Exhibit 10.3

AIRCRAFT LEASE AGREEMENT

BETWEEN

WHL MANAGEMENT LLC

A CALIFORNIA LIMITED LIABILITY COMPANY

AS LESSOR

AND

WILLIAMS-SONOMA, INC.

A CALIFORNIA CORPORATION

AS LESSEE

DATED

MAY 16, 2008

 

          INSTRUCTIONS TO COMPLY WITH TRUTH-IN-LEASING REQUIREMENTS    

1.

  

Mail a copy of the lease to the following address via certified mail, return
receipt requested, immediately upon execution of the lease (14 C.F.R. 91.23
requires that the copy be sent within twenty-four hours after it is signed):

        

Federal Aviation Administration

Aircraft Registration Branch

ATTN: Technical Section

P.O. Box 25724

Oklahoma City, Oklahoma 73125

   

2.

  

Telephone the nearest Flight Standards District Office at least forty-eight
hours prior to the first flight under this lease.

   

3.

  

Carry a copy of the lease in the aircraft at all times

   

4.

  

For questions regarding this lease, please contact Kevin C. Austin, Esq. c/o
Aero Law Group, PLLC at (425) 456-1800 or AustinKC@law.aero

      

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AIRCRAFT LEASE AGREEMENT

AIRCRAFT LEASE AGREEMENT (this “Agreement”) dated May 16, 2008 (the “Effective
Date”), by and between WHL MANAGEMENT LLC, a California limited liability
company (“Lessor”), and WILLIAMS-SONOMA, INC., a California corporation
(“Lessee”).

RECITALS

WHEREAS, Lessor owns or rightfully possesses that certain 2007 Bombardier Inc.
Model BD-700-1A11 “GLOBAL 5000” aircraft, U.S. registration number N878HL, and
bearing manufacturer’s serial number 9261, including its ROLLS-ROYCE DEUTSCHLAND
BR710A2-20 engines, serial numbers 12633 and 12634 and all other appliances,
avionics, parts, additions, appurtenances, accessories, instruments, components,
systems, furnishings, and other items of equipment now installed thereon, and
all flight manuals, log books and records required by the United States Federal
Aviation Administration (“FAA”), relating to said aircraft, engines, components
and systems as further described in the Aircraft Delivery Receipt to be executed
at acceptance by Lessee (collectively, the “Aircraft”); and

WHEREAS, Lessee desires to dry lease the Aircraft from Lessor on an exclusive
basis and Lessor desire to so lease the Aircraft to Lessee.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:

AGREEMENT

1.        LEASE OF AIRCRAFT; DELIVERY.

(a)        Lessor hereby agrees to lease the Aircraft to Lessee and Lessee
hereby agrees to lease the Aircraft from Lessor, subject to the terms and
conditions set forth herein. Lessee’s possession, use or operation of the
Aircraft pursuant to this Agreement shall be referred to herein as the “Lease
Operations.” Lessee agrees that its Lease Operations shall not exceed four
hundred seventy-five (475) flight hours during any twelve (12) month period
without the consent of Lessor.

(b)        Prior to the Lease Operations, Lessor shall deliver the Aircraft to
Lessee at BRADLEY INTERNATIONAL AIRPORT, WINDSOR LOCKS, CONNECTICUT or at such
other location as is mutually agreed to by Lessor and Lessee, with all Aircraft
records, logs and other materials required by the United States Department of
Transportation (the “DOT”) or the FAA with respect to the maintenance and
operation of the Aircraft and in compliance with all Delivery Conditions (as set
forth on EXHIBIT A). Lessee shall be deemed to have accepted the Aircraft and be
satisfied with the condition thereof upon commencement of the Lease Operations
and execution of an Aircraft Delivery Receipt in the form attached hereto as
EXHIBIT B. The parties agree that the Aircraft Delivery Receipt will not be
filed with the FAA and that filing of this Agreement with the FAA shall evidence
that the Aircraft has been accepted by Lessee and that the Lease Term (as
defined in Section 2 below) has commenced.

 

1.

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(c)        This Agreement is a net lease in which the direct operating costs,
maintenance and taxes relating to the lease and Lessee’s possession and use of
the Aircraft, including but not limited to personal property tax on the Aircraft
for the term of the Lease, hangarage and insuring the Aircraft will be paid by
Lessee.

2.        TERM OF AGREEMENT. The term of this Agreement shall commence on the
Effective Date and shall continue in full force and effect for 36 Months, unless
earlier terminated pursuant to Section 15 (the “Lease Term”).

3.        LEASE PAYMENTS

(a)        Lessee shall pay, directly to the provider thereof, all costs,
expenses, fees, and charges incurred in connection with the Lease Operations as
such arise during the Lease Term.

(b)        Lessee shall pay to Lessor an amount equal to $375,000 per calendar
month, payable in advance at Lessor’s address (as set forth on the signature
page hereto) on the first business day of the month beginning June 1, 2008 and
on each succeeding calendar month throughout the Lease Term (the “Basic Rent”).
Basic Rent shall also be prorated and payable on the Effective Date for the
partial month ending May 31, 2008. The final Basic Rent payment due on the first
business day of the final month of the Lease Term shall also be prorated for the
remaining number of days in the Lease Term.

(c)        Lessee hereby also agrees to pay any Lessee Expenses (as set forth in
Section 5(j), below) within thirty (30) days after receipt of Lessor’s written
invoice therefor, to Lessor at Lessor’s address (as set forth on the signature
page hereto).

4.        TAXES

(a)         Lessee shall be liable for and shall report and pay promptly when
due all taxes, fees and assessments imposed, assessed or levied against the
Aircraft (or ownership, delivery, leasing, possession, use or operation
thereof), this Agreement (or any rents or receipts hereunder), Lessor or Lessee,
by any domestic or foreign governmental entity or taxing authority during the
Lease Term or related to this Agreement, including, without limitation, all
license and registration fees, and all sales, use, personal or business
property, excise, gross receipts, franchise, stamp, value added, customs duties,
landing fees, airport charges, navigation service charges, route navigation
charges or other taxes, imposts, duties and charges; together with any
penalties, fines or interest thereon (collectively “Taxes”). The parties agree
that “Taxes” shall also include any property taxes assessed on the ownership of
the Aircraft. Lessee shall promptly reimburse (on an after-tax basis) Lessor for
any Taxes charged to or assessed against Lessor, including, without limitation,
any sales, use, or other similar transaction taxes and property taxes imposed by
the State of California or any agency or authority thereof or any local
authority therein. Lessor and Lessee acknowledge that the California property
tax is levied against the owner and/or operator of the Aircraft at 12:01 a.m. on
January 1st of each year – for the upcoming tax year – and such tax is typically
due and payable on or before August 31st of such year. No California property
tax should be due with respect to the Aircraft during 2008, and Lessee will
receive the benefit of this exception. The tax due for future years will attach
on January 1st of each year and will be due and payable later in that year. The
tax is not pro-rated or forgiven if the Aircraft is sold or this Agreement is
terminated after January 1st. It is agreed by Lessee and Lessor that the
California Property Tax due for the final year of the Lease Term will be payable
by Lessee at a time that is likely to occur after the end of the Lease Term. For
example, if the Agreement terminates on May 15, 2011, then Lessee shall be

 

2.

