Exhibit 10.8

LEASE ASSUMPTION AND OPTION AGREEMENT

THIS LEASE ASSUMPTION AND OPTION AGREEMENT, dated as of the ___ day of May,
2009, is made by and between DHL NETWORK OPERATIONS (USA), INC., an Ohio
corporation (“DHL”), and ABX AIR, INC., a Delaware corporation (“ABX”)
(collectively, the “Parties”).

RECITALS:

WHEREAS, DHL operates as an express delivery business; and

WHEREAS, ABX is a U.S. certificated air carrier; and

WHEREAS, ABX and DHL are parties to an ACMI Service Agreement dated as of
August 15, 2003, as amended (the “ACMI Agreement”), pursuant to which ABX
provides air transportation services to DHL by providing aircraft, crew,
maintenance and insurance to support DHL’s operations; and

WHEREAS, ABX, as lessee, is a party to each of the five aircraft leases
described more fully in Exhibit A hereto (collectively, the “Existing Leases”);
and

WHEREAS, each of the Existing Leases concerns the lease of a Boeing model
767-281 aircraft, each of which are currently being operated by ABX under the
ACMI Agreement (collectively, the “Existing Lease Aircraft”), which are
described as follows:

(a) That certain Boeing model 767-281 aircraft bearing manufacturer’s serial
number 23017 and U.S. Registration No. N784AX, together with two (2) General
Electric model CF6-80A aircraft engines bearing manufacturer’s serial numbers
580267 and 580338 and all associated parts and documents subject to the
applicable lease of such aircraft;

(b) That certain Boeing model 767-281 aircraft bearing manufacturer’s serial
number 23018 and U.S. Registration No. N785AX, together with two (2) General
Electric model CF6-80A aircraft engines bearing manufacturer’s serial numbers
580239 and 580153 and all associated parts and documents subject to the
applicable lease of such aircraft;

(c) That certain Boeing model 767-281 aircraft bearing manufacturer’s serial
number 23019 and U.S. Registration No. N786AX, together with two (2) General
Electric model CF6-80A aircraft engines bearing manufacturer’s serial numbers
580166 and 580168 and all associated parts and documents subject to the
applicable lease of such aircraft;

the aircraft N784AX, N785AX and N786AX listed above in (a), (b) and (c) being
referred to together as the “Tomair Existing Lease Aircraft”;

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(d) That certain Boeing model 767-281 aircraft bearing manufacturer’s serial
number 23022 and U.S. Registration No. N789AX, together with two (2) General
Electric model CF6-80A aircraft engines bearing manufacturer’s serial numbers
580247 and 580185 and all associated parts and documents subject to the
applicable lease of such aircraft; and

(e) That certain Boeing model 767-281 aircraft bearing manufacturer’s serial
number 23140 and U.S. Registration No. N790AX, together with two (2) General
Electric model CF6-80A aircraft engines bearing manufacturer’s serial numbers
580240 and 580241 and all associated parts and documents subject to the
applicable lease of such aircraft; and

the aircraft N789AX and N790AX listed in (d) and (e) above being referred to
together as the “Genesis Existing Lease Aircraft”;

WHEREAS, DHL is willing to assume all of the financial obligations under the
Existing Leases, effective as of January 31, 2009, subