 1995.
Last Basic Rent The Last Basic Rent Payment
Payment Date: Date shall be the ninety-sixth (96th)
Basic Rent Payment Date.
Lease Identification: This [Aircraft] [Engine] is owned by
Wilmington Trust Company, not in its
individual capacity but solely as Trustee
for the benefit of ITOCHU AirLease
(Europe) Limited and Marubeni Airleasing
(UK) Limited, is leased to Aloha Airlines,
Inc. and may not be operated by a third
party without the prior written consent
of Wilmington Trust Company, as trustee.
Lessee's Address: Aloha Airlines, Inc.
371 Aokea Street
Honolulu, Hawaii 96819
Fax No.: (808) 833-3100
Attention: Vice President -
Finance and Chief Financial
Officer
Lessor's Address: Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
Attention: Corporate Trust
Administration
Fax No.: (302) 651-8882
Manufacturer: The Boeing Company.
Other Lease: Means each of Aircraft Lease Agreement
A, dated as of December 1, 1991, between
Lessee and First Security Bank of Utah,
National Association, as owner trustee,
and Aloha Airlines, Inc., as lessee, and
Aircraft Lease Agreement B, dated as of
December, 1991,
-2-
<PAGE>
between First Security Bank of Utah,
National Association, as owner trustee,
and Aloha Airlines, Inc., as lessee, as
each may be supplemented or amended
from time to time. The Other Leases relate
to the leasing to Lessee of aircraft other
than the Aircraft.
Overdue Rate: One month LIBOR, as in effect from time to
time, plus 3-1/2% per annum, but not to
exceed the maximum amount permitted by Law.
Payment Locations: For ITOCHU AirLease (Europe) Limited:
Account Name: Citibank New York (ABA No.
021000089) for the account of Citibank
Dublin (account no. 10994598) in favor of
ITOCHU AirLease (Europe) Limited (account
no. 1-00-6793-017)
For Marubeni Airleasing (U.K.) Limited:
Harris Bank International Corporation
ABA #026-007-760
for the credit of
The Mitsubishi Trust & Banking Corporation
London Branch A/C#16011100
UID No.107280
for further credit to
Marubeni Airleasing (UK) Ltd.
Account #020-404391
With respect to payments by
Lessee of Basic Rent hereunder, 62.682% of
such amounts shall be paid to ITOCHU
AirLease (Europe) Limited (as above
provided) and 37.318% of such amounts
shall be paid to Marubeni Airleasing (U.K.)
Limited (as above provided).
Permitted Jurisdictions: Any member country of the European Union
and the following:
-3-
<PAGE>
Argentina
Australia
Austria
Brazil
Canada
Chile
Finland
Hong Kong
Iceland
New Zealand
Norway
Puerto Rico
Singapore
South Africa
Sweden
Switzerland
United States of America
Permitted Sublessees: Aer Lingus
Air Canada
Air France
Air-Inter
Air New Zealand
Air Portugal
Alitalia
All Nippon Airways
Ansett
Austrian Airlines
Braathens
British Airways
British Midland Airways
Canadian Airlines International
Cathey Pacific
China Airlines
Condor
Iberia
Japan Airlines
Japan Air System
Japan Asia Airways
Korean Air
Lufthansa
Malaysian Airlines System
Martinair Holland
Qantas
Royal Dutch Airlines
Sabena
Scandinavian Airlines System
Singapore Airlines
SwissAir
Thai Airways International
Alaska Airlines
Continental Airlines
Delta Airlines
Southwest Airlines
United Air Lines
USAir
-4-
<PAGE>
Provided always that, at any time during
the Term, the Beneficiaries may, by notice
to Lessee, notify Lessee that any such
Person no longer constitutes a Permitted
Sublessee (which determination shall be
made on a reasonable basis by the
Beneficiaries), whereupon such Person shall
no longer constitute a Permitted Sublessee.
Public Liability and Five Hundred Million Dollars
Property Damage Insurance: ($500,000,000) per occurrence or the
highest amount carried by Lessee with
respect to other narrow body aircraft in
its fleet.
Return Location: Such location in the Western Continental
United States as may be selected by
Lessor. If the Beneficiaries request
Lessee to return the Aircraft to a
location other than in Western
Continental United States, other than
following a Default or an Event of Default,
then Lessee and the Beneficiaries will
cooperate reasonably and in good faith to
arrange for such ferry flight, and the
Beneficiaries will bear any additional
ferry flight cost and expenses incurred by
Lessee (without markup) that are beyond
those costs and expenses that would have
been incurred if the Aircraft were ferried
to a location in the Western United States.
Supplemental Agreement: means the Letter Agreement No. 1 dated as
of November 29, 1995 executed by the parties
hereto.
Trust Agreement: means Trust Agreement N685MA, dated as of
December 27, 1991 between Wilmington Trust
Company and each Beneficiary, as amended
modified or supplemented from time to time.
-57-
<PAGE>
kits were purchased, manufactured or ordered by Lessee and in stock or
undelivered pursuant to purchaser order, then Lessor shall have a right to
purchase such kits from Lessee, at Lessee's cost and expense (without mark-up),
such right being exercisable at any time during the sixty (60) day period
following the return of the Aircraft; provided that such period will be
extended to one hundred eighty (180) days if such kit is ordered by Lessee upon
request by the Beneficiaries.
Lessee shall have undertaken to use all reasonable endeavors (short of
grounding any aircraft or rescheduling any flight) to ensure that the Aircraft
shall have, on return of the Aircraft, no installed Part which shall have a
total time since new greater than 150% that of the Airframe. In any event,
Lessee shall not adversely discriminate against the Aircraft regarding the age
of Parts installed in the Aircraft compared with other aircraft operated by
Lessee.
2 AIRCRAFT MAINTENANCE ON RETURN
Prior to the Return Occasion and immediately prior to the return of the
Aircraft to Lessor, at Lessee's own expense:
(a) AIRFRAME
(i) Lessee shall, if requested by a Beneficiary, perform, or
procure the performance of, a full and complete C Check or its
equivalent including all phases, multiples and lower checks
in accordance with the Maintenance Program. Lessee shall
correct any deficiencies revealed during such C Check
inspection using Manufacturer's limits and guidelines, as
witnessed by the Beneficiaries' representative. Lessor will
contribute to the cost of such C Check or equivalent by
paying to Lessee the incrementary cost (without markup) to
perform such C Check or equivalent.
(ii) The Airframe shall have no less than 4,000 Flight Hours
remaining to the next due D Check and no less than 1,500
Flight Hours remaining to the next due C Check under Lessee's
Maintenance Program; PROVIDE, HOWEVER, that Lessee shall be
permitted to return the Aircraft with less than 4,000 Flight
Hours remaining until the next due D Check under Lessee's
Maintenance Program if (A) at time of the Return Occasion,
the Beneficiaries have entered into an agreement for the
lease or sale of the Aircraft with a subsequent lessee, buyer
or user of the Aircraft (a "Subsequent User"), and (B) the
bridging of the Maintenance Program to the Subsequent User's
maintenance program is approved in writing by the civil
aviation authority having jurisdiction over the Subsequent
User in a manner that permits the Subsequent User to actually
have available to it as of the Return Occasion no less than
4,000 Flight Hours remaining until the next due D check or
its equivalent in accordance with the Subsequent User's
maintenance program.
(iii) In addition to (i) above, if the Beneficiaries request that
Lessee perform, or procure the performance of, D Check or
equivalent, Lessee will perform, or procure the performance
of, such D Check or equivalent, with Lessor contributing to
the cost of such D Check or equivalent by paying to Lessee
the incrementary cost (without markup) to perform such D
Check or equivalent; provided that the Term will not be
deemed to be extended solely because of such D Check or
equivalent.
(b) The condition of the Aircraft and installed systems upon return to
Lessor shall be as follows:
<PAGE>
(i) each Engine and each life limited Part therein shall have no
less Flight Hours or Cycles or time (whichever is applicable
and the more limiting factor) remaining until the next due
scheduled removal, shop visit or overhaul refurbishment as on
the Delivery Date, and the Engines shall have not less than
2,250 Flight Hours and 1,500 Cycles remaining (whichever is
the more limiting factor) until the next scheduled
refurbishment and each life limited part within the Engines
shall have not less than 3,000 Flight Hours and 2,000 Cycles
remaining to the next scheduled replacement.
(ii) the APU and each life limited Part therein (if applicable)
shall have no less hours or time (whichever is applicable and
the more limiting factor) remaining until the next due
scheduled removal and overhaul as on the Delivery Date, and
Lessee shall have the option to swap APUs to meet the
requirements of this paragraph (ii);
(iii) the Landing Gear of the Aircraft and other time or life limited
parts of the Landing Gear shall have no less Flight Hours or
Cycles or any other life limit (whichever is applicable and
the more limiting factor) remaining until the next due
scheduled removal and overhaul as on the Delivery Date, and
Lessee shall have the option to swap Landing Gear to meet the
requirements of this paragraph (iii).
3 OTHER MATTERS
(a) Provided necessary material and instructions are received in due
time (other than materials available by Lessee), any further work
required by the Beneficiaries, which can be accommodated within
the days already planned by Lessee for the above inspection and
check as set forth in paragraph 2(a) above, shall be performed, or
performance thereof shall be procured, by Lessee during the above
check and Lessor shall reimburse Lessee for the incremental costs
incurred (without mark-up).
(b) Each and every Part and time or calendar limited Part (including,
without limitation, loose equipment) will have no less life
remaining to the next scheduled removal, repair and overhaul as on
the Delivery Date in accordance with the Maintenance Program or
the recommended maintenance planning document of the manufacturer
of the relevant Part, and Lessee shall have the option to swap
Parts to meet the requirements of this paragraph (b).
(c) Each Engine and the APU will be installed on the Aircraft and
if not the engines or auxiliary power unit installed on the
Delivery Date will be accompanied by all documentation that the
Beneficiaries may reasonably require to evidence that title
thereto is properly vested in Lessor in accordance with this Lease
and will:
(i) have a power assurance run and a borescope inspection (or, in
case of the APU, such other inspection as in accordance with
Manufacturer's or APU manufacturer's recommendation) and, in a
case where an Engine does not meet the on-wing operating
criteria as required by Lessee's FAA approved engine
Maintenance Program and limits of the Engine section of the
Aircraft Maintenance Manual, if requested by Lessor, a test
cell inspection which shall be performed at Lessee's expense
with the Beneficiaries' representative entitled to be present
and Lessee shall provide evidence satisfactory to the
Beneficiaries (A) that the Engine meets the JT8D-17A limits
established by the Manufacturer according to the power
assurance check defined on the Aircraft
-5-
<PAGE>
Maintenance Manual with an EGT margin of no less than 18
degrees centigrade at maximum rated takeoff power on a
standard day and (B) reflecting the correction of any
discrepancies from the guidelines set out by the Engine
Manufacturer which may be discovered during any such
inspection. All repairs shall be to the Beneficiaries'
satisfaction;
(ii) if the Engine historical and maintenance records and/or trend
monitoring data (or current test cell run report, if
applicable) indicate a rate of acceleration in performance
deterioration of any Engine including the APU which is higher
than normal based on Lessee's maintenance experience in
operating such engines, Lessee shall, prior to return, correct
or cause to be corrected such conditions which are determined
to have exceeded engine manufacturer's maintenance manual
tolerances or otherwise be causing such performance
deterioration; and
(iii) not have an Engine which is "on watch" for any reason
requiring any special or out of sequence inspection and each
such Engine shall comply with the operations specification of
Lessee without waiver, carry over, deferment, restriction or
exceptions.
4 FUSELAGE, WINDOWS AND DOORS
(a) The fuselage will be free of all dents and abrasions,
additional scab patches am as at the Delivery Date and loose or
pulled or missing rivets, beyond the limits set in the relevant
structural repair manual (and all scab patches existing at the
Delivery Date shall be monitored and maintained, including as to
corrosion, during the Tenn);
(b) windows will be free of delamination, blemishes, crazing, beyond
limits set in the relevant structural repair manual and will be
properly sealed; and
(c) doors will be free moving, correctly rigged and be fitted with
serviceable seals.
5 WINGS AND EMPENNAGE
(a) All leading edges will be free from damage, beyond limits
set in the relevant structural repair manual; and
(b) all control surfaces will be cleaned (provided they shall have
been waxed and polished during the preceding C Check);
(c) all unpainted cowlings and fairings will be cleaned (provided they
shall have been polished during the preceding C Check); and
(d) wings will be free of fuel leaks.
6 INTERIOR
(a) Ceilings, sidewalls and bulkhead panels will be clean and free of
cracks and stains (fair wear and tear excepted);
-6-
<PAGE>
(b) carpets and seat covers will be in good condition, clean and free
of stains, spots, chewing gum, tear or fraying (fair wear and tear
excepted) and meet FAA fire resistance regulations;
(c) seals and panels will meet FAA fire resistance regulations and
will be serviceable in good condition free of cracks and repainted
as necessary; and
(d) emergency equipment having no less calendar life remaining as on
the Delivery Date.