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responsible to pay California property tax for the years 2009, 2010 and 2011,
including the 2011 California property tax payment due on or before August 31,
2011.

(b)        Notwithstanding the foregoing, the term “Taxes” shall not include
Taxes to the extent they are: (i) taxes imposed by the United States of America
or any state or political subdivision thereof which are on or measured by the
net income of Lessor; (ii) in the nature of franchise or conduct of business
taxes imposed on Lessor; (iii) the result of Lessor’s own bankruptcy or any act
on the part of Lessor in contravention of the provisions of this Agreement or
any failure of Lessor to observe the provisions of this Agreement; (iv) imposed
as a result of any voluntary sale, assignment, transfer, or other disposition by
Lessor of its ownership interest in the Aircraft, unless such transfer or
disposition occurs during an Event of Default under this Agreement, in which
case, Lessor agrees to use commercially reasonable efforts to minimize any
adverse tax consequences related to such disposition; (v) so long as no Event of
Default under this Agreement shall have occurred and be continuing, imposed with
respect to acts or events occurring or matters arising after the return of
possession of the Aircraft to Lessor pursuant to the terms of this Agreement;
(vi) imposed solely as a result of a transaction which is unrelated to the
transactions contemplated under this Agreement; (vii) interest or penalties
resulting from Lessor’s failure to file timely and proper tax returns except to
the extent such failure is a result of Lessee’s failure to provide Lessor in a
timely manner with the information needed to pay such Taxes; (viii) a result of
the willful misconduct or gross negligence of Lessor, or (ix) pertaining to the
sale and delivery of the Aircraft from Bombardier Inc. to Lessor prior to the
Lease Operations.

(c)        Lessee shall also be liable for any federal excise tax imposed under
Internal Revenue Code Section 4261 (the “Commercial Transportation Tax”) if such
tax is (or if Lessor reasonably determines that such tax is) applicable to any
or all amounts paid (or deemed to be paid) by Lessee to Lessor hereunder. Lessee
shall pay such tax to Lessor within thirty (30) days after receipt of Lessor’s
written invoice therefor, unless such tax is being contested pursuant to
Section 4(i).

(d)        Lessee shall also be liable for and shall pay any and all fees for
licenses, registrations, permits, and other certificates as may be required for
the lawful operation of the Aircraft during the Lease Term.

(e)        Lessee shall also pay any and all liabilities, fines, forfeitures, or
penalties for violations of any applicable governmental regulations relating to
the Lease Operations and reimburse Lessor for any amounts expended by Lessor on
account of such violations except as set forth in Section 14.

(f)        Lessor shall promptly notify Lessee and send Lessee any notices,
reports, and inquiries of taxing authorities concerning any Taxes or other
charges payable by Lessee that may be received from time to time by Lessor with
respect to the Aircraft.

(g)        Lessee shall reimburse Lessor, within thirty (30) days after Lessee’s
receipt of a written demand for such reimbursement from Lessor together with
supporting invoices relating to such payment, for any Taxes (or other amounts
described in this Section 4) charged to or assessed against Lessor.

(h)        Lessee shall show Lessor as the owner of the Aircraft on all tax
reports or returns, and send Lessor a copy of each report or return and evidence
of Lessee’s payment of Taxes upon request.

 

3.

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(i)        Lessor hereby acknowledges and agrees that Lessee may, from time to
time, contest or pursue refunds of any Taxes that Lessee is required to pay, to
or on behalf of Lessor or otherwise, hereunder. Lessor agrees to fully cooperate
in the process of making such contest or obtaining such refunds, which may
require the submission of such contest or claims by Lessor in Lessor’s own name.
Upon receipt of any such refund, Lessor agrees to immediately pay the amount of
such refund to Lessee. In connection with any such contest or refund pursuit by
Lessee under the circumstances described above, (i) Lessor shall not be required
to take any action pursuant thereto unless Lessor, in its sole discretion,
determines there exists a reasonable basis in law and fact so to do, and (ii) in
any event, Lessee hereby agrees to indemnify Lessor for any liability or loss
which Lessor may incur as a result of or in any way relating to such contest or
related proceeding and agrees to pay Lessor on demand all reasonable costs and
expenses, including attorneys’ fees, incurred by or on behalf of Lessor in
connection with such contest/pursuit.

(j)        Lessor agrees to acquire, hold and deliver the Aircraft to Lessee and
Lessee agrees that it will operate the Aircraft, each in a manner that qualifies
for the exemption from California Sales and Use Tax identified in California
Regulation 1620(b)(4)(b) relating to the Aircraft’s flight time in interstate or
foreign commerce. Lessee will monitor such operations and prepare and preserve
all documentation required by the California Board of Equalization (“CBE”) to
qualify for such exemption. Lessee will engage ATIS Group, LLC (Victor Anvick)
prior to any Lease Operation to assist Lessee and Lessor in this process and to
obtain written verification from the CBE of the Aircraft’s qualification for
this exemption promptly following the end of the appropriate test period.

(k)        For purposes of this Section 4, all references to “Lessor” shall be
deemed to include any permitted assignee of Lessor.

5.         MAINTENANCE RESPONSIBILITY. At all times during the Lease Term:

(a)        Lessee shall, at Lessee’s cost and expense, be responsible for the
servicing, repair, inspection, maintenance and overhaul of the Aircraft. Lessee
shall maintain, inspect, service, repair, overhaul and test the Aircraft in
accordance with: (i) all requirements under any applicable sections of the
maintenance manuals initially furnished with the Aircraft, including any
subsequent amendments or supplements to such manuals issued by the manufacturer
from time to time, (ii) all statutes, laws, ordinances, regulations and
standards or directives issued by any governmental agency applicable to the
maintenance of the Aircraft, including (A) all mandatory or otherwise required
service bulletins issued, supplied, or available by or through the manufacturer
and/or the manufacturer of any engine or part with respect to the Aircraft, and
(B) all airworthiness directives applicable to the Aircraft issued by the FAA
that by their terms require compliance during the Lease Term, and causing such
directives and bulletins to be completed through corrective modification in lieu
of operating manual restrictions, when and to the extent commercially
reasonable.

(b)        Lessee shall, at Lessee’s cost and expense, maintain all records,
logs and other materials pertaining to the Aircraft and its maintenance
(including any computerized maintenance records) in accordance with all
applicable FAA rules and regulations and in a manner that does not modify or
impair any applicable warranties.

(c)        All of Lessee’s maintenance procedures shall be undertaken and
completed in accordance with the manufacturer’s recommended procedures, and by
properly trained, licensed, and certificated maintenance sources and maintenance
personnel, so as to keep the Aircraft, each engine and every component and
system of each: (i) in as good operating condition as when delivered to Lessee
hereunder, ordinary wear and tear excepted, and (ii) in such operating condition
as may be necessary to enable the FAA Standard Airworthiness Certificate (and
any other applicable certificate, license,

 

4.

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registration or authorization) to be maintained in good standing, and in a
manner that does not modify or impair any applicable warranties.

(d)        Any service, repair and maintenance shall take precedence over
scheduling of the Aircraft for Lease Operations, unless such can be safely
deferred in accordance with applicable laws and regulations.

(e)        Lessee shall, at Lessee’s cost and expense, replace or have repaired
appliances, parts, instruments, appurtenances, accessories, furnishings, and
other equipment or components of the Aircraft that may have become worn out,
lost, stolen, destroyed, damaged or otherwise rendered unfit for use for any
reason whatsoever. All such replacements or repairs installed on or incorporated
into the Aircraft shall upon such installation or incorporation become the
property of Lessor.

(f)        Lessee shall not make any change in the configuration, appearance or
coloring of the Aircraft from that in effect at the beginning of the Lease Term,
other than changes mandated by the FAA or consented to in writing by Lessor.
Lessee shall, at Lessee’s cost and expense, make only such alterations or
modifications to the Aircraft that: (i) are necessary or advisable to comply
with Lessee’s obligations pursuant to this Agreement, or (ii) as are required to
comply with any applicable law or any governmental rule or regulation.

(g)        Any repair, alteration or modification made to the Aircraft and any
replacement parts, including any replacement engine, installed thereon in the
course of repairing or maintaining the Aircraft, shall be deemed an accession,
and title thereto shall be immediately vested in Lessor without cost or expense
to Lessor, except with respect to a temporary loaner engine, APU or part
installed on the Aircraft during the period of maintenance or repair of the
original engine, APU or part required by this Agreement, and provided such
loaner engine, APU or part is removed and the original engine, APU or part (or
any accession as may be permitted hereby) is reinstalled promptly on the
completion of such repair or maintenance, but, if reasonably practicable, no
later than the first to occur of (i) 6 months after the applicable removal or
(ii) termination of this Agreement in accordance with its terms; and if
reinstallation is not reasonably practicable by such time, then Lessee shall
make reasonable accommodations for such reinstallation. Reinstallation of any
original engine, APU or part (or any accession permitted hereby) shall be
accomplished to allow the Aircraft to conform with the Return Conditions on the
Return Date. Otherwise, Lessee will not modify the Aircraft or affix or remove
any accessory to the Aircraft leased hereunder, without the consent of Lessor.
Lessee may use Lessee’s existing Ground Support Equipment (“GSE”) and Spare
Parts (“Spares”) in support of the Aircraft during the Lease Term, which shall
remain the property of Lessee until installed on the Aircraft, at which time
such GSE and Spares shall be deemed an accession in accordance with this
subsection of the Agreement.

(h)        Lessee agrees, at its own cost and expense, to cause the Aircraft to
be kept marked with the U.S. registration number specified above; and replace
promptly any such Aircraft marking which may be removed, defaced or destroyed.

(i)        If, and so long as, no Event of Default exists under this Agreement,
Lessee shall, and hereby is, authorized to assert and enforce, at Lessee’s sole
cost and expense, in the name of and for the account of Lessor and/or Lessee, as
their interests may appear, whatever claims and rights Lessor may have under any
warranties applicable to the Aircraft.

(j)        Lessor may from time to time, at its option, perform any act which
Lessee agrees hereunder to perform under this Section 5 and which Lessee shall
fail to perform after being requested in

 

5.

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writing to so perform by Lessor. Lessee shall reimburse Lessor for any such
expenses (the “Lessee Expenses”). Lessor may from time to time take any other
action which Lessor may reasonably determine necessary for the maintenance,
preservation or protection of the Aircraft.

(k)        Notwithstanding anything contained herein to the contrary, the
parties agree that Lessee shall be responsible to outfit the Aircraft with
interior convenience items such as china, crystal, silverware, linens, etc. and
that such interior items shall be and will remain the property of Lessee and may
be removed by Lessee from the Aircraft at the expiration or termination of this
Agreement.

(l)        Capital improvements to the Aircraft (as determined under GAAP)
required by this Agreement or otherwise mutually agreed to by Lessor and Lessee,
such as repainting, engine overhaul and airframe modifications, to the extent
over and above those covered under CorporateCare, APU MSA, Smart Parts (each as
defined in SCHEDULE 1 TO EXHIBIT C attached to this Agreement) or any applicable
warranty or service plan (collectively, “Capital Improvements”) shall be paid
for by Lessor. The parties shall establish a reasonable fair market lease rate
applicable to Capital Improvements, if any, for the remainder of the Lease Term.
Such amounts shall be paid monthly by Lessee to Lessor with, and under the same
terms as, the Basic Rent.

6.        OPERATIONAL CONTROL

(a)        IT IS THE INTENT OF LESSOR AND LESSEE THAT THIS AGREEMENT CONSTITUTES
A DRY LEASE WITHOUT THE PROVISION OF FLIGHT OR CABIN CREW.

(b)        Lessee shall have complete and absolute “operational control” of the
Aircraft and shall maintain “possession, command and control” of the Aircraft
(as determined by the Internal Revenue Service) during the Lease Operations.
“Operational control” as defined in 14 C.F.R. Section 1.1 and for the purpose of
this Agreement, with respect to a flight, means the exercise of authority over
initiating, conducting or terminating a flight, and for the purposes of this
Agreement shall include, without limitation, Lessee, (i) at Lessee’s sole
expense, locating and retaining (either through direct employment or contracting
with an independent contractor for flight services) a duly-qualified flight crew
(the “Flight Crew”), and selecting the Pilot-In-Command and (ii) being
responsible for all other physical and technical aspects of operating the
Aircraft, including, without limitation, flight following, dispatch, flight
planning, flight scheduling, communications, weather, weight and balance and
fueling.

(c)        The Aircraft shall be operated at all times in compliance with, and
all Flight Crew shall be appropriately certified, rated and trained in
compliance with, (i) all applicable Federal Aviation Regulations (“FARs”) and
(ii) the terms and conditions of any and all insurance policies described in
Section 12.

(d)        The Aircraft shall not be operated in any geographic location
excluded from coverage under the insurance policies described in Section 12.

(e)        The Aircraft shall not be used for any illegal purpose or in any
manner that could subject the Aircraft to confiscation.

(f)        It is understood and agreed by Lessee that Lessee’s use of the
Aircraft for its Lease Operations shall be for Lessee’s own account and that
Lessee is prohibited from providing transportation of passengers or cargo for
compensation or hire as determined under the FARs, except that (i) time sharing
or similar agreements for operations by Lessee permitted under 14 C.F.R.
Section 91.501

 

6.