7 COCKPIT
(a) All fairing panels shall be clean, free of stains and cracks (fair
wear and tear excepted), will be secure and repainted as necessary;
(b) floor coverings will be clean (fair wear and tear excepted) and
effectively sealed;
(c) seat covers will be in good condition, clean, free of stains (fair
wear and tear excepted) and will conform to FAA fire resistance
regulations; and
(d) seats will be serviceable, in good condition, meet FAA fire
resistance regulations and will be repainted as necessary.
8 CARGO COMPARTMENTS
(a) All panels will be in good condition, fair wear and tear
excepted, clean and free of cracks and any panels which have
cracks will be replaced;
(b) all nets will be serviceable and in good condition, fair wear and
tear excepted; (c) any repair shall be within the limits
established in the Manufacturer's structural repair manual; and
(d) fabric cover shall be in good condition, fair wear and tear
excepted, free of stains, spots, tear or fraying.
9 WHEEL WELLS AND UNDERCARRIAGE
Each wheel well and undercarriage will be clean and free of leaks. The
wheel wells will be repainted as necessary.
10 CORROSION
(a) The Aircraft will have been inspected and treated with respect to
corrosion in strict adherence to that required by the Maintenance
Program;
(b) the entire fuselage will be substantially free from corrosion and
will be adequately treated and an approved corrosion prevention
program will be in operation; and
-7-
<PAGE>
(c) fuel tanks will be free from contamination and, if applicable, a
corrosion and a tank treatment program will be in operation.
11 EQUIPMENT CHANGES
Upon mutual discussion and agreement, Lessor may require Lessee to
remove any Removable Part (but excluding a Removable Part the
installation of which is a requirement of the FAA or this Lease) and
restore the Aircraft to its condition prior to installation of that
Removable Part. Where appropriate, compliance by Lessee with the
redelivery conditions in this Schedule shall be measured by reference to
the Boeing maintenance planning document.
12 NO LESSOR OR BENEFICIARY COMPENSATION
Neither Lessor nor any Beneficiary shall be liable to Lessee, and Lessee
shall not be entitled to any compensation, with respect to the return of
the Airframe, the APU, any Landing Gear or any Part which, in any case,
has more Flight Hours, Cycles or time remaining or is otherwise in
better condition than the Flight Hours, Cycles, time remaining or
condition required by this Lease (including but not limited to Sections
2(a)(ii), 2(b)(ii), 2(b)(iii) and 3(b) of this Section E).
-8-
<PAGE>
EXHIBIT F
to
AIRCRAFT LEASE AGREEMENT
[Letterhead of Lessee's Counsel]
[Date of Delivery Date]
The following is a summary of the items that should be included in Lessee's
Counsel Opinion:
1. Lessee is a corporation duly organized and existing under
the laws of the State of Hawaii and has the corporate power and authority to
carry on its business as presently conducted and to perform its obligations
under the Lease.
2. The execution, delivery and performance of the Operative
Documents have been duly authorized by all necessary corporate action of Lessee
and do not require any further approval of the Board of Directors or
stockholders of Lessee or approval or consent of any trustee or holders of
indebtedness or obligations of Lessee. Neither the execution and delivery
thereof nor the consummation of the transactions contemplated thereby nor
compliance by Lessee with any of the terms and provisions thereof will
contravene the certificate of incorporation or by-laws of Lessee or, to our
knowledge, any law applicable to Lessee and, to our knowledge, do not and will
not result in any breach of, or constitute a default under, or result in the
creation of any Lien upon any property of Lessee under, any credit agreement or
instrument, or other agreement or instrument to which Lessee is a party or by
which Lessee or its properties or assets are bound or affected.
3. Neither the execution and delivery by Lessee of the
Operative Document, nor the consummation of any of the transactions by Lessee
contemplated thereby, nor the compliance by the Lessee with any of the terms
and provisions thereof, requires the consent or approval of, or the giving of
notice to, or the registration with, or the taking of any other action in
respect of any federal or state governmental authority or agency, except for
the registration of the Aircraft, recordation and other actions referred to in
paragraph 6 below.
4. The Operative Document have been duly executed and
delivered by Lessee, and constitute the legal, valid and binding obligations of
Lessee, enforceable against Lessee in accordance with their respective terms,
subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and, to general principles of equity.
5. To our knowledge, there are no pending suits or proceedings
before any court or any regulatory commission, board or other administrative
governmental agency against or affecting Lessee which might have a materially
adverse effect on the current business or financial condition of Lessee.
6. Except for the appropriate registrations, recordings and
filings with the FAA, the filing of a precautionary UCC-1 financing statement
with the Hawaii Bureau of Conveyances and the placing on the Aircraft and on
each Engine of the plates containing the legends referred to in Section 6(f) of
the Lease
<PAGE>
Agreement, no further filing or recording of any document and no further action
is necessary or desirable in order to protect Lessor's right, title and
interest in and to the Aircraft as against Lessee or any third party.
7. Lessee is a Certified Air Carrier as defined in the Lease
Agreement.
8. Lessor is entitled to the benefits of Section 1110 of Title
11 of the United States Code with respect to the Aircraft and the Engines to
the extent that they constitute an "airframe" or "aircraft engines", as defined
in Section 101 of the Federal Aviation Act.
-2-
<PAGE>
EXHIBIT G
to
AIRCRAFT LEASE AGREEMENT
[LETTERHEAD OF APPROVED INSURANCE BROKER]
[Date of Delivery Date]
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
Re: Insurance Coverage for One Boeing 737-25A Aircraft under
Aircraft Lease Agreement, dated as of November 29, 1995,
between Wilmington Trust Company, not in its individual
capacity but solely as Trustee f/b/o ITOCHU AirLease
(Europe) Limited and Marubeni Airleasing (U.K.) Limited
Gentlemen:
This report is delivered to you pursuant to the provisions of
Section 2(b)(vii)(5) of the Aircraft Lease Agreement 23791, dated as of
November __, 1995 (the "Lease"), between Wilmington Trust Company, not in its
individual capacity but solely as Trustee (the "Lessor"), and Aloha Airlines,
Inc. (the "Lessee"). We are the firm of independent aircraft insurance brokers
(the "Approved Insurance Broker") who have been appointed by the Lessee to
deliver this report pursuant to Section 2(b)(vii)(5) of the Lease and we
understand that the Lessor has not objected to such appointment. Except as
otherwise defined herein, the terms used herein shall have the meanings set
forth in the Lease.
We have reviewed the Lease and particularly Section 12
thereof. We are also fully familiar with the Certificate of Insurance dated
November __, 1995 issued to you on behalf of the Approved Insurers as well as
the policies of insurance evidenced thereby.
As of the date of this report, it is our opinion as the
Approved Insurance Broker that the insurance presently carried and maintained
by the Lessee, as evidenced in the attached certificates, complies with the
terms and requirements of Section 12 of the Lease.
We agree to advise the Lessor and each Beneficiary in writing
promptly of any default in the payment of any premium and any other act or
omission on the part of the Lessee of which we have knowledge and which might
invalidate or render unenforceable, in whole or part, any insurance required
under the Lease on the Aircraft.
Yours faithfully,
[APPROVED INSURANCE BROKER]
<PAGE>
Wilmington Trust Company
Date
Page 2
----------------------
[Title]
<PAGE>
EXHIBIT H
to
AIRCRAFT LEASE AGREEMENT
SPECIAL PROVISIONS TO CERTIFICATE OF INSURANCE
The "special provisions" section of the Insurance Certificate
shall provide as follows:
1. In accordance with the Aircraft Lease Agreement, dated as
of November 29, 1995 (the "Lease"), between Lessor and Lessee, it is agreed to
include Lessor (in its individual capacity and as Owner Trustee), each
Beneficiary and their assigns as additional insureds, designate Lessor as owner
of the Aircraft, and designate the Beneficiaries and their assigns as loss
payees (but without imposing upon Lessor, such Beneficiary and their assigns
any obligation to pay any premiums).
2. It is agreed that in respect of the interests of Lessor,
each Beneficiary and their assigns, in the insurance coverage provided hereby,
such insurance coverage shall not be invalidated by any action or omission of
Lessee, and shall insure Lessor, such Beneficiary and their assigns, regardless
of any breach or violation of any warranty, declaration or condition contained
in such insurance coverage by Lessee.
3. It is agreed that if the insurance coverage provided hereby
is canceled for any reason whatsoever, or is adversely changed in any way with
respect to the interests of Lessor, any Beneficiary or their assigns, or if
such insurance is allowed to lapse for nonpayment of premium, such
cancellation, adverse change or lapse shall not be effective as to Lessor, such
Beneficiary and their assigns, for thirty (30) days (seven (7) days or such
lesser period as may be applicable in the case of any war risks and allied
perils coverage) after receipt by Lessor and such Beneficiary of written notice
of such prospective cancellation, change or lapse.
4. It is agreed that, as against Lessor, each Beneficiary and
their assigns, the Insurers waive any rights of setoff, counterclaim or any
other deduction, whether by attachment or otherwise, and waive any rights to be
subrogated to any right of any insured against Lessor, each Beneficiary or
their assigns, with respect to the Aircraft to the same extent that Lessee has
waived its rights of subrogation by the terms of its agreements to indemnify
any such party pursuant to this Lease.
5. The coverage provided hereunder is primary without right of
contribution from any other insurance which may be carried by Lessor, any
Beneficiary or their assigns. It is agreed that Lessor and each Beneficiary has
a right to carry insurance in excess of the amounts provided hereunder without
prejudice to the coverage hereunder provided.
6. A 50/50 clause is in effect between the all risk hull and
war risk covers.
<PAGE>
EXHIBIT I
to
AIRCRAFT LEASE AGREEMENT
FORM OF REDELIVERY ACKNOWLEDGEMENT
This Redelivery Acknowledgement is delivered, on the date set
out below, by WILMINGTON TRUST COMPANY ("Lessor") to ALOHA AIRLINES INC.
("Lessee") pursuant to the Lease Agreement dated November __, 1995 between
Lessor and Lessee (the "Agreement"). The capitalised terms used in this
Certificate shall have the meanings given to such terms in the Agreement.
1 DETAILS OF ACCEPTANCE
Lessor hereby confirms to Lessee that Lessor has at [ ] o'clock on
[insert date], at [ ], accepted redelivery of the following, in
accordance with the provisions of the Agreement:
(a) Boeing Model 737-25A Airframe, Manufacturer's Serial No. 28791.
(b) Pratt and Whitney JT8D-17A Engine, Manufacturer's Serial
Nos. [ ] and [ ].
(c) Fuel Status: Pounds [ ].
(d) Loose Equipment Check List: as per list signed by Lessor
and Lessee and attached hereto.
2 CONFIRMATION
Lessor confirms to Lessee that as at the time indicated above, being
the Expiration Date, Lessor's authorized technical experts have
inspected the Aircraft to ensure the Aircraft conforms to redelivery
conditions specified in the Agreement and that the Aircraft is in
accordance with the specifications of the Agreement and satisfactory
in all respects save for the following:
[ ]
[ ]
<PAGE>
3 IN WITNESS WHEREOF, the Lessor has, by its duly authorized
representative, executed this Certificate on the date in paragraph 1
above.
LESSOR:
By:
---------------------
Title:
---------------------
Date:
---------------------
The "special provisions" section of the Insurance Certificate shall
provide as follows:
-2-
<PAGE>
EXHIBIT J
to
AIRCRAFT LEASE AGREEMENT
Monthly Aircraft Utilization & Status Report
Monthly Aircraft Utilization and Status Report Provided
UNDER THE LEASE CONTRACT BETWEEN ALOHA AIRLINES, INC. AND WILMINTON TRUST
COMPANY, AS TRUSTEE
MONTH ENDING:
Aircraft Registration Number:
Airframe Make and Model: Boeing:
Total Time on Airframe Since New:
Total Cycles on Airframe Since New:
<TABLE>
<CAPTION>
MONTHLY TOTAL
FLIGHT MONTHLY FLIGHT TOTAL DATE INST
SERIAL NO. HOURS CYCLES HOURS CYCLES LOCATION (REMOVED)
<S> <C> <C> <C> <C> <C> <C> <C>
Airframe
Engines & APU's Subject to Lease
Engine #1
Engine #2
APU
Other Engines & APU's Installed on Airframe
Engine #1
Engine #2
APU
Engines & APU's permanently removed from Service During Month
</TABLE>
MAJOR MAINTENANCE
<TABLE>
<CAPTION>
MAINTENANCE CHECK DATE ACCOMPLISHED
<S> <C>
"A" CHECK - HOURS
"B" CHECK - HOURS
"C" CHECK - HOURS
"D" CHECK - HOURS
</TABLE>
APU and Engine data represent the times and cycles of the airframes
each is installed on.
The Aircraft, Engines, modules and APU subject to the Lease for
this Aircraft have been kept in good order and repair, or are being restored to
the condition required by the Lease.
MAJOR STRUCTURAL REPAIR:
MAJOR MODIFICATIONS/AD's:
MISCELLANEOUS/ACCIDENTS/INCIDENTS:
FOR AND ON BEHALF OF VARIG S.A.
NAME:
TITLE:
<PAGE>
EXHIBIT K
to
AIRCRAFT LEASE AGREEMENT
LIST OF DOCUMENTS TO BE SUPPLIED ANNUALLY
1. AIRWORTHINESS DIRECTIVE SUMMARY UPDATES WILL BE SUPPLIED ANNUALLY
2. SERVICE BULLETIN AND LESSEE'S ORIGINATED MODS SUMMARY
UPDATES WILL BE SUPPLIED ANNUALLY
3. ENGINEERING ORDER (DT)
4. LAST SHOP VISIT REPORT (FORM 337) FOR ENGINES AND APU WILL BE SUPPLIED
AS APPLICABLE.
5. LIFE LIMITED PARTS STATUS FOR AIRFRAME/ENGINE/APU/LANDING GEAR WITH
COPY OF SERVICEABLE TAGS AS APPLICABLE.
6. LISTING OF TIME/CALENDAR CONTROLLED COMPONENTS BY PIN, S/N -
DESCRIPTION-POSITION-TBO-TSI-TSO-TOTAL TIME.
7. AIRCRAFT MASTER FLIGHT LOG (COMPUTER RUN OF TOTAL TT/TC RECORDED
DAILY). UPDATES WILL BE PROVIDED.
8. CURRENT AND FUTURE REVISIONS OF ALOHA 737 MAINTENANCE PROGRAM (EPM), AS
APPLICABLE.
9. LISTING OF ALL MAJOR 737 STRUCTURAL REPAIRS (N685MA) AS APPLICABLE.
10. ANTICIPATED DATE OF NEXT SCHEDULED D CHECK OR C CHECK.
<PAGE>
COUNTERPART NO. 7
LEASE SUPPLEMENT NO. 1
TO AIRCRAFT LEASE AGREEMENT
DATED AS OF NOVEMBER 29, 1995
LEASE SUPPLEMENT NO. 1, dated December 1, 1995, between
Wilmington Trust Company, not in its individual capacity but solely as
Trustee f/b/o ITOCHU AirLease (Europe) Limited and Marubeni Airleasing (U.K.)
Limited ("Lessor"), and Aloha Airlines, Inc., a company organized under the
laws of Hawaii ("Lessee").
Lessor and Lessee have previously entered into that certain
Aircraft Lease Agreement dated as of November 29, 1995 (herein called the
"Lease" and the defined terms therein being hereinafter used with the same
meaning). The Lease provides for the execution and delivery from time to time
of a Lease Supplement substantially in the form hereof for the purpose of
leasing the aircraft described below under the Lease as and when delivered by
Lessor to Lessee in accordance with the terms thereof.
The Lease relates to the Aircraft, Parts and Engines as more
precisely described below. A counterpart of the Lease is attached hereto and
this Lease Supplement and the Lease shall form one document.
In consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under the
Lease and Lessee hereby accepts and leases from Lessor under the Lease, that
certain Boeing Model B-737-25A commercial jet aircraft, Airframe and the two
Pratt & Whitney JT8D-17A Engines (each of which engines has 750 or more rated
takeoff horsepower or the equivalent of such horsepower) described in
Schedule 1 attached hereto and made a part hereof (the "Delivered Aircraft").
The status of the Aircraft and Engines upon delivery thereof to Lessee shall
be as described on Schedule 2 attached hereto and made a part hereof.
2. (A) The Delivery Date of the Delivered Aircraft is the
date of this Lease Supplement set forth in the opening paragraph hereof.
(B) The time of the delivery and acceptance of the
Delivered Aircraft is 12:30 p.m. Central Time, at which
<PAGE>
time the Delivered Aircraft is located in the airspace over the State of
Texas, United States of America (such location is herein called the "Delivery
Location").
3. The Term for the Delivered Aircraft shall commence on
the Delivery Date and shall end on the Expiration Date, which shall be
December 1, 2003.
4. The amount of Basic Rent for the Delivered Aircraft is
payable in advance on each Basic Rent Payment Date.
5. Lessee hereby confirms to Lessor that (i) the Delivered
Aircraft and each Engine installed thereon or belonging thereto have been
duly marked in accordance with the terms of Section 6(f) of the Lease, (ii)
Lessee has accepted the Delivered Aircraft for all purposes hereof and of the
Lease and (iii) Lessee has inspected the Delivered Aircraft and the Delivered
Aircraft satisfies the conditions set forth in the Lease.
6. Lessor represents that all of its representations and
warranties contained in the Lease are true and correct on the date hereof.
7. All of the terms and provisions of the Lease Agreement
are hereby incorporated by reference in the Lease Supplement to the same
extent as if fully set forth herein.
8. The Lease Supplement may be executed in any number of
counterparts, each of such counterparts, except as provided in Section 20(e)
of the Lease, shall for all purposes be deemed to be an original and all such
counterparts shall together constitute but one and the same Lease Supplement.
THIS LEASE SUPPLEMENT HAS BEEN EXECUTED IN MULTIPLE COUNTERPARTS, OF WHICH
THERE IS ONE COUNTERPART DESIGNATED AS "COUNTERPART NO. 1 - CHATTEL PAPER
ORIGINAL" AND ALL OTHER COUNTERPARTS SHALL BE DESIGNATED WITH NUMBERS OTHER
THAN 1. TO THE EXTENT THAT THIS LEASE SUPPLEMENT CONSTITUTES CHATTEL PAPER
UNDER THE UNIFORM COMMERCIAL CODE, AS IN EFFECT IN ANY APPLICABLE
JURISDICTION, NO SECURITY INTEREST MAY BE CREATED OR PERFECTED BY POSSESSION
OF ANY COUNTERPART OF THIS LEASE SUPPLEMENT OTHER THAN SAID COUNTERPART NO. 1.
-2-
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee each have caused
this Lease Supplement to be duly executed by their authorized officers as of
the day and year first above written.
LESSOR:
WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Trustee
By: /s/ M. P. Bonilla
------------------------------------
Name: Myfanwy Phillips Bonilla
------------------------------------
Title: Asst. Vice President
LESSEE:
ALOHA, AIRLINES, INC
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee each have caused this
Lease Supplement to be duly executed by their authorized officers as of the
day and year first above written.
LESSOR:
WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Trustee
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
LESSEE:
ALOHA AIRLINES, INC.
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
------------------------------------
<PAGE>
SCHEDULE 1
TO
LEASE SUPPLEMENT NO. 1
BOEING 737-25A
AIRFRAME
<TABLE>
<CAPTION>
MANUFACTURER'S U.S. REGISTRATION
SERIAL NO. NUMBER TOTAL TIME* TOTAL CYCLES*
-------------- ----------------- ----------- -------------
<S> <C> <C> <C>
23791 N685MA 23,859 14,057
(to be changed to
N819AL)
INSTALLED PRATT & WHITNEY
ENGINES
MODEL NO. SERIAL NO. TOTAL TIME* TOTAL CYCLES*
--------- ---------- ----------- -------------
JT8D-17A P709529 20,960 11,883
JT8D-17A P709530 22,100 12,908
INSTALLED
AUXILIARY POWER UNIT
MODEL NO. SERIAL NO. TOTAL TIME* TOTAL CYCLES*
--------- ---------- ----------- -------------
GTCP85-129 P35274 (TACH Reading)
</TABLE>
<PAGE>
SCHEDULE 1
TO
LEASE SUPPLEMENT NO. 1 (cont'd)
B737 AVIONICS
COMPONENT INVENTORY
<TABLE>
<CAPTION>
ITEM PART NUMBER SERIAL NUMBER DESCRIPTION POSITION/QUANTITY
NO.
---- ------------------ ------------- --------------------------- -------------------
<S> <C> <C> <C> <C> <C>
1 622-4096-001 4581 PA Amp E&E 1
2 5140-1-112 339 Remote Electronics Unit E&E 1
3 622-8971-020 2119 TCAS T/R E&E 1
4 622-1181-001 14400 VHF T/R E&E 1
5 622-1396-001 5023 VHF T/R E&E 1
6 622-7878-200 5128/5165 ATC E&E 2
7 NA 13UO2 255AKWO022 Selcal E&E 1
8 622-2921-001 10076/10061 DME E&E 2
9 080-20325-01 4603/4613/4602 T/Rectifier E&E 3
10 2-301-3 4782 Batt Charger E&E 1
11 39B168-1-0 3276 Static Inverter E&E 1
12 65-52811-109 D00485 Landing Gear Acc Unit E&E 1
13 42-651-01 443 Anti-Skid E&E 1
14 65-52810-25 D01002 Air Condition Relay Unit E&E 1
15 65-73606-69 D01029 Eng Acc Unit E&E 1
16 65-52808-7 D00496 Compartment Overheat Unit E&E 1
17 65-52806-235 D00870 Misc Solid State Switch E&E 1
18 65-52807-26 D00449 Slat Position Switch Unit E&E 1
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
ITEM PART NUMBER SERIAL NUMBER DESCRIPTION POSITION/QUANTITY
NO.
---- ------------------ ------------- --------------------------- -------------------
<S> <C> <C> <C> <C> <C>
19 522-2996-011 2012 Marker Beacon E&E 1
20 777-1492-002 1582 ADF E&E 1
21 777-1492-004 4039 ADF E&E 1
22 965-0876-001 304 GPWS E&E 1
23 622-3890-003 1556 Radio Alt E&E 1
24 65-52801-31 D00446 APU Control Unit E&E 1
25 65-52809-15 D00306 Fire Detector Unit E&E 1
26 8TJ45-GAB X0062 34B3 Fuel Flow Power Supply E&E
27 231-2 5556/6517 Window Heat Control E&E 4
28 4314/7490 E&E
29 522-3949-001 3701 Monitor Comparator E&E 1
30 622-3257-001 5662/2275 ILS NAV RCVR E&E 2
31 172938-001 6620/6623 NAV SW Unit E&E 4
32 6630/6613 E&E
33 HG48B13 P255/G1711 ADC E&E 2
34 4030952-906 88062826 Yaw Damper E&E 1
35 163356-88-01 0000528 Performance Data Comp E&E 1
36 548376-6 097C-9045 Cabin Temp Controller E&E 1
37 87093613 P43 Pressure Controller E&E 1
38 2588424-902 84053253 Rate of Turn E&E 1
39 101 812802UA/9118557A Compass Rack E&E 2
40 622-2500-004 2343/1298 Steering Comp E&E 2
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
ITEM PART NUMBER SERIAL NUMBER DESCRIPTION POSITION/QUANTITY
NO.
---- ------------------ ------------- --------------------------- -------------------
<S> <C> <C> <C> <C> <C>
41 65-52805-317 D01011 Flight Inst Acc Unit E&E 1
42 172938-001 6624/6615 Switch Unit E&E 4
43 6595/2678 E&E
44 2590650-901 05872772 Mach Trim Comp E&E 1
45 2588810-904 01851529 Pitch Computer E&E 1
46 2588812-902 06871639 Roll Computer E&E 1
47 65-52812-107 D00496 Auto Pilot Acc Unit E&E 1
48 457300-0430 3394 Omega RPU E&E 1
49 25582-003 8305313 Battery E&E 1
50 2587335-11 84054627 Vert Gyro E&E 1
51 2587335-11 8415034 Vert Gyro E&E 1
52 2587335-11 0034163 Vert Gyro E&E 1
53 2588302-4 0067044 Direction Gyro E&E 1
54 2588302-4 84056507 Direction Gyro E&E 1
</TABLE>
-4-
<PAGE>
SCHEDULE 2
TO
LEASE SUPPLEMENT NO. 1
AIRCRAFT STATUS
ON THE DELIVERY DATE
AIRFRAME HEAVIEST CHECK ("D" CHECK OR EQUIVALENT):
Interval: 28,000 (Hrs)
Time Remaining: 4,141
LANDING GEAR OVERHAUL:
Interval: Main Gear 24,000 cycles
Nose Gear 24,000 cycles
Time Remaining: Left Gear 9,943 cycles
Right Gear 9,943 cycles
Nose Gear 9,943 cycles
ENGINES:
Overhaul Interval:
Time Remaining (S/N P709529):
Time Remaining (S/N P709530):
Hot Section Inspection:
Interval:
Time Remaining (S/N P709529):
Time Remaining (S/N P709530):
TIME REMAINING TO FIRST RESTRICTION:
Engine S/N: P709529
Hours: 9,040
Cycles: 3,117 (C07)
Engine S/N: P709530
Hours: 7,900
Cycles: 2,092 (C07)
<PAGE>
AUXILIARY POWER UNIT:
Hot Section Inspection:
Interval: On Condition
Time Remaining: On Condition
Time Remaining to Next Limited
or Scheduled Removal: On Condition
-2-
<PAGE>
SCHEDULE 3
TO
LEASE SUPPLEMENT NO. 1
Aircraft Status on The Delivery Date
Time and Calendar Controlled Components
(excluding engines, landing gear, and APU).