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for the purpose of making the Aircraft available to any officer, director,
employee or affiliate of Lessee, and (ii) reimbursement for the carriage of
candidates in federal elections under 14 C.F.R. Section 91.321, shall be
permitted, each in a form and substance acceptable to Lessor in its reasonable
discretion and provided: (1) no Event of Default is then existing, (2) such
arrangement does not result in any breach of any other provision of this
Agreement or any breach of the Aircraft Mortgage, (3) Lessee remains primarily
liable under this Agreement, (4) any such arrangement is subject and subordinate
to Lessor’s rights hereunder (including its right of repossession) and to Bank’s
rights under any Aircraft Mortgage, and in the case of operations under item
(i) above, the officer, director, employee or affiliate expressly acknowledges
the same in such agreement for the benefit of Lessor, and any such agreement is
a true lease and does not result in a grant of a “security interest” as such
term is used in Section 1-201(37) of the UCC, does not permit any further
subleasing or other disposition, is for a term less that six months, and does
not permit any de-registration of the Aircraft from the FAA Registry or the
registration of any international interests with the International Registry of
Mobile Assets in Dublin, Ireland pursuant to the Convention on International
Interests in Mobile Equipment and the Protocol to the Convention on
International Interests in Mobile Equipment on Matters specific to Aircraft
Equipment and the regulations and procedures thereunder (“International
Registry”) or allow registration of the Aircraft in the registry of any aviation
or other governmental authority of any other nation.

7.        INSPECTION.  Lessor, or its designee, shall have the right to inspect
the Aircraft and the Aircraft records at its sole cost and expense during the
Lease Term at any reasonable time where the Aircraft is currently located, upon
reasonable notice, and to make copies of any such records. Lessee shall provide
to Lessor any information reasonably requested by Lessor with respect to the
location, condition, use and operation of the Aircraft.

8.        LEGAL TITLE TO THE AIRCRAFT.  Legal title to the Aircraft shall remain
in and the Aircraft shall remain registered to Lessor or any appointed trustee
thereof at all times during the Lease Term. Lessee shall not create, incur,
assume or suffer to exist any lien with respect to the Aircraft or take any
action that would otherwise dilute Lessor’s unrestricted title to and ownership
of the Aircraft, other than other than those which result from (i) the
respective rights of Lessor and Lessee as herein provided; (ii) liens arising
from the acts of Lessor; (iii) liens for taxes not yet due; and (iv) inchoate
materialmen’s, mechanics’, workmen’s, repairmen’s, employees’ or other like
liens arising in the ordinary course of business of Lessee for sums not yet
delinquent or being contested in good faith. Lessee shall not transfer, assign,
charter, sublease or convey Lessee’s or Lessor’s interest in or to the Aircraft,
or attempt to do any of the foregoing without Lessor’s prior written consent.

9.        RETURN CONDITIONS.  Lessee agrees to return the Aircraft to Lessor, at
the expiration of this Agreement in accordance with its terms (the “Return
Date”), at the Aircraft’s home base (as set forth in Section 29) or such other
location as is mutually agreeable to Lessor and Lessee, free and clear of all
liens and encumbrances created by Lessee and in compliance with all Return
Conditions (as set forth on EXHIBIT C and its related Schedules) and with all
Aircraft records, logs and other materials previously delivered to Lessee. The
Aircraft will be in as good an operating condition as exists at the time of
delivery to Lessee, normal wear and tear excepted, with no material damage and
all systems functioning properly. Any exceptions or deviations from the required
return conditions shall be identified by Lessee to Lessor and listed in the
Aircraft or engine logbook, as necessary to comply with all applicable FARs.
“Material damage” shall mean damage to the Aircraft that would materially affect
the market value or marketability of the Aircraft.

10.        REPRESENTATIONS AND WARRANTIES OF LESSOR.  THE AIRCRAFT IS LEASED TO
LESSEE BY LESSOR HEREUNDER “AS-IS,” AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE

 

7.

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AIRWORTHINESS, CONDITION, VALUE, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS
FOR USE OF THE AIRCRAFT, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER
OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT,
TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT
LIABILITY IN TORT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE
AIRCRAFT OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE AIRCRAFT, except that Lessor represents and warrants to
Lessee as follows:

(a)        Lessor is the registered owner of the Aircraft and has the absolute
and unrestricted right, power and authority to enter into and perform its
obligations under this Agreement, and the execution and delivery of this
Agreement by Lessor have been duly authorized by all necessary action on the
part of Lessor. This Agreement constitutes a legal, valid and binding obligation
of Lessor, enforceable in accordance with its terms.

(b)        Lessor is a limited liability company duly organized, existing in
good standing under the laws of the State of California and has all necessary
power and authority under applicable law and its organizational documents to own
and lease its properties and to carry on its business as presently conducted.

(c)        Lessor is and will remain throughout the Lease Term a “citizen of the
United States” as defined in Section 40102(a)(15) of Title 49, United States
Code.

(d)        Lessor has provided to Lessee a true and correct copy of the Aircraft
Mortgage (as defined in Section 12) and will provide Lessee with a copy of any
amendments thereto.

11.        REPRESENTATIONS AND WARRANTIES OF LESSEE.  Lessee hereby represents
and warrants to Lessor as follows:

(a)        Lessee has the absolute and unrestricted right, power and authority
to enter into and perform its obligations under this Agreement, and the
execution and delivery of this Agreement by Lessee have been duly authorized by
all necessary action on the part of Lessee. This Agreement constitutes a legal,
valid and binding obligation of Lessee, enforceable in accordance with its
terms.

(b)        Lessee is a corporation duly organized, existing and in good standing
under the laws of the State of California and has all necessary power and
authority under applicable law and its organizational documents to lease its
property and to carry on its business as presently conducted.

(c)        Lessee is a “citizen of the United States” as defined in
Section 40102(a)(15) of Title 49, United States Code.

(d)        A copy of this Agreement, and a current and valid AC Form 8050-l or
AC Form 8050-3 will be kept on the Aircraft at all times during the Lease Term.

(e)        Lessee shall not operate the Aircraft under Part 135 of the FARs.

(f)        Lessee shall notify the nearest Flight Standards District Office of
the FAA at least forty-eight (48) hours prior to the first flight of the
Aircraft under this Agreement.

 

8.

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(g)        Throughout the Lease Term, Lessee will not use or operate and will
not permit the Aircraft to be used or operated “predominately” outside the
United States as that phrase is used in Section 168(g)(1)(A) of the Internal
Revenue Code.

(h)        Other than as is described on the cover page of this Agreement and in
Sections 13(b) and 13(c) below, Lessee shall not make any filings or
registrations with respect to this Agreement or the Aircraft at the FAA or at
the International Registry unless consented to in writing by Lessor.

12.        INSURANCE.  Lessee will maintain, or cause to be maintained and in
effect, at all times during the Lease Term, comprehensive aircraft hull,
liability and war-risk insurance with respect to the Aircraft as follows:

(a)        Liability insurance maintained at all times and any other type of
insurance required under applicable laws and regulations of the United States
and any other jurisdiction in which the Aircraft is operated, but in no event
less than $300,000,000 combined single limit for any one occurrence;

(b)        All risk aircraft hull insurance covering the Aircraft maintained at
all times for an amount not less than the greater of (i) $53,000,000 and
(ii) the fair market value of the Aircraft (as reasonably determined by Lessor
from time to time during the Lease Term upon providing Lessee with written
evidence reasonably substantiating same);

(c)        Any other insurance required by BANC OF AMERICA, N.A. (or any
substitute or replacement financial institution, the “Bank”) as the beneficiary
of any mortgage or security interest made by Lessor that includes the Aircraft
as collateral (the “Aircraft Mortgage”); and

(d)        All such insurance policies shall: (i) be with insurance companies of
recognized responsibility, (ii) name Lessor as the insured owner with respect to
the hull and liability insurance and Lessee (and any Bank) as an additional
insured with respect to the liability insurance, (iii) name Lessor as the sole
loss payee with respect to any hull insurance (except as otherwise required by
clause (iv)) and (iv) shall comply with all other insurance requirements of Bank
under any Aircraft Mortgage; provided however, that the parties agree that the
Aircraft will be added to the hull and liability policies maintained by Lessee
for Lessee’s existing aircraft, with only such changes to the terms, conditions,
coverages and limitations thereof as are required hereby or as are consented to
by Lessor in writing.

The Aircraft shall not be operated by Lessee, nor shall Lessee allow the
Aircraft to be operated by any other party, at any time, unless and until such
insurance policies are in effect. Lessee and Lessor shall consult with each
other, from time to time, in determining any additional amounts of insurance
that may be advisable with respect to the Lease Operations and the Aircraft.

13.        SUBORDINATION; FILING OF AGREEMENTS.

(a)        ALL RIGHTS OF LESSEE HEREUNDER SHALL BE SUBJECT AND SUBORDINATE TO
THOSE OF BANK UNDER ANY AIRCRAFT MORTGAGE. THIS AGREEMENT IS SUBJECT TO THAT
CERTAIN CONSENT TO LEASE AND ASSIGNMENT, DATED MAY 16, 2008, BY AND AMONG
LESSEE, LESSOR AND BANK (the “Consent”).

(b)        CAPE TOWN REGISTRATIONS.  The Convention on International Interests
in Mobile Equipment and the Protocol to the Convention on Matters Specific to
Aircraft Equipment and the regulations and procedures issued thereunder
(collectively, the “Cape Town Convention”) will be

 

9.

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applicable to the lease of the Aircraft under this Lease. Lessor and Lessee
shall each register, if not already registered, as an approved Transacting User
Entity of the International Registry, at each party’s own expense, in time to
support a timely delivery of the Aircraft on the Effective Date. Lessor and
Lessee each shall appoint, not later than one (1) business day prior to the
Effective Date, FAA Counsel as its Professional User Entity to accomplish the
registration of International Interests (as defined in the Cape Town Convention)
with respect to the Lease.

(c)        Lessor and Lessee agree to promptly execute and deliver to Bank such
further instruments, UCC, FAA, Cape Town Convention and International Registry
filings and other documents, and take such further action, as Bank may from time
to time reasonably request in order to further carry out the intent and purpose
of the Aircraft Mortgage and Consent and to establish and protect the rights,
interests and remedies created, or intended to be created, in favor of Bank
thereby.

14.        LIMITATION OF LIABILITY.

(a)        Lessee agrees to indemnify and hold harmless Lessor and its
respective officers, directors, partners, employees, shareholders, agents and
affiliates (collectively, “Representatives”) from any claim, damage, loss, or
reasonable expense (including reasonable attorney’s fees) resulting from damage
to any property (including the Aircraft) or for bodily injury to or death of any
person(s) caused by an occurrence and arising out of the possession, maintenance
or use of the Aircraft during the Lease Term; except (i) to the extent caused by
the gross negligence or willful misconduct of Lessor, or its Representatives, or
(ii) relating to any claim, damage, loss or reasonable expense of Lessor or its
Representatives to the extent covered by the proceeds from the insurance
policies required under Section 12 hereof.

(b)        EACH PARTY AGREES THAT (i) THE PROCEEDS OF INSURANCE TO WHICH IT IS
ENTITLED, (ii) ITS RIGHTS TO INDEMNIFICATION UNDER THIS SECTION 14, AND
(iii) ITS RIGHT TO DIRECT DAMAGES ARISING IN CONTRACT FROM A MATERIAL BREACH OF
THE OTHER PARTY’S OBLIGATIONS UNDER THIS AGREEMENT ARE THE SOLE REMEDIES FOR ANY
DAMAGE, LOSS, OR EXPENSE ARISING OUT OF THIS AGREEMENT OR THE SERVICES PROVIDED
HEREUNDER OR CONTEMPLATED HEREBY. EXCEPT AS SET FORTH IN THIS SECTION 14 EACH
PARTY WAIVES ANY RIGHT TO RECOVER ANY DAMAGE, LOSS, OR EXPENSE ARISING OUT OF
THIS AGREEMENT OR THE SERVICES PROVIDED HEREUNDER OR CONTEMPLATED HEREBY. IN NO
EVENT SHALL LESSOR OR LESSEE BE LIABLE TO THE OTHER FOR OR HAVE ANY DUTY FOR
INDEMNIFICATION TO THE OTHER FOR SUCH OTHER PARTY’S CLAIMED INDIRECT, SPECIAL,
CONSEQUENTIAL, OR PUNITIVE DAMAGES, OR FOR ANY OF SUCH OTHER PARTY’S DAMAGES
CONSISTING OF DAMAGES FOR LOSS OF USE LOSS OF PROFIT OR INSURANCE DEDUCTIBLE,
EXCEPT AS RELATE TO CLAIMS BY LESSOR AGAINST LESSEE FOR REIMBURSEMENT OF
THIRD-PARTY BODILY INJURY, DEATH OR PROPERTY DAMAGE.

(c)        NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS AGREEMENT,
LESSEE SHALL INDEMNIFY LESSOR AND REIMBURSE LESSOR FOR ANY DIMINUTION IN VALUE
OF OR TO THE AIRCRAFT RESULTING FROM DAMAGE THERETO DURING THE LEASE TERM,
EXCEPT (I) TO THE EXTENT CAUSED BY THE NEGLIGENCE OR WILLFUL MISCONDUCT OF
LESSOR OR ITS REPRESENTATIVES OR (II) TO THE EXTENT COVERED BY THE PROCEEDS FROM
THE INSURANCE POLICIES REQUIRED UNDER SECTION 12 HEREOF. If the parties cannot
agree on whether or not the Aircraft has suffered diminution in value or the
amount of such diminution in value, then an appraisal will be performed to
determine the diminution in Aircraft value, if any, that is proximately caused
by such damage and repair.

 

10.

--------------------------------------------------------------------------------

The appraisal will be conducted by a panel of three (3) experienced aircraft
appraisers, with each party selecting, and bearing the expense of, one
(1) appraiser and the two (2) appraisers thus appointed selecting the third
appraiser, who will act as chairman and whose expense will be borne equally by
both parties. The appraisers’ evaluation will include, without limitation, the
nature and quality of the repair (e.g., replacement of damaged components with
new components versus repair of damaged components), market conditions and a
review of the relevant Aircraft logbook entry(ies). The findings of the two
appraisers which are closest in value shall be averaged and shall constitute the
diminution in value caused by the damage, if any.