Effective date: 10/20/95
<TABLE>
<CAPTION>
AIRCRAFT
COMPONENT PART HR.
POSITION NUMBER SERIAL # LIMIT TSI REMAINING
--------- -------- --------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C>
ATA 21
------
Valve, Safety 720737-5 L-0001 14000H 13,817.6 3,977.2
RH OH 7/3/92
Valve, Safety 720737-5 830678 14000H 13,817.6 3,977.2
LH OH 7/3/92
Gasper Fan 21520-1 063 6000H 22,594.7 4,735
OH 6/15/95
ATA 23
------
Recorder, 93A100-80 52428 72 Mo. 14, 623.2H 2 Yrs., 6 Mo.
Voice RPL
(Battery)
ATA 24
------
APU Generator 976J498-1 YK13122 6000H 20,471 2,602H
HT 10/20/94
Panel Bus 915F213-2 WE1347B 6000H 19,313.9 1,454H
Protection BC 6/11/94
Gen. Cont. 948F458-1 NM4963 6000H 19,616.8H 1,757H
Unit BC 7/18/94
APU
Gen. Cont. 948F458-1 PM5071 6000H 23,697H 5,838H
Unit BC 10/3/95
Left
Gen. Cont. 948F458-1 XJ2186 6000H 21,639.9H 3,780.9H
Unit BC 2/18/95
Right
ATA 25
------
Life Vest KSE-35L8 527-691 24 Mo. 8/30/95 9 Mos.
Rt. Aft OH 23,304H
Life Vest AV-35 541-064 24 Mo. 2/95 14 Mos.
Co-pilot O H 21,530H
Slide, Evac D31354- 1112 24 Mo. 8/23/94 10 Mos.
Rt. Aft 425 OH 19,939.7H
</TABLE>
<PAGE>
SCHEDULE 3
TO
LEASE SUPPLEMENT NO. 1
Aircraft Status on The Delivery Date
Time and Calendar Controlled Components
(excluding engines, landing gear, and APU).
<TABLE>
<CAPTION>
AIRCRAFT
COMPONENT PART HR.
POSITION NUMBER SERIAL # LIMIT TSI REMAINING
--------- -------- --------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C>
ATA 25
------
Slide, Evac D31354- 1613 24 Mo. 8/24/94 10 Mos.
Lt. Aft 433 OH 19, 949H
Slide, Evac 11611-143 123-1 24 Mo. 9/12/95 23 Mos.
Rt. Fwd OH 23,459H
Slide, Evac D31354- 0159 24 Mo. 2/15/95 7 Mos.
Lt. Fwd 403 OH 21,620H
Escape Slide SEE NOTE (1) OF THE MARKAIR MAINTENANCE PROGRAM
Bottles (4)
Life Vest KSE-35L8 50287 24 Mo. 3/17/95 9/96
Obs OH 21,942H 8 Mos.
Life Vest KSE-35L8 12323 24 Mo. 8/1/95 7/97
Capts OH 23,085H 22 Mos.
Life Vest KSE-35L8 527-691 24 Mo. 8/30/95 7/97
Aft Right OH 23,304H 21 Mos.
Life Vest KSE-35L8 29358 24 Mo. 2/3/95 12/96
Left Aft OH 21,474H 8 Mos.
Life Vest AC-2 535-380 24 Mo. 4/29/95 3/97
Fwd FA OH 22,259H 17 Mos.
Life Vest KSE-35L8 541-064 24 Mo. 2/7/95 1/97
Co-pilot OH 21,530.7 15 Mos.
Kit, Medical 017093 NHC1613 24 Mo. 11/28/94 11/96
OH 20,844H 13 Mos.
PEE 4566M378 E9134322 120 Mo. 12/31/91 1/2000
R/A Closet OH 60 Mos.
PEE 4566M378 E9134326 120 Mo. 12/31/91 1/2000
L/A Closet OH 60 Mos.
PEE 4566M378 E9134942 120 Mo. 1/13/92 1/2000
Aft Closet OH 60 Mos.
PEE 4566M378 E9134751 120 Mo. 12/22/91 1/2000
Row 10 OH 60 Mos.
PEE 4566M378 E9548209 120 Mo. 6/9/95 5/2002
Cockpit OH 70 Mos.
</TABLE>
-2-
<PAGE>
SCHEDULE 3
TO
LEASE SUPPLEMENT NO. 1
Aircraft Status on The Delivery Date
Time and Calendar Controlled Components
(excluding engines, landing gear, and APU).
<TABLE>
<CAPTION>
AIRCRAFT
COMPONENT PART HR.
POSITION NUMBER SERIAL # LIMIT TSI REMAINING
--------- -------- --------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C>
ATA 26
------
Cartridge, 30903828 AEN-1-3 72 Mos. 5/28/93 50 Mos.
Fire RPL
ext.: Rt.
Cartridge, 30903828 BTL23883B 120 Mos. 5/5/95 5/2005
Fire 1 RPL
ext.: APU
Cartridge, 30903828 09015DI 72 Mos. 4/27/95 2/2001
Fire RPL
ext.: Left
Fire Bottle 3307507 23883B1 WC/12 Mos 5/5/95 5/96
APU HST/60 Mo 5/5/95 5/2000
Fire Bottle 33600011 10124D1 WC/12 Mos 4/27/95 5/98
Rt Eng. HST/60 Mo 5/14/93 4/98
Fire Bottle 33600011 09015D1 WC/12 Mos 4/27/95 4/96
Left Eng. HST/60 Mo 2/16/95 2/2000
Fire Ext. 892480 672AC WC/12 Mos 5/1/95 5/96
Aft HST/60 Mo 7/96
Closet(H20)
Fire Ext. 898052 A-415392 WC/12 Mos 5/1/95 5/96
Aft. (halon) HST/60 Mo 11/91 7/96
Fire Ext. 898052 B-615379 WC/12 Mos 5/1/95 5/96
Lt row HST/60 Mo 7/96
10/halon
Fire Ext. 898052 V-343826 WC/12 Mos 4/26/95 5/99
Fwd/(halon) HST/60 Mo
Fire Ext. 898052 E494480 WC/12 Mos 4/29/95 4/96
cockpit/halon HST/60 Mo 5/99
Fire Bottle, A800100-1 26-904 WC/12 Mos 4/13/94 Over Due
Lav. Aft HST/60 Mo
Fire bottle, A800100-1 26-906 WC/12 Mos 4/13/94 Over Due
Lav. Fwd HST/60 Mo
</TABLE>
-3-
<PAGE>
SCHEDULE 3
TO
LEASE SUPPLEMENT NO. 1
Aircraft Status on The Delivery Date
Time and Calendar Controlled Components
(excluding engines, landing gear, and APU).
<TABLE>
<CAPTION>
AIRCRAFT
COMPONENT PART HR.
POSITION NUMBER SERIAL # LIMIT TSI REMAINING
--------- -------- --------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C>
ATA 27
------
Jackscrew, 65-49970- KE00301 8000H 19,946H 3,787H
Stab. trim 17 OH 8/24/94
Fuse assy 6213-4 219 22,400H 19,945H 18,487H
auto BC
brk/rudder
Transmission 65-50321- 0812 16000H 15,275H 7,416H
No 1 flap 5 OH
Transmission 65-50322- 0840 16000H 15,275H 7,416H
No 2 flap 12 OH
Transmission 65-50323- 0911 16000H 15,275H 7,416H
No 3 flap 5 OH
Transmission 65-50324- 0784 16000H 15,275H 7,416H
No 4 flap 3 OH
Transmission 65-50325- 50007 16000H 15,275H 7,416H
No 5 flap 5 OH
Transmission 65-50326- 62003 16000H 15,275H 7,416H
No 6 flap 6 OH
Transmission 65-50327- 72004 16000H 15,275H 7,416H
No 7 flap 14 OH
Transmission 65-50328- 82002 16000H 15,275H 7,416H
No 8 flap 7 OH
Gearbox assy 65-51510- 7417 16000H 15,275H 7,416H
Rt angle/Left 1 OH
Gearbox assy 65-51510- 1489 16000H 15,275H 7,416H
Rt angle/Rt 2 OH
Gearbox assy 65-51513- 4778 16000H 15,275H 7,416H
Flap dr./Left 1 OH
Gearbox assy 65-51513- 1877 16000H 15,275H 7,416H
Flap dr./Rt. 2 OH
Power Unit 65-63851- 7241 16000H 15,275H 7,416H
Flap dr GBX 7 OH
</TABLE>
-4-
<PAGE>
SCHEDULE 3
TO
LEASE SUPPLEMENT NO. 1
Aircraft Status on The Delivery Date
Time and Calendar Controlled Components
(excluding engines, landing gear, and APU).
<TABLE>
<CAPTION>
AIRCRAFT
COMPONENT PART HR.
POSITION NUMBER SERIAL # LIMIT TSI REMAINING
--------- -------- --------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C>
ATA 28
------
APU Fuel AV16EI209 H1842C 20000H 19,898H 16,025H
S/0 VLV D OH 8/19/94
Left Fuel 61185 128 200001-1 19,876H 16,003H
S/0 VLV OH 8/16/94
Right Fuel 61185 1813 20000H 20,015H 16,142H
S/0 VLV OH 8/31/94
CF Fuel 61185 609 20000H 20,005H 16,146H
S/0 VLV OH 8/31/94
ATA 31
------
ULB Batteries 9804100- 7040 6 Yrs. 12 Mar 94 41 Mos.
GXUS RPL
ATA 32
------
Fuse assy 6213-4 627 22,400H 19,917.7H 18,458H
Auto OH 8/21/94
Brk/Rudder
ATA 34
------
Altimeter, WL102AMS AG102 24 Mo. 12/20/94 14 Mo.
Stby 3 IN
Transponder TPR 720 5128 24 Mo. 4/27/95 18 Mo.
Mode S, Lt. IN
Transponder TPR 720 5165 24 Mo. 4/27/95 18 Mo.
Mode S, Rt. IN
</TABLE>
-5-
<PAGE>
SCHEDULE 3
TO
LEASE SUPPLEMENT NO. 1
Aircraft Status on The Delivery Date
Time and Calendar Controlled Components
(excluding engines, landing gear, and APU).
<TABLE>
<CAPTION>
AIRCRAFT
COMPONENT PART HR.
POSITION NUMBER SERIAL # LIMIT TSI REMAINING
--------- -------- --------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C>
ATA 35
------
02 Cylinder 801307-00 223879/ 36 Mo. 6/22/94 5/97
29668 HST 5/94 19 Mo.
Portable 02 5500A1A- 771X/3596 60 Mo. 5/11/92 3/96
Cyl BF23A 4 HST 5 Mo.
Portable 02 5500A1A- 151843P/1 60 Mo. 12/21/93 1/97
Cyl BF23A 3 HST 15 Mo.
Row 1 5454
Portable 02 56002C1AF 55934DB/2 60 Mo. 10/5/95 2/2000
Cyl 23AM 3832 HST 58 Mo.
Aft closet
Portable 02 5600-2ClA 74732DF/ 60 Mo. 1/12/93 1/98
Cyl 41819 HST 26 Mo.
Cockpit
02 Generators Varies 12 Yrs 22 Mo.
------------- ------ ------ ------
117003-17 12 Yrs 22 Mo.
117.00-12 12 Yrs 22 Mo.
803000-02 12 Yrs 22 Mo.
117003-12 12 Yrs 22 Mo.