(d)         The provisions of this Section 14 shall survive the termination or
expiration of this Agreement.

15.        TERMINATION.  Lessor may terminate this Agreement at any time upon an
Event of Default by Lessee. The term “Event of Default” means any of the
following events: (a) Lessee breaches its obligation to pay the Basic Rent or
any other sum when due and fails to cure such breach within ten (10) days;
(b) Lessee breaches any of Lessee’s insurance obligations under Section 12;
(c) Lessee’s material breach of any of its other obligations and failure to cure
that breach within thirty (30) days after written notice from Lessor to Lessee;
(d) any representation or warranty made by Lessee in connection with this
Agreement shall be false or misleading in any material respect when made;
(e) Lessee becomes insolvent or ceases to do business as a going concern; or
(f) a petition is filed by or against under any bankruptcy, insolvency or
similar laws and in the event of an involuntary petition, the petition is not
dismissed within forty-five (45) days of the filing date. Lessee may, at its
option, terminate this Agreement in the case of any Event of Default (as such
term is defined in the Aircraft Mortgage) under the Aircraft Mortgage acted on
by the Bank. In addition to the foregoing, unless otherwise agreed in writing by
Lessee and Lessor, this Agreement shall terminate at 12:00 noon Pacific Time on
the later of (x) the retirement or other event that results in the withdrawal of
W. Howard Lester from the active management of Lessee (each a “Retirement
Event”), and (y) the ninetieth (90th) day following written notice of a
Retirement Event. With respect to notice to Lessor of a Retirement Event, notice
to W. Howard Lester shall be deemed such notice.

16.        INDEPENDENT CONTRACTOR.  Nothing herein shall in any way create any
association, partnership or joint venture relationship between the parties or be
construed to evidence the intention of the parties to constitute such. Lessor
and Lessee shall be considered independent contractors under this Agreement. All
persons engaged by Lessee in connection with the Lease Operations and in
performance of its obligations under this Agreement shall at all times and for
all purposes be considered Lessee’s employees or agents, and Lessee shall be
solely responsible for payment of all federal, state, and other applicable
government, social security, social insurance, unemployment and sickness
disability insurance and other payroll taxes with respect such respective
party’s employees, including contributions from them when and as required by
law. Lessee agrees to indemnify and save Lessor harmless from any and all claims
that may be made by Lessee’s employees under workers compensation laws in
relation to the Lease Operations and in Lessee’s performance of Lessee’s
obligations under this Agreement.

17.        ASSIGNMENT.  Neither Lessee nor Lessor shall assign this Agreement or
any rights hereunder at any time without the other party’s prior written
consent; provided, however, with notice to Lessee, Lessor may assign its rights
hereunder to Bank in connection with the Aircraft Mortgage.

18.        AMENDMENTS AND WAIVERS.  No term or provision of this Agreement may
be amended, modified, waived, discharged or terminated orally, but only by a
written instrument signed by the party against which enforcement of such
amendment, modification, waiver, discharge or termination is sought. No delay or
failure by either party to exercise any right under this Agreement shall
constitute a

 

11.

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waiver of that or any other right hereunder and any waiver of the terms hereof
shall be effective only in the specific instance and for the specific purpose
given.

19.        NOTICES.  Unless otherwise expressly provided by law or herein, all
notices, instructions, demands and other communications hereunder shall be in
writing and shall be delivered personally or sent by registered or certified
mail, postage prepaid and return receipt requested, or sent by facsimile or
electronic transmission (the receipt of which shall be confirmed by the parties,
either by a confirming copy sent by air mail, postage prepaid, or some other
manner which confirms receipt of the facsimile or electronic transmission), and
the date of personal delivery or facsimile or electronic transmission or seven
(7) days after the date of mailing (other than in the case of the mailing of a
confirming copy of a facsimile or electronic transmission), as the case may be,
shall be the date of such notice, in each case to the address, facsimile number
or e-mail address of such party set forth on the signature page hereto (or at
such other address, facsimile number and/or e-mail address as either party shall
have furnished to the other in writing). Copies of all communications provided
hereunder shall also be sent to each party’s attorneys at the following
addresses:

 

LESSOR’S ATTORNEY    LESSEE’S ATTORNEY

Aero Law Group, PLLC

  

Barbera & Watkins, LLC

Attn: Kevin C. Austin, Esq.

  

Attn: Joanne M. Barbera, Esq.

P.O. Box 50228

  

6701 W. 64th Street, Suite 315

11120 NE 2nd Street

  

Overland Park, KS 66202

Bellevue, WA 98004-8332

  

Phone: 425-456-1800

  

Phone: 913-677-3800

Facsimile: 425-456-1801

  

Facsimile: 913-677-3801

E-mail:  AustinKC@law.aero

  

E-mail:  jbarbera@bwaerolaw.com

20.        ENTIRE AGREEMENT.  This Agreement is the entire agreement between the
parties. No agreements, representations, or warranties other than those
specifically set forth herein shall be binding on either party unless in writing
signed by both parties.

21.        GOVERNING LAW/JURISDICTION.  This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California. The parties hereby submit to the exclusive jurisdiction and venue of
any court (federal, state or local) having situs within the State of California.

22.        HEIRS AND SUCCESSORS.  This Agreement and each of its provisions
shall be binding on and shall inure to the benefit of the respective heirs,
devisees, legatees, executors, administrators, trustees, successors and assigns
of the parties to this Agreement. Nothing contained in this Section 23 shall be
construed as consent by Lessor to any assignment of this Agreement or any
interest therein by Lessee, nor as consent by Lessee to any assignment of this
Agreement or any interest therein by Lessor.

23.        FURTHER ASSURANCES.  Each party shall execute and deliver to the
other such further documents and take such further action as may be necessary to
effectuate the intent and purpose of this Agreement.

24.        CAPTIONS.  The captions used in this Agreement are solely for
convenience of reference and do not form part of this Agreement.

25.        NO THIRD PARTY BENEFICIARY.  No person, other than the parties
expressly named herein, is intended to be a beneficiary of any provisions of
this Agreement.

 

12.

--------------------------------------------------------------------------------

26.        SEVERABILITY.  If any term or provision of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be
prohibited or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those as to
which it is held prohibited or unenforceable, shall not be affected thereby, and
each term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.

27.        COUNTERPARTS.  This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts together shall constitute and be one and the same
instrument.

28.        HOME BASE OF AIRCRAFT.  The Aircraft is based at OAKLAND
INTERNATIONAL AIRPORT, OAKLAND, CALIFORNIA (KOAK).

29.        TRANSACTION COSTS AND EXPENSES. Closing costs associated with this
Agreement shall be shared equally by Lessor and Lessee. Each party to this
Agreement shall bear its own transaction costs and expenses, including for its
own attorneys and advisors, except as otherwise set forth herein. Lessor shall
bear its own transaction costs and expenses, associated with the Aircraft’s
acquisition from Bombardier, including (a) fees and expenses paid to Boston
JetSearch, Inc., (b) fees related to the technical acceptance and receipt of the
Aircraft by Lessor’s technical advisors, and (c) registration of the Aircraft in
Lessor’s name with the FAA and the International Registry.

30.        ATTORNEYS’ FEES. In any action or proceeding brought by any party
against the other arising under or in connection with this Agreement or any
other documents related thereto, the prevailing party shall, in addition to
other allowable costs, be entitled to an award of reasonable attorneys’ fees.

[Signature page follows.]

 

13.

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31.        TRUTH IN LEASING

(a)        LESSEE HAS REVIEWED THE AIRCRAFT’S MAINTENANCE RECORDS AND OPERATING
LOGS AND HAS FOUND THAT, DURING THE TWELVE MONTHS PRECEDING THE EFFECTIVE DATE
(OR FROM THE DATE OF THE AIRCRAFT’S MANUFACTURE, IF A SHORTER PERIOD) THE
AIRCRAFT HAS BEEN MAINTAINED AND INSPECTED UNDER PART 91 OF THE FARS. LESSEE
CERTIFIES THAT THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED UNDER FAR PART 91
FOR OPERATIONS TO BE CONDUCTED UNDER THIS AGREEMENT.

(b)        LESSEE CERTIFIES THAT LESSEE AND NOT LESSOR IS RESPONSIBLE FOR
OPERATIONAL CONTROL OF THE AIRCRAFT UNDER THIS AGREEMENT DURING THE LEASE TERM.
LESSEE FURTHER CERTIFIES THAT LESSEE UNDERSTANDS LESSEE’S RESPONSIBILITY FOR
COMPLIANCE WITH APPLICABLE FARS.

(c)        LESSEE UNDERSTANDS THAT AN EXPLANATION OF FACTORS BEARING ON
OPERATIONAL CONTROL AND THE PERTINENT FARS CAN BE OBTAINED FROM THE NEAREST FAA
FLIGHT STANDARDS DISTRICT OFFICE.

(d)        LESSEE CERTIFIES AND AGREES THAT A TRUE COPY OF THIS AGREEMENT SHALL
BE CARRIED ON THE AIRCRAFT AT ALL TIMES, AND SHALL BE MADE AVAILABLE FOR
INSPECTION UPON REQUEST BY A REPRESENTATIVE OF THE FEDERAL AVIATION
ADMINISTRATION.

The parties have executed this Agreement as of the day and year first written
above.

 

LESSOR:     LESSEE: WHL MANAGEMENT LLC     WILLIAMS-SONOMA, INC. a California
limited liability company     a California corporation By:    /s/ Kirk Lester  
  By:    /s/ Sharon L. McCollam Printed Name: R. Kirk Lester     Printed Name:
Sharon L. McCollam Its:   Manager     Its:   Executive Vice President, Chief    
  Operating and Chief Financial Officer WHL Management LLC     Williams-Sonoma,
Inc. Address: c/o R. Kirk Lester, PO Box 1475     Address: 3250 Van Ness Avenue
Rancho Mirage, CA 92270     San Francisco, CA 94109 Phone: 760-779-5236    
Phone: 415-616-8775 Fax: 703-837-1592     Fax: 415-439-1067 Attn: R. Kirk Lester
    Attn: Sharon McCollam E-mail: kirk@rklester.com     E-mail:
smccollam@wsgc.com

 

14.

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EXHIBIT A

AIRCRAFT LEASE AGREEMENT

DELIVERY CONDITIONS

 

In addition to the requirements set forth in Section 1(b) of this Agreement,
Lessor shall deliver the Aircraft to Lessee in compliance with the following
provisions (the “Delivery Conditions”):

   (1)   

The Aircraft shall be airworthy and shall have been maintained and operated in
accordance with the standards contained in Section 5 of this Agreement and in
compliance with FAR Part 91 and all other applicable FAA regulations.

   (2)   

The Aircraft exterior shall be washed and the interior shall be clean.

   (3)   

The Aircraft shall have installed the full complement of engines and other
equipment, parts, components, accessories and loose equipment as would be
necessary for Lessee to operate the Aircraft in accordance with its intended
use.

   (4)   

The Aircraft shall comply with all outstanding Regulations and Airworthiness
Directives issued by the FAA affecting such model aircraft, engines, and
components that by their terms require compliance on or before the date of the
first Lease Operation.

   (5)   

When the Aircraft is delivered to Lessee, all Aircraft systems (including
galleys, passenger and cargo compartments) shall be fully operational for their
intended functions.

 

A-1

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EXHIBIT B

AIRCRAFT LEASE AGREEMENT

AIRCRAFT DELIVERY RECEIPT

WILLIAMS-SONOMA, INC. (“Lessee”) hereby accepts and acknowledges receipt from
WHL MANAGEMENT LLC (“Lessor”) in accordance with the terms and conditions of the
Aircraft Lease Agreement between Lessee and Lessor dated May________, 2008, of
that certain 2007 Bombardier Inc. Model BD-700-1A11 “GLOBAL 5000” aircraft, U.S.
registration number N878HL, and bearing manufacturer’s serial number 9261,
including its ROLLS-ROYCE DEUTSCHLAND BR710A2-20 engines, serial numbers 12633
and 12634, and all other appliances, avionics, parts, additions, appurtenances,
accessories, instruments, components, systems, furnishings, and other items of
equipment now installed thereon, and all flight manuals, log books and records
required by the United States Federal Aviation Administration (“FAA”) relating
to said aircraft, engines, components and systems, including the equipment and
accessories set forth in Schedule 1 attached hereto (collectively, the
“Aircraft”). At the time of delivery the Aircraft and engines had the following
hours:

Airframe: ____________

Engine S/N 12633: ____________

Engine S/N 12634: ____________

IN WITNESS WHEREOF, this instrument has been duly signed by the undersigned
authorized party, and the Aircraft accepted at __________________________
Airport, in ______________, on May_________, 2008, at _______________________
a.m./p.m. local time.

 

LESSEE:

 

WILLIAMS-SONOMA, INC.

By: 

   

Print Name: 

   

Its:     

LESSOR:

WHL MANAGEMENT LLC

By: ___________________________________

Print Name: _________________________

Its: ________________________________

 

B-1

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SCHEDULE 1 TO AIRCRAFT DELIVERY RECEIPT

AVIONICS AND EQUIPMENT

Lightning Sensor System (Honeywell)

  

LH Entrance Jeppesen Manual (10max) Storage Drawer

  

Noise Cancelling Headphones for Crew

  

Wireless LAN

  

Standby Analog Telephone Jack and Loose Equipment

  

Handset (in Cockpit)

  

Additional Wired Handset, without Cradle

  

18.1 Inch LCD Pop Up Monitor in Credenza

  

- 24 Inch Bulkhead Monitors. Quantity 2

  

10.4 Inch Touchsecreen Monitor. Quantity 1

  

- 3 in arm monitors

  

Additional Galley Outlet (115v-60Hz)

  

Utility Outlets For Cockpit (115VAC - 60Hz)

  

Additional TRU & PDEs #5 and 6

  

Service Lights Timer Cabin Power Override System

  

Sunshield (Cockpit)