</TABLE>
-6-
<PAGE>
SCHEDULE 4
TO
LEASE SUPPLEMENT NO. 1
A/C N685MA
R/H SIDE
<TABLE>
<CAPTION>
DESC. PART NUMBER SERIAL NUMBER MODEL NUMBER
----- ----------- ------------- ------------
<S> <C> <C> <C>
1. TRIPLE BURNS 86952102 310588 JB5.2-3-58
2. TRIPLE BURNS 86952024 310581 JB5.2-3-59
3. TRIPLE BURNS 86952022 310569 JB5.2-3-59
4. TRIPLE BURNS 86952022 310566 JB5.2-3-59
5. TRIPLE BURNS 86952022 310572 JB5.2-3-59
6. TRIPLE BURNS 86952022 310577 JB5.2-3-59
7. TRIPLE BURNS 86952022 310570 JB5.2-3-59
8. TRIPLE BURNS 86952022 310574 JB5.2-3-59
9. TRIPLE BURNS 86952022 310568 JB5.2-3-59
10. TRIPLE BURNS 86952016 310562 JB5.2-3-58
11. TRIPLE BURNS 86952022 310573 JB5.2-3-59
12. TRIPLE BURNS 86952022 310579 JB5.2-3-59
13. TRIPLE BURNS 86952022 310578 JB5.2-3-59
14. TRIPLE BURNS 86952022 310571 JB5.2-3-59
15. TRIPLE BURNS 86952022 310576 JB5.2-3-59
16. TRIPLE BURNS 86952022 310564 JB5.2-3-59
17. TRIPLE BURNS 86952022 310575 JB5.2-3-59
18. TRIPLE BURNS 86952026 310582 JB5.2-3-59
19. TRIPLE BURNS 86952014 310560 JB5.2-3-58
20. DOUBLE BURNS 86953201 306409 JB5.2-2-39
</TABLE>
-1-
<PAGE>
A/C N685MA
L/H SIDE
<TABLE>
<CAPTION>
DESC. PART NUMBER SERIAL NUMBER MODEL NUMBER
----- ----------- ------------- ------------
<S> <C> <C> <C>
1. TRIPLE BURNS 86952101 310587 JB5.2-3-58
2. TRIPLE BURNS 86952007 310556 JB5.2-3-58
3. TRIPLE BURNS 86952001 310548 JB5.2-3-59
4. TRIPLE BURNS 86952001 310545 JB5.2-3-59
5. TRIPLE BURNS 86952001 310541 JB5.2-3-59
6. TRIPLE BURNS 86952001 310542 JB5.2-3-59
7. TRIPLE BURNS 86952001 310539 JB5.2-3-59
8. TRIPLE BURNS 86952001 310550 JB5.2-3-59
9. TRIPLE BURNS 86952013 310559 JB5.2-3-58
10. TRIPLE BURNS 86952015 310561 JB5.2-3-58
11. TRIPLE BURNS 86952001 310544 JB5.2-3-59
12. TRIPLE BURNS 86952003 310554 JB5.2-3-59
13. TRIPLE BURNS 86952001 310547 JB5.2-3-59
14. TRIPLE BURNS 86952001 310543 JB5.2-3-59
15. TRIPLE BURNS 86952001 310553 JB5.2-3-59
16. TRIPLE BURNS 86952001 310538 JB5.2-3-59
17. TRIPLE BURNS 86952001 310538 JB5.2-3-59
18. TRIPLE BURNS 86952001 310549 JB5.2-3-59
19. TRIPLE BURNS 86952005 310555 JB5.2-3-59
20. TRIPLE BURNS 86952017 310563 JB5.2-3-56
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
AUDITED THRU L/P 165891 10/20/95
A/C TOTAL HOURS 23,859
A/C TOTAL CYCLES 14,057
INSTALLED ON N685MA POSITION 1
HOURS CYCLES
LIMIT SINCE SINCE TOTAL TOTAL TIME REMAINING
ITEM POS PART NO S/N HOURS CYCLES NEW NEW HOURS CYCLES HOURS CYCLES
<S> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c>
ENGINE LEFT JT8D-17A P7095308 30,000 15,000 22,100 12,908 22,100 12,908 7,900 2,092
HUB (DISK) C 01 817401G P78775 NO LIMIT 20,000 NO LIMIT 12,908 NO LIMIT 12,908 NO LIMIT 7,092
DISK C 02 5002402-01 N87756 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK C 03 800803 N58289 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK (HUB) C 04 799504 P44646 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK C 05 745705 P93696 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK C 06 745706 P93306 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK C 07 774407 P81245 30,000 15,000 22,100 12,908 22,100 12,908 7,900 2,092
DISK (HUB) C 08 5005808-01 N90080 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK C 09 701509 P97271 30,000 19,000 22,100 12,908 22,100 12,908 7,900 6,092
DISK C 10 772510 P97761 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK C 11 772511 P03600 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK C 12 772512 P97578 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK C 13 5003613-01 P59603 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK (SHAFT) T 01 5003601-01 N36371 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK T 02 5003102-01 P03367 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK T 03 5003103-01 N64721 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
DISK T 04 5003104-01 N52111 30,000 20,000 22,100 12,908 22,100 12,908 7,900 7,092
LPT (SHAFT) NO LIMIT 20,000 22,100 14,558 22,100 14,558 NO LIMIT 5,442
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AUDITED THRU L/P 165891 10/20/95
A/C TOTAL HOURS 23,859
A/C TOTAL CYCLES 14,057
INSTALLED ON N685MA POSITION 2
HOURS CYCLES
LIMIT SINCE SINCE TOTAL TOTAL TIME REMAINING
ITEM POS PART NO S/N HOURS CYCLES NEW NEW HOURS CYCLES HOURS CYCLES
<S> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c>
ENGINE RIGHT JT8D-17A P7095308 NO LIMIT NO LIMIT 20,960 11,883 20,960 11,883 9,040 3,117
HUB (DISK) C 01 817401 P23654 NO LIMIT 20,000 NO LIMIT 13,372 NO LIMIT 13,372 NO LIMIT 6,628
DISK C 02 5002402-01C S56233 30,000 20,000 10,771 7,680 10,771 7,680 19,229 12,320
DISK C 03 800803 P68371 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK (HUB) C 04 799504 N90833 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK C 05 745705 P93614 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK C 06 745706 P93230 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK C 07 774407 P81364 30,000 15,000 20,960 11,883 20,960 11,883 9,040 3,117
DISK (HUB) C 08 5005808-01 P43608 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK C 09 701509 P97641 30,000 19,000 20,960 11,883 20,960 11,883 9,040 7,117
DISK C 10 772510 P97278 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK C 11 772511 P03553 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK C 12 772512 P97219 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK C 13 5003613-01 P92918 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK T 01 5003601-01 N36374 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK T 02 5003102-01 M12012 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK T 03 5003103-01 N64611 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
DISK T 04 5003104-01 N52069 30,000 20,000 20,960 11,883 20,960 11,883 9,040 8,117
LPT (SHAFT) NO LIMIT NO LIMIT
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AUDITED THRU L/P 165891 TOTAL A/C HOURS 23859
INSTALLED ON: N685MA DATE 10/20/95 TOTAL A/C CYCLES 14057
<S> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c>
NLG ASSEMBLY 65-73762-5 T01406P1486 90,000 24,000 9,943
SHOCK STRUT ASSY 65-46200-63 T01408P1486 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
OUTER CYLINDER ASSY 65-46210-25 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
OUTER CYLINDER 65-46211- 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
STEERING PLATE, UPR 65-46210-27 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
STEERING PLATE, LWR (DRILLED) 65-46210-24 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
OUTER CYLINDER ASSY (DRILLED) 65-46215-14 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
METERING PIN ASSY 65-46200-54 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
METERING PIN 65-46219- 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
SUPPORT TUBE, METERING PIN 65-46229- 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
DRAIN TUBE 69-57991- 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
SUPPORT TUBE, UPPER ORIFICE 69-73038-1 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
TUBE, ORIFICE SUPPORT 65-46226-9 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
STEM, ORIFICE SUPPORT 65C25707- 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
GLAND NUT ASSY 65-46221-4 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
ORIFICE PLATE, UPPER 69-36622-2 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
TORSION LINK ASSY, UPPER 65-46202-9 JC-1917 90,000 24,000 08/28/92 14,378 7,445 23,971 6,612 9,481 65,028 17,388
TORSION LINK ASSY, LOWER 65-46288-5 32-58 90,000 24,000 08/28/92 14,378 7,445 28,383 6,612 9,481 61,617 17,388
STEERING COLLAR ASSY 65-46203-24 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
BOLT, STEERING COLLAR 69-61383-2 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
BOLT, STEERING COLLAR 69-61383- 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
PIN, UPPER TORSION LINK 69-72698-1 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
PIN, LOWER TORSION LINK 69-72698-1 486-2 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
BOLT, TORSION LINK APEX 69-35883-2 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
LOWER DRAG BRACE ASSY 65-46230-7 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
UPPER DRAG BRACE ASSY 65-80051-13 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
PIN, DRAG BRACE CENTER 69-35391- 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
BOLT, DRAG BRACE, CENTER NAS1110-68D 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
PIN, UPPER DRAG BRACE 69-35394-2 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
PIN, UPPER DRAG BRACE 66-35394-2 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
BOLT, LOWER DRAG BRACE 69-35396-2 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
LOCK BRACE ASSY, AFT 65-46240-11 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
LOCK LINK ASSY, FWD 65-46242-11 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
BOLT, NOSE GEAR LOCK JOINT NAS1105-52D 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
SHAFT, AFT LOCK MECHANISM 69-35385-1 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
TRUNNION PIN, LEFT HAND 69-35398-2 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
TRUNNION PIN, RIGHT HAND 69-41248- 1486 (ORIG) 90,000 24,000 12/17/87 0 0 14,057 14,057 23,859 75,943 9,943
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AUDITED THRU L/P 165891 TOTAL A/C HOURS 23859
INSTALLED ON: N685MA DATE 10/20/95 TOTAL A/C CYCLES 14057
<S> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c>
LEFT NLG ASSEMBLY 65-73761-87 MC026895P1488 100,000 24,000 9,943
SHOCK STRUT ASSY 65-46100-52 MC028958P1488 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
OUTER CYLINDER ASSY 65-61740-10 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
INNER CYLINDER ASSY 65-46116-47 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
ORIFICE SUPPORT TUBE ASSY 65-46159-7 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
SUPPORT TUBE, ORIFICE 65-46160-7 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
ORIFICE PLATE 69-38980-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
METERING PIN 65-46124-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
DRAIN TUBE 65-46156-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
GLAND NUT 69-39485-10 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TORSION LINK ASSY, LOWER 65-46102-22 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TORSION LINK ASSY, UPPER 65-87958-9 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
UPPER DRAG STRUT ASSY 65-46103-11 1486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LOWER DRAG STRUT ASSY 65-60579-3 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
UNIVERSAL ASSY, LWR SIDE 65-46108-7 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
ACTUATOR BEAM ARM ASSY 65-46109-12 5104 100,000 24,000 12/16/91 12,391 5931 8,865 8,126 11,488 91,135 15,874
TRUNNION PIN ASSY 65-46113-5 34ORGA 100,000 24,000 12/16/91 12,391 5931 66,508 8,126 11,488 31,492 15,874
TEE BOLT ASSY, DRAG STRUT 65-46140-6 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TRUNNION LINK ASSY 65-63378-9 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TORSION LINK PIN, LOWER 69-72023-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TORSION LINK PIN, UPPER 69-72023-2 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, TEE FITTING ATTACHMENT 69-51833-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT ASSY.: LOWER DRAG STRUT 69-39473-9 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
FUSE BOLT ASSY, UPR DRAG 69-39476-6 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
NUT, TRUNNION PIN 69-41633-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
UNIVERSAL ASSY, REACTION LINK 65-46107-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
UPPER SIDE STRUT ASSY 65-46138-5 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LOWER SIDE STRUT ASSY 65-63397-9 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
REACTION LINK ASSY 65-46135-13 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LINK ASSY, UPPER DOWNLOCK 65-46138-16 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LINK ASSY, LOWER DOWNLOCK 65-46139-9 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
SHAFT, SPRING SUPPORT 69-38999-2 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT ASSY, REACTION LINK 69-38148-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT ASSY, UPPER SIDE STRUT 69-68149-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT ASSY, SIDE STRUT 69-68150-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, DOWNLOCK LINK PIVOT 69-41628-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, DOWNLOCK 69-42193-2 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, ASSY, UPPER DOWNLOCK 69-62779-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
ACTUATOR BEAM ASSY 65-46108-3 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
SUPPORT LINK ASSY 65-46112-22 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LINK ASSY, UPLOCK 65-63887-5 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BELLCRANK ASSY 65-63663-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
HOOK ASSY 65-46142-2 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
SHAFT, UPLOCK SUPPORT 65-46146-2 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, REACTION LINK / UPLOCK 69-68148-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, ACTUATOR BEAM, OUTBD 69-39464-4 352 100,000 24,000 12/16/91 12,891 5931 8,126 8,126 11,468 91,874 15,874
BOLT ASSY, LOWER SIDE STRUT 69-68151-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
COLLAR, BELLCRANK RET, UPLOCK 69-51838-2 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
FUSE BOLT, FWD TRUNNION BRG 69-58854-3 486 (ORIG) 83,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, ACTUATOR BEAM, INBRD BACB301J20CD43 685 100,000 24,000 12/14/91 12,891 5931 8,126 8,126 11,468 91,874 15,874
BOLT, ACTUATOR ROD END BACB301J16CD48 685/1 100,000 24,000 12/14/91 12,891 5931 8,126 8,126 11,468 91,874 15,874
BEARING ASSY, FWD TRUNNION 69-58871-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
NUT, AFT TRUNNION 65-84161-1 486 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AUDITED THRU L/P 165891 TOTAL A/C HOURS 23859
INSTALLED ON: N685MA DATE 10/20/95 TOTAL A/C CYCLES 14057
<S> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c>
RIGHT NLG ASSEMBLY 65-73761-87 MC02665P1488 100,000 24,000 9,943
SHOCK STRUT ASSY 65-46100-52 MC02896P1488 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
OUTER CYLINDER ASSY 65-61740-10 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
INNER CYLINDER ASSY 65-46116-47 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
ORIFICE SUPPORT TUBE ASSY 65-46159-7 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
SUPPORT TUBE, ORIFICE 65-46160-7 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
ORIFICE PLATE 69-38980-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
METERING PIN 65-46124-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
DRAIN TUBE 65-46156-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
GLAND NUT 69-39485-10 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TORSION LINK ASSY, LOWER 65-46102-22 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TORSION LINK ASSY, UPPER 65-87958-9 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
UPPER DRAG STRUT ASSY 65-46103-11 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LOWER DRAG STRUT ASSY 65-60579-3 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
UNIVERSAL ASSY, LWR SIDE 65-46105-7 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
ACTUATOR BEAM ARM ASSY 65-46109-12 1507 100,000 24,000 12/14/91 12,391 5931 34,655 8,126 11,488 65,345 15,874
TRUNNION PIN ASSY 65-46113-16 32-118 100,000 24,000 12/14/91 12,391 5931 8,126 8,126 11,488 91,674 15,874
TEE BOLT ASSY, DRAG STRUT 65-46140-6 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TRUNNION LINK ASSY 65-63378-9 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TORSION LINK PIN, LOWER 69-72023-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
TORSION LINK PIN, UPPER 69-72023-2 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, TEE FITTING ATTACHMENT 69-51833-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT ASSY.: LOWER DRAG STRUT 69-39473-3 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
FUSE BOLT ASSY, UPR DRAG 69-39476-6 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
NUT, TRUNNION PIN 69-41633-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
UNIVERSAL ASSY, REACTION LINK 65-46107-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
UPPER SIDE STRUT ASSY 65-46138-5 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LOWER SIDE STRUT ASSY 65-63397-9 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
REACTION LINK ASSY 65-46135-13 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LINK ASSY, UPPER DOWNLOCK 65-46138-16 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
LINK ASSY, LOWER DOWNLOCK 65-46139-9 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
SHAFT, SPRING SUPPORT 69-38999-3 685 100,000 24,000 12/14/91 12,391 5931 8,126 8,126 11,468 91,874 15,874
BOLT ASSY, REACTION LINK 69-38148-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT ASSY, UPPER SIDE STRUT 69-68149-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT ASSY, SIDE STRUT 69-68150-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, DOWNLOCK LINK PIVOT 69-41628-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, DOWNLOCK 69-42193-2 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, ASSY, UPPER DOWNLOCK0 69-62779-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
ACTUATOR BEAM ASSY 65-46108-3 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
SUPPORT LINK ASSY 65-46112-22 HI-106 100,000 24,000 12/14/91 12,391 5931 8,126 8,126 11,468 91,874 15,874
LINK ASSY, UPLOCK 65-63887-5 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BELLCRANK ASSY 65-63663-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
HOOK ASSY 65-46142-2 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
SHAFT, UPLOCK SUPPORT 65-46146-2 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, REACTION LINK / UPLOCK 69-68148-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, ACTUATOR BEAM, OUTBD 69-39464-4 482 100,000 24,000 12/14/91 12,391 5931 8,126 8,126 11,468 91,874 15,874
BOLT ASSY, LOWER SIDE STRUT 69-68151-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
COLLAR, BELLCRANK RET, UPLOCK 69-51838-2 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
FUSE BOLT, FWD TRUNNION BRG 69-58854-3 486-2 (ORIG) 83,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
BOLT, ACTUATOR BEAM, INBRD BACB301J20CD43 685/2 100,000 24,000 12/14/91 12,391 5931 8,126 8,126 11,468 91,874 15,874
BOLT, ACTUATOR ROD END BACB301J16CD48 685 100,000 24,000 12/14/91 12,391 5931 8,126 8,126 11,468 91,874 15,874
BEARING ASSY, FWD TRUNNION 69-58871-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
NUT, AFT TRUNNION 65-84161-1 486-2 (ORIG) 100,000 24,000 12/17/87 0 0 14,057 14,057 23,859 85,943 9,943
</TABLE>
<PAGE>
COUNTERPART NO. 2
LEASE SUPPLEMENT NO. 2
TO AIRCRAFT LEASE AGREEMENT
DATED AS OF NOVEMBER 29, 1995
LEASE SUPPLEMENT NO. 2, dated April 12, 1996, between
Wilmington Trust Company, not in its individual capacity but solely as Trustee
f/b/o ITOCHU AirLease (Europe) Limited and Marubeni Airleasing (U.K.) Limited
("Lessor"), and Aloha Airlines, Inc., a company organized under the laws of
Hawaii ("Lessee").
Lessor and Lessee have previously entered into that certain
Aircraft Lease Agreement dated as of November 29, 1995, as supplemented by
Lease Supplement No. 1, dated December 1, 1995 (as amended, modified or
supplemented and in effect from time to time, the "Lease" and the defined terms
therein being hereinafter used with the same meaning), which was filed with the
FAA as one instrument and recorded on January 25, 1996 as Conveyance No.
11004730. Lessor and Lessee desire to supplement the Lease in order (1) to
subject to the Lease two Pratt & Whitney model JT8D-9A engines described below,
and (2) to remove from the terms of the Lease two Pratt & Whitney model
JT8D-17A engines described below.
In consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby leases to Lessee under the Lease and Lessee
hereby leases from Lessor under the Lease, two (2) Pratt & Whitney JT8D-9A
Engines bearing Manufacturer's Serial Numbers 665868 and 655877, each having
750 or more rated takeoff horsepower, together with (1) all parts, appliances,
components, accessories and equipment currently installed on, or attached to
any such engine and (2) all flight, engineering, maintenance, overhaul and
repair manuals, drawings, records, logs, documents and other data relating to
the above described engines or parts (such engines, together with the items
identified in clauses (1) and (2) above, are referred to herein collectively as
the "9A Engines"). For all purposes of the Lease, each of the 9A Engines shall
be deemed an "Engine" as defined in the Lease, and part of the Aircraft and
each such Engine shall be maintained, insured and returned to Lessor in the
manner and at the times set forth in the Lease.
RECORDED
FEDERAL AVIATION ADMINISTRATION
Date 4-29-96 Time 1:07
--------- --------
Conveyance Number ZZ011203
------------
By /s/ [Illegible]
--------------------
<PAGE>
2. There are hereby removed from the terms of the Lease the
two (2) Pratt & Whitney JT8D-17A Engines bearing Manufacturer's Serial Numbers
P709529 and P709530, each having 750 or more rated takeoff horsepower, together
with (1) all parts, appliances, components, accessories and equipment currently
installed on, or attached to any such engine and (2) all flight, engineering,
maintenance, overhaul and repair manuals, drawings, records, logs, documents
and other data relating to the above described engines or parts (such engines,
together with the items identified in clauses (1) and (2) above, are referred
to herein collectively as the "0riginal 17A Engines"). Lessee and Lessor
acknowledge that the Original 17A Engines are, effective on this date, no
longer subject to the terms of the Lease and that Lessee has no interest
therein or thereto under the Lease.
3. From the date hereof until the last day of the Term,
Lessee shall affix and keep a metal nameplate of reasonable dimensions in a
reasonably prominent position on each of the 9A Engines bearing the Lease
Identification (such name plate to be furnished by Lessee and affixed on or
prior to the date hereof).
4. Lessee represents that all of its representations and
warranties contained in the Lease are true and correct on the date hereof and
that no Default or Event of Default has occurred and is continuing.
5. All of the terms and provisions of the Lease Agreement are
hereby incorporated by reference in this Lease Supplement to the same extent as
if fully set forth herein. The Lease is hereby ratified and confirmed and,
except as set forth herein, remains unamended and in full force and effect.
6. This Lease Supplement may be executed in any number of
counterparts, each of such counterparts, except as provided in Section 20(e) of
the Lease, shall for all purposes be deemed to be an original and all such
counterparts shall together constitute but one and the same Lease Supplement.
THIS LEASE SUPPLEMENT HAS BEEN EXECUTED IN MULTIPLE COUNTERPARTS, OF WHICH
THERE IS ONE COUNTERPART DESIGNATED AS "COUNTERPART NO. 1 - CHATTEL PAPER
ORIGINAL'' AND ALL OTHER COUNTERPARTS SHALL BE DESIGNATED WITH NUMBERS OTHER
THAN 1. TO THE EXTENT THAT THIS LEASE SUPPLEMENT CONSTITUTES CHATTEL PAPER
UNDER THE UNIFORM COMMERCIAL CODE, AS IN EFFECT IN ANY APPLICABLE JURISDICTION,
NO SECURITY INTEREST MAY BE CREATED OR PERFECTED BY POSSESSION OF ANY
COUNTERPART OF THIS LEASE SUPPLEMENT OTHER THAN SAID COUNTERPART NO. 1.
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee each have caused this
Lease Supplement to be duly executed by their authorized officers as of the day
and year first above written.
LESSOR:
WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Trustee.
By: M.P. Bonilla
----------------------------
Name: MYFANWY PHILLIPS BONILLA
----------------------------
Title: ASSISTANT VICE PRESIDENT
----------------------------
LESSEE:
ALOHA AIRLINES, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee each have caused this
Lease Supplement to be duly executed by their authorized officers as of the day
and year first above written.
LESSOR:
WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Trustee.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
LESSEE:
ALOHA AIRLINES, INC.
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
----------------------------
<PAGE>
COUNTERPART NO.
-------
LEASE SUPPLEMENT NO. 2
TO AIRCRAFT LEASE AGREEMENT
DATED AS OF NOVEMBER 29, 1995
LEASE SUPPLEMENT NO. 2, dated April 12, 1996, between
Wilmington Trust Company, not in its individual capacity but solely as Trustee
f/b/o ITOCHU AirLease (Europe) Limited and Marubeni Airleasing (U.K.) Limited
("Lessor"), and Aloha Airlines, Inc., a company organized under the laws of
Hawaii ("Lessee").
Lessor and Lessee have previously entered into that certain
Aircraft Lease Agreement dated as of November 29, 1995, as supplemented by
Lease Supplement No. 1, dated December 1, 1995 (as amended, modified or
supplemented and in effect from time to time, the "Lease" and the defined terms
therein being hereinafter used with the same meaning), which was filed with the
FAA as one instrument and recorded on January 25, 1996 as Conveyance No.
11004730. Lessor and Lessee desire to supplement the Lease in order (1) to
subject to the Lease two Pratt & Whitney model JT8D-9A engines described below,
and (2) to remove from the terms of the Lease two Pratt & Whitney model
JT8D-17A engines described below.
In consideration of the premises and other good and sufficient
consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby leases to Lessee under the Lease and Lessee
hereby leases from Lessor under the Lease, two (2) Pratt & Whitney JT8D-9A
Engines bearing Manufacturer's Serial Numbers 665868 and 655877, each having
750 or more rated takeoff horsepower, together with (1) all parts, appliances,
components, accessories and equipment currently installed on, or attached to
any such engine and (2) all flight, engineering, maintenance, overhaul and
repair manuals, drawings, records, logs, documents and other data relating to
the above described engines or parts (such engines, together with the items
identified in clauses (1) and (2) above, are referred to herein collectively as
the "9A Engines"). For all purposes of the Lease, each of the 9A Engines shall
be deemed an "Engine" as defined in the Lease, and part of the Aircraft and
each such Engine shall be maintained, insured and returned to Lessor in the
manner and at the times set forth in the Lease.
<PAGE>
2. There are hereby removed from the terms of the Lease the
two (2) Pratt & Whitney JT8D-17A Engines bearing Manufacturer's Serial Numbers
P709529 and P709530, each having 750 or more rated takeoff horsepower, together
with (1) all parts, appliances, components, accessories and equipment currently
installed on, or attached to any such engine and (2) all flight, engineering,
maintenance, overhaul and repair manuals, drawings, records, logs, documents
and other data relating to the above described engines or parts (such engines,
together with the items identified in clauses (1) and (2) above, are referred
to herein collectively as the "Original 17A Engines"). Lessee and Lessor
acknowledge that the Original 17A Engines are, effective on this date, no
longer subject to the terms of the Lease and that Lessee has no interest
therein or thereto under the Lease.