  

Side Console Pouches in cockpit (connectors delta)

  

Floor Mat Heaters (Entrance Area)

  

Flight Compartment Printer

  

Recliner Type Legrest, Single Seat (qty 6)

  

Flexible Reading Light, Single Seat (qty 6)

  

Flexible Reading Light, Double Seat (qty 2)

  

Plug-in Headrest with Flexwings (qty 10)

  

Single Seat Wide replacing Single Narrow Seat (qty 2)

  

Three Place Divan

  

Espresso Coffee Maker, Manual Fill

  

Addition Fwd Cabin Windows (in Fwd Lavatory)

  

Enviroclean System for Vacuum Toilet

  

Electronic Flight Bag

  

Logo Lights (Exterior)

  

Enhanced Vision System

  

Third FMS

  

Flight Crew Quick Donning Oxygen Masks-Puritan Bennett

  

Airshow: World Map Package

  

Airshow: Day-Night Map with Times Zone

  

Airshow: Static Logo

  

Airshow: Video Briefing English and Non English

  

Airshow: World Explorer

  

Winglet Viewing Mirrors (Cockpit)

  

Main Entry Door, Aft Handrail Extension

  

Main Entry Door, Additional Airstair Storage

  

Mid Cabin Bulkhead C/W Manual Sliding Frangible Door and

  

EICAS Annunciation Half Bulkhead RHS

  

Provisions for Electrical Outlet in LH Galley Annex

  

Aft Lavatory Large 50.5 inch (EVAC vacuum toilet)

  

TOGETHER WITH ALL ADDITIONS, ACCESSIONS, MODIFICATIONS, IMPROVEMENTS,
REPLACEMENTS, SUBSTITUTIONS, AND ACCESSORIES THERETO AND THEREFOR, ALL AVIONICS,
ONBOARD EQUIPMENT, LOOSE EQUIPMENT, MANUALS, DOCUMENTATION AND TECHNICAL
PUBLICATIONS, NOW OWNED OR HEREAFTER ACQUIRED, AND ALL RECORDS AND LOGBOOKS (IN
WRITTEN FORM OR AS COMPUTER DATA, DISCS OR TAPES, WHETHER NOW EXISTING OR
HEREAFTER ACQUIRED OR CREATED, AND WHETHER IN THE POSSESSION OF CUSTOMER OR HELD
ON BEHALF OF CUSTOMER BY OTHERS).

 

B-2

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EXHIBIT C

AIRCRAFT LEASE AGREEMENT

RETURN CONDITIONS

 

In addition to the requirements set forth in Section 9 of this Agreement, Lessee
shall return the Aircraft in compliance with all of the following provisions
(the “Return Conditions”):

 

(1)

  

The Aircraft shall be airworthy and shall have been maintained and operated in
accordance with Sections 5 and 6 of this Agreement and in compliance with FAR
Part 91 and all other applicable FAA regulations.

 

(2)

  

The Aircraft exterior shall be washed and the interior shall be clean.

 

(3)

  

The Aircraft shall have installed the full complement of engines and other
equipment, parts, components, accessories and loose equipment as were delivered
to Lessee at the commencement of the Lease Term.

 

(4)

  

The Aircraft, except as otherwise provided in this Agreement or as consented to
by Lessor, shall be in the same configuration (including, but not limited to,
interior seating configuration, galleys and lavatories) as when the Aircraft was
originally delivered to Lessee.

 

(5)

  

The Aircraft shall be in as good operating condition as when delivered to
Lessee, ordinary wear and tear excepted. All aircraft systems (including
galleys, passenger and cargo compartments) shall be fully operational for their
intended functions.

 

(6)

  

The Aircraft shall be current on the manufacturer’s recommended inspection and
maintenance programs, with all hourly, cycle and calendar inspections required
under such program, including those required within ninety (90) days or 150
hours following such return, complied with.

 

(7)

  

All records, logs, materials, manuals and data associated with the Aircraft,
including without limitation, inspection, modification and overhaul records
required to be maintained with respect to the Aircraft under the applicable
rules and regulations of the FAA or the manufacturer’s recommended maintenance
program, all as originally delivered by Lessor to Lessee and, in addition,
including those acquired or prepared by Lessee during the Lease Term shall be
returned with the Aircraft.

 

(8)

  

The Aircraft shall comply with the terms and conditions set forth on Schedule 1
to this Exhibit C.

 

 

C-1

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SCHEDULE 1 TO EXHIBIT C

ADDITIONAL MAINTENANCE AND RETURN CONDITIONS

I.    MAINTENANCE PLANS.  In addition to the “Maintenance Responsibilities” of
Lessee required under Section 5 of this Agreement and the “Return Conditions”
set forth otherwise in this Exhibit C, Lessee shall comply with the following
terms and conditions:

(a)        Lessee shall keep the Aircraft’s engines enrolled and participating
at all times on the CORPORATECARE maintenance service program provided by
ROLLS-ROYCE DEUTSCHLAND LTD & CO KG with respect to the Aircraft engines or such
other comparable engine maintenance service program as is agreed to in writing
by Lessor (“CorporateCare”).

(b)        Lessee shall keep the Aircraft’s APU enrolled and participating at
all times in the MSA maintenance service program provided by HONEYWELL AEROSPACE
with respect to the Aircraft’s APU or such other comparable APU maintenance
service program as is agreed to in writing by Lessor (“APU MSA”).

(c)        Lessee shall keep the Aircraft enrolled and participating at all
times in the Global 5000 Smart Parts Plus component maintenance service program
provided by BOMBARDIER INC. with respect to the Aircraft’s components or such
other comparable component maintenance service program as is agreed to in
writing by Lessor (“Smart Parts”).

(d)        On the Return Date, Lessee shall ensure that (i) each engine is paid
up in full on CorporateCare; (ii) the APU is paid up in full on APU MSA; and
(iii) the Aircraft is paid up in full on Smart Parts.

(e)        In the event that Lessee fails to meet the conditions set forth in
paragraph (a), (b), (c) or (d) above, Lessee shall pay Lessor an amount equal to
the sum of: (i) for each engine, the cost of paying the CorporateCare account
balances in full as of the Return Date, plus (ii) for the APU, the cost of
paying the APU MSA account balances in full as of the Return Date, plus
(iii) for the Aircraft, the cost of paying the Smart Parts account balances in
full as of the Return Date, plus (iv) any and all enrollment costs, including
any inspection, overhaul, repair or modification then-required to enroll in such
program, plus (iv) any inspection, overhaul, repair or modifications then
required on the Aircraft, which would otherwise have been covered under such
program had Lessee complied with the requirements of this Schedule. All such
costs, including inspection, repair, modification and/or overhaul charges, if
any, shall be payable as supplemental rent and shall be due upon presentation to
Lessee of an invoice setting forth in reasonable detail the calculation of such
amounts due, including the names of all sources used for the required cost
estimates. (Unless both Lessor and Lessee agree to alternative source(s), the
manufacturers of the airframe, engines and APU shall be used as the sources for
all cost estimates.)

 

C-2