3. From the date hereof until the last day of the Term, Lessee
shall affix and keep a metal nameplate of reasonable dimensions in a reasonably
prominent position on each of the 9A Engines bearing the Lease Identification
(such name plate to be furnished by Lessee and affixed on or prior to the date
hereof).
4. Lessee represents that all of its representations and
warranties contained in the Lease are true and correct on the date hereof and
that no Default or Event of Default has occurred and is continuing.
5. All of the terms and provisions of the Lease Agreement are
hereby incorporated by reference in this Lease Supplement to the same extent as
if fully set forth herein. The Lease is hereby ratified and confirmed and,
except as set forth herein, remains unamended and in full force and effect.
6. This Lease Supplement may be executed in any number of
counterparts, each of such counterparts, except as provided in Section 20(e) of
the Lease, shall for all purposes be deemed to be an original and all such
counterparts shall together constitute but one and the same Lease Supplement.
THIS LEASE SUPPLEMENT HAS BEEN EXECUTED IN MULTIPLE COUNTERPARTS, OF WHICH
THERE IS ONE COUNTERPART DESIGNATED AS "COUNTERPART NO. 1 - CHATTEL PAPER
ORIGINAL" AND ALL OTHER COUNTERPARTS SHALL BE DESIGNATED WITH NUMBERS OTHER
THAN 1. TO THE EXTENT THAT THIS LEASE SUPPLEMENT CONSTITUTES CHATTEL PAPER
UNDER THE UNIFORM COMMERCIAL CODE, AS IN EFFECT IN ANY APPLICABLE JURISDICTION,
NO SECURITY INTEREST MAY BE CREATED OR PERFECTED BY POSSESSION OF ANY
COUNTERPART OF THIS LEASE SUPPLEMENT OTHER THAN SAID COUNTERPART NO. 1.
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee each have caused this
Lease Supplement to be duly executed by their authorized officers as of the day
and year first above written.
LESSOR:
WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Trustee.
By: M. P. Bonilla
----------------------------
Name: MYFANWY PHILLIPS BONILLA
----------------------------
Title: ASSISTANT VICE PRESIDENT
----------------------------
LESSEE:
ALOHA AIRLINES, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
<PAGE>
IN WITNESS WHEREOF, - Lessor and Les-gee each have caused this
Lease Supplement to he duly executed by their authorized officers as of the day
and year first above written.
LESSOR:
WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Trustee.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
LESSEE:
ALOHA AIRLINES, INC.
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
----------------------------
<PAGE>
ASSIGNMENT, ASSUMPTION, AMENDMENT AND CONSENT
THIS ASSIGNMENT, ASSUMPTION, AMENDMENT AND CONSENT
("Assignment"), dated as of December 26, 1996 is between WILMINGTON TRUST
COMPANY, not in its individual capacity but solely as Trustee f/b/o ITOCHU
AirLease (Europe) Limited and Marubeni Airleasing (U.K) Limited ("Lessor"),
ALOHA AIRLINES, INC., a Hawaii Corporation ("Assignor"), and ALOHA AIRLINES,
INC., a Delaware corporation ("Assignee").
RECITALS
WHEREAS, Lessor and Assignor entered into that certain
Aircraft Lease Agreement dated as of November 29, 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 737-25A aircraft bearing
manufacturer's serial number 23791 and registration mark N819AL (the
"Aircraft");
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.
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.
<PAGE>
4. LESSOR CONSENT.
(a) Pursuant to Section 8(i) of the Lease, Lessor
acknowledges and consents 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 further acknowledges and agrees 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) Assignee is a corporation duly organized and existing in
good standing under the Laws of the State of Delaware and has the corporate
power and authority to carry on its business as presently conducted and to
perform its obligations under this Assignment.
(b) This Assignment has been duly authorized by all necessary
corporate action on the part of Assignee and does not require any approval of
the stockholders of Assignee (or if such approval is required, such approval
has been obtained), and neither the execution and delivery hereof nor the
consummation of the transactions contemplated hereby nor compliance by Assignee
with any of the terms and provisions hereof will contravene any Law applicable
to Assignee or result in any breach of, or constitute any default under, or
result in the creation of, any Lien upon any property of Assignee under, any
credit agreement or instrument, or other agreement or instrument to which
Assignee is a party or by which Assignee or its properties or assets may be
bound or affected.
(c) Assignee has received or has complied with every
necessary consent, approval, order, or authorization of, or registration with,
or the giving of prior notice to, any Governmental Entity having jurisdiction
with respect to the use and operation of the Aircraft and the execution and
delivery of this Assignment of the validity and enforceability hereof.
(d) This Assignment has been duly entered into and delivered
by Assignee and constitutes a valid, legal and binding
<PAGE>
obligation of Assignee, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, reorganization, moratorium or
other similar Laws and by general principles of equity, whether considered in a
proceeding at Law or in equity.
(e) Assignee is a Certified Air Carrier and holds all
licenses, certificates, permits and franchises from the appropriate agencies of
the United States of America and/or all other governmental authorities having
jurisdiction which are necessary to authorize the Assignee to engage in air
transport and to carry on its business as presently conducted and to be
conducted with the Aircraft.
(f) Assignee is a "citizen of the United States" as defined
in 40102(a)(15) of Title 49 of the United States Code.
6. GOVERNING LAW. This Assignment shall governed by the Laws
of the State of New York.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK.]
<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/ Owen Sekimura
------------------------------------
Name: OWEN SEKIMURA
----------------------------------
Title: STAFF VICE PRESIDENT -
FINANCE & CONTROLLER
---------------------------------
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/ Owen Sekimura
------------------------------------
Name: Owen Sekimura
----------------------------------
Title: STAFF VICE PRESIDENT -
FINANCE & CONTROLLER
---------------------------------
LESSOR: WILMINGTON TRUST COMPANY, NOT
IN ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE F/B/O ITOCHU
AIRLEASE (EUROPE) LIMITED AND
MARUBENI AIRLEASING (U.K)
LIMITED
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: /s/ Brenda F. Cutwright
------------------------------------
Name: BRENDA F. CUTWRIGHT
----------------------------------
Title: SR. VICE PRESIDENT FINANCE &
PLANNING AND CFO
---------------------------------
By: /s/ Owen Sekimura
------------------------------------
Name: OWEN SEKIMURA
----------------------------------
Title: STAFF VICE PRESIDENT -
FINANCE & CONTROLLER
---------------------------------
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/ Owen Sekimura
------------------------------------
Name: Owen Sekimura
----------------------------------
Title: STAFF VICE PRESIDENT -
FINANCE & CONTROLLER
---------------------------------
LESSOR: WILMINGTON TRUST COMPANY, NOT
IN ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE F/B/O ITOCHU
AIRLEASE (EUROPE) LIMITED AND
MARUBENI AIRLEASING (U.K)
LIMITED
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: /s/ Brenda F. Cutwright
------------------------------------
Name: BRENDA F. CUTWRIGHT
----------------------------------
Title: SR. VICE PRESIDENT FINANCE &
PLANNING AND CFO
---------------------------------
By: /s/ Owen Sekimura
------------------------------------
Name: OWEN SEKIMURA
----------------------------------
Title: STAFF VICE PRESIDENT -
FINANCE & CONTROLLER
---------------------------------
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/ Owen Sekimura
------------------------------------
Name: Owen Sekimura
----------------------------------
Title: STAFF VICE PRESIDENT -
FINANCE & CONTROLLER
---------------------------------
LESSOR: WILMINGTON TRUST COMPANY, NOT
IN ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE F/B/O ITOCHU
AIRLEASE (EUROPE) LIMITED AND
MARUBENI AIRLEASING (U.K)
LIMITED
By:____________________________________
Name:__________________________________
Title:_________________________________
<PAGE>
CONSENT
THIS CONSENT is made this ______ day of ________________,
1996 by WILMINGTON TRUST COMPANY, not in its individual capacity but solely as
Trustee f/b/o ITOCHU AirLease (Europe) Limited and Marubeni Airleasing (U.K)
Limited ("Lessor") in favor of Aloha Airlines, Inc., a Hawaii corporation
("Aloha Hawaii") and Aloha Airlines, Inc., a Delaware corporation ("Aloha
Delaware").
RECITALS
WHEREAS, Lessor and Aloha Hawaii entered into that certain
Aircraft Lease Agreement dated as of November 29, 1995 (the "Lease"), pursuant
to which Aloha Hawaii leased from Lessor one (1) Boeing model 737-25A aircraft
bearing manufacturer's serial number 23791 and registration mark N819AL (the
"Aircraft");
WHEREAS, Aloha Hawaii and Aloha Delaware are wholly owned
subsidiaries of Aloha Airgroup, Inc., a Hawaii corporation.
WHEREAS, effective ____________________________________, 1996, Aloha Hawaii
merged with Aloha Delaware, and Aloha Delaware emerged as the surviving entity
and the successor in interest to Aloha Hawaii.
WHEREAS, as a result of the merger, all of the assets and
liabilities of Aloha Hawaii, including the Lease, will become assets and
liabilities of Aloha Delaware by operation of law.
WHEREAS, Aloha Hawaii has requested that Lessor consent to the
merger and the transfer by operation of law of the Lease and the Notice of
Assignment to Aloha Delaware.
NOW, THEREFORE, in consideration of these presents and for
other valuable consideration, Lessor does hereby consent to the merger of Aloha
Hawaii with and into Aloha Delaware and the transfer by operation of law of the
Lease to Aloha Delaware, upon and subject to the condition that this consent
shall not be construed as authorizing any other or further assignment of the
Lease, and that all of the rights of the undersigned as set forth in the Lease
are expressly reserved.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Consent
as of the date first written above.
LESSOR: WILMINGTON TRUST COMPANY,
NOT IN ITS INDIVIDUAL
CAPACITY BUT SOLELY AS
TRUSTEE F/B/O ITOCHU
AIRLEASE (EUROPE) LIMITED
AND MARUBENI AIRLEASING
(U.K) LIMITED
By________________________________
Name______________________________
Title_____________________________
<PAGE>
LEASE ASSIGNMENT
This Lease Assignment (this "Agreement") dated as of August 7, 1998 is
entered into by and between (1) ITOCHU Airlease Limited, a company formed under
the laws of the Republic of Ireland ("ITOCHU"), (ii) MA-Lease Limited, a
company duly formed under the laws of England ("Marubeni"), (iii) Wilmington
Trust Company, not in its individual capacity but solely as trustee f/b/o
ITOCHU and Marubeni ("Trustee", and together With ITOCHU and Marubeni, each, an
"Assignor" and collectivelly, "Assignors"), and Boeing Capital Corporation, a
company duly formed under the laws of Delaware (the "Assignee").
RECITALS
WHEREAS, Trustee is the Lessor, under that certain Aircraft Lease
Agreement dated as of November 29, 1995 and recorded with the Federal
Aviation Administration on ________, 199__, and assigned conveyance number
____________, with Aloha Airlines, Inc., as the Lessee, as supplemented by
Lease Supplement No. 1 and as amended and supplemented by Letter Agreement
No. 1 dated as of November 29, 1995 (collectively, the "Lease"), covering
one (1) Boeing 737-25A aircraft (as more particularly described under the
Lease, the "Aircraft"),
WHEREAS, pursuant to that certain Aircraft Purchase Agreement dated
as of August _________, 1998 (the "Purchase Agreement"), by and between
Assignors and Assignee, Assignors desire to assign, and Assignee desires to
accept, the assignment of the Assignors' rights, titles, interest in, to and
under the Lease;
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein and for other good and valuable consideration, receipt of
which is hereby acknowledged, the parties hereto agree as follows,
Section 1, DEFINITIONS. Terms used herein but not defined shall have
the meanings set forth in the Lease.
Section 2. ASSIGNMENT. Assignor hereby assigns to Assignee and
Assignee hereby accepts, all of Assignors' right, title and interest under
the Lease.
Section 3. ASSUMPTION OF OBLIGATIONS. Assignee hereby assumes all
obligations of the Assignors under the Lease to the extent arising from and
after the date hereof,
Section 4. AMENDMENTS TO THE LEASE. With respect to events occurring on
and after the date hereof, all references to "Beneficiaries" contained in the
Lease shall be deemed to be references to Lessor.
Section 5. CONCERNING THE TRUSTEE. Wilmington Trust Company is
entering into this Agreement solely in its capacity as Trustee under the Trust
Agreement, except as otherwise expressly provided herein, and Wilmington Trust
Company (or any successor Trustee) shall not be personally liable for or on
account of any of the statements, representations, warranties, covenants or
obligations of the Assignor hereunder; provided, however, that Wilmington Trust
Company (or any other successor Trustee) shall be liable hereunder for its own
gross negligence or willful misconduct or for breach of its covenants or its
representations. and warranties to the extent covenanted or made in its
individual capacity. extent covenanted or made in its individual capacity.
<PAGE>
Section 6. MISCELLANEOUS.
(a) This Agreement may be signed in one or more counterparts with the
same effect as if the signatures in each counterpart were upon a single
document. All counterparts shall be considered an original hereof.
(b) The terms and provisions hereof shall inure to the benefit of and
be binding on the parties hereof and their respective successors and assigns.
(c) This Agreement shall in all respects be governed by and construed
in accordance with the laws of the State of New York, including all matters
of construction, validity, and performance.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
WILMINGTON TRUST COMPANY ITOCHU AIRLEASE LIMITED
not in its individual capacity but as ("Assignor")
trustee ("Assignor")
By: /s/ Bruce L. Besson By: [Illegible]
------------------------------ -------------------------
Name: Bruce L. Besson Name:
------------------------------ -------------------------
Title: V.P. Title: ATTORNEY IN FACT
------------------------------ -------------------------
MA-LEASE LIMITED BOEING CAPITAL CORPORATION
("Assignor") ("Assignor")
By: [Illegible] By: /s/ Stephen J. Novak
------------------------------ -------------------------
Name: Name: Vice President
------------------------------ -------------------------
Title: ATTORNEY IN FACT Title: Stephen J. Novak
------------------------------ -------------------------
2
<PAGE>
CONSENT
Reference is hereby made to the attached Lease Assignment (capitalized
terms used herein without definition are used with the same meaning as in the
Lease Assignment). The undersigned hereby consents to the assignment and
assumption set forth therein and acknowledges that the Assignors shall, from
and after the date hereof, be released from all further obligations under the
Lease, except that such release shall not affect any liability arising on or
before the effective date of the Lease Assignment.
The undersigned hereby also agrees that Aloha Airlines, Inc. shall
cause each of the Assignors to be added as an additional insured under the
liability insurance policies required to be maintained by Aloha Airlines, Inc.,
as Lessee, pursuant to the Lease. Aloha Airlines, Inc. agrees that its
obligations to maintain such insurance shall continue until the earlier to
occur of (i) two years after the date hereof, and (ii) the D check or its
equivalent first occurring after the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Consent as of
August 7, 1998.
ALOHA AIRLINES, INC.
By: /s/ Brenda F. Cutwright
---------------------------------
Name: Brenda F. Cutwright
---------------------------------
Sr. Vice President Finance &
Title: Planning and CFO
---------------------------------
By: /s/ James M. King
---------------------------------
Name: James M. King
---------------------------------
Vice President
Title: Planning & Development
---------------------------------
3
<PAGE>
CONSENT
Reference Is hereby made to the attached Lease Assignment (capitalized
terms used herein without definition are used with the same meaning as in the
Lease Assignment). The undersigned hereby consents to the assignment and
assumption set forth therein and acknowledges that the Assignors shall, from
and after the date hereof, be released from all further obligations under the
Lease, except that such release shall not affect any liability arising on or
before the effective date of the Lease Assignment.
The undersigned hereby also agrees that Aloha Airlines, Inc. shall
cause each of the Assignors to be added as an additional insured under the
liability insurance policies required to be maintained by Aloha Airlines, Inc.,
as Lessee, pursuant to the Lease. Aloha Airlines, Inc. agrees that its
obligations to maintain such insurance shall continue until the earlier to
occur of (i) two years after the date hereof, and (ii) the D check or its
equivalent first occurring after the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Consent as of
August 7, 1998.
ALOHA AIRLINES, INC.
By: /s/ Brenda F. Cutwright
---------------------------------
Name: Brenda F. Cutwright
---------------------------------
Sr. Vice President Finance &
Title: Planning and CFO
---------------------------------
By: /s/ James M. King
---------------------------------
Name: James M. King
---------------------------------
Vice President
Title: Planning & Development
---------------------------------
3
<PAGE>
CONSENT
Reference is hereby made to the attached Lease Assignment (capitalized
terms used herein without definition are used with the same meaning as in the
Lease Assignment). The undersigned hereby consents to the assignment and
assumption set forth therein and acknowledges that the Assignors shall, from
and after the date hereof, be released from all further obligations under the
Lease, except that such release shall not affect any liability arising on or
before the effective date of the Lease Assignment.
The undersigned hereby also agrees that Aloha Airlines, Inc. shall
cause each of the Assignors to be added as an additional insured under the
liability insurance policies required to be maintained by Aloha Airlines, Inc.,
as Lessee, pursuant to the Lease. Aloha Airlines, Inc. agrees that its
obligations to maintain such insurance shall continue until the earlier to
occur of (i) two years after the date hereof, and (ii) the D check or its
equivalent first occurring after the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Consent as of
August ___,1998.
ALOHA AIRLINES, INC.
By:
---------------------------------
Name:
---------------------------------
Title.
---------------------------------
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
<PAGE>
LEASE EXTENSION AND AMENDMENT AGREEMENT
THIS LEASE EXTENSION AND AMENDMENT AGREEMENT (this "Agreement") dated as of
November ____, 2001, is by and between BOEING CAPITAL CORPORATION, a Delaware
corporation ("Lessor") and ALOHA AIRLINES, a Delaware corporation ("Lessee).
WITNESSETH
WHEREAS, Lessor (as successor to Wilmington Trust Company, not in its individual
capacity but solely as trustee f/b/o ITOCHU AirLease (Europe) Limited and
Marubeni Airleasing (U.K) Limited, pursuant to certain Purchase Agreement and
Assignment Agreement dated June 22, 1998) are parties to Aircraft Lease
Agreement dated as of November 29, 1995 and filed with the Federal Aviation
Administration ("FAA") on January 25, 1996 as conveyance no. 11004730 (the
"Lease") as supplemented by Lease Supplement No. 1 filed with the FAA on
_________________________ as conveyance no. _________________________, as
further supplemented by Lease Supplement No. 2 filed with the FAA on April 29,
1996 as conveyance no. 22011203 (collectively the "Supplement"). The Lease and
the Lease Supplement shall be collectively referred to as the "Lease Agreement."
WHEREAS, pursuant to the Lease Agreement, Lessee agreed to lease from Lessor one
(1) Boeing Model 737-25A aircraft bearing manufacturer's serial number 23791
(the "Aircraft") for a term of ninety-six (96) months;
WHEREAS, Lessee desires to extend the lease Expiration Date from December 1,
2003 to February 1, 2004 and Lessor is willing to agree to this extension; and
WHEREAS, the parties hereto further desire to amend the Lease Agreement upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
Except as otherwise defined in this Agreement the capitalized terms used herein
shall have the meanings attributed thereto in the Lease Agreement.
Page 1
<PAGE>
SECTION 2. AMENDMENTS
The Lease Agreement is hereby amended in the following manner:
2.1 Section 4.(a)(i) entitled "Basic Rent" is hereby deleted in its
entirety and the following is inserted in lieu thereof:
"(i) BASIC RENT: The Basic Rent as set forth on Exhibit C-1 hereto
throughout the Term hereof, payable in consecutive installments in arrears
on each Basic Rent Payment Date."
2.2 Exhibit C-1 definition "Basic Rent" is hereby deleted in its entirety
and the following is inserted in lieu thereof:
[This provision has been omitted as confidential information, and
is separately filed with the Commission.]
2.3 Exhibit C-1 definition "Casualty Value" is hereby deleted in its
entirety and the following is inserted in lieu thereof:
[This provision has been omitted as confidential information, and
is separately filed with the Commission.]
2.4 Exhibit C-1 definition "Security Deposit" is hereby deleted in its
entirety and the following is inserted in lieu thereof:
[This provision has been omitted as confidential information, and
is separately filed with the Commission.]
2.5 Exhibit C-1 definition "Security Letter of Credit" is hereby deleted in
its entirety.
2.6 Exhibit D, Article 3 is hereby deleted in its entirety and revised to
reflect the new expiration date of February 1, 2004. The following is inserted
in lieu thereof:
"3. The term for the Delivered Aircraft shall commence on the Delivery Date
and shall end on the Expiration Date, which shall be February 1, 2004."
Page 2
<PAGE>
SECTION 3. TRANSFER OF PAYMENTS
[This provision has been omitted as confidential information, and
is separately filed with the Commission.]
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 REPRESENTATIONS AND WARRANTIES. Lessee hereby repeats the
representations and warranties in Section 3 of the Lease Agreement as if made
with reference to the facts and circumstances existing as at the date hereof and
as if the references in such representations and warranties to this Agreement
refer not to the Lease but rather to the Lease Agreement as amended by this
Agreement.
SECTION 5. CONDITIONS PRECEDENT
This Agreement is subject to the satisfaction of each of the following
conditions or receipt of documents by Lessor, each in form and substance
satisfactory to Lessor:
5.1 CORPORATE ACTION. Lessee, must have furnished to Lessor satisfactory
proof that Lessee has taken all corporate action necessary to authorize this
Agreement.
5.2 OPINION OF COUNSEL. Lessor shall have received a legal opinion from
Lessee's counsel in form and substance satisfactory to Lessor and confirming,
INTER ALIA, that this Agreement has (i) been duly signed and delivered on behalf
of Lessee, (ii) that the representations, warranties and covenants of Lessee set
forth in this Agreement are valid and legally binding obligations of Lessee,
enforceable in accordance with their respective terms in the jurisdictions in
which the Aircraft will be registered, operated and located; (iii) this
Agreement and all other necessary documents have been, or will be, duly filed,
registered and recorded as necessary with the aviation or other comparable
authority in all places as may be necessary and all other action has been taken
to fully protect Lessor's title to the Aircraft against all persons whomsoever
(specifying in such opinion the location and nature of all such filings,
registrations or recordings); (iv) upon termination of the Lease Agreement for
any reason, Lessor will be able to promptly take possession of the Aircraft and
immediately return the Aircraft to facilities in the United States designated by
Lessor in a manner satisfactory to Lessor.
5.3 APPROVAL OF LESSOR'S COUNSEL. All documents incident to this
transaction will satisfactory to counsel for Lessor.
5.4 ADDITIONAL INFORMATION. Lessee must have furnished Lessor with any
other opinions, documents, evidence, materials and information as Lessor may
reasonably request.
Page 3
<PAGE>
5.5 ENGLISH. All certificates, opinions, statements, evidence, proof,
documents, materials and information required under this Section must be
furnished in English.
5.6 INSURANCE. Lessee must have furnished to Lessor certificates of
insurance evidencing the insurance required under the Lease as extended hereby.
SECTION 6. CONDITIONS SUBSEQUENT
6.1 RECORDATION. Immediately following execution of this Agreement by
Lessor and Lessee, the Agreement will be filed for recordation by Lessee with
the FAA, and all other necessary action will be taken by Lessee to fully protect
the title of Lessor in the Aircraft. Lessee agrees that failure to effect such
filings, registrations and/or recordations as of the date falling 2 weeks after
execution by the last party to execute this Agreement shall constitute an "Event
of Default" under the Lease Agreement and Lessor shall have the right to
exercise all remedies available to it under Section 13 of the Lease Agreement
with respect to such Event of Default.
SECTION 7. MISCELLANEOUS
7.1 HEADINGS. The section and paragraph headings in this Agreement are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
7.2 CHOICE OF LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
7.3 COUNTERPARTS. This Agreement 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.
7.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of, and shall be enforceable by and against, the parties
hereto and their respective successors and permitted assigns.
7.5 EFFECT OF AGREEMENTS. Except as expressly amended hereby, the Lease
Agreement is and shall continue in full force and effect.
Page 4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.
BOEING CAPITAL CORPORATION
By: /s/ [ILLEGIBLE]
-------------------------------
Its: Vice President
-------------------------------
ALOHA AIRLINES, INC.
By:
-------------------------------
Its:
-------------------------------
By:
-------------------------------
Its:
-------------------------------
Page 5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.
BOEING CAPITAL CORPORATION
By:
-------------------------------
Its:
-------------------------------
ALOHA AIRLINES, INC.
By: /s/ Brenda F. Cutwright
-------------------------------
BRENDA F. CUTWRIGHT
Its: EXECUTIVE VICE PRESIDENT & CFO
-------------------------------
By: /s/ James M. King
-------------------------------
JAMES M. KING
Its: SENIOR VICE PRESIDENT PLANNING
AND BUSINESS DEVELOPMENT
-------------------------------
Page 5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.
BOEING CAPITAL CORPORATION
By: /s/ [ILLEGIBLE]
-------------------------------
Its: Vice President
-------------------------------
ALOHA AIRLINES, INC.
By:
-------------------------------
Its:
-------------------------------
By:
-------------------------------
Its:
-------------------------------
Page 5
</TEXT>
</DOCUMENT>
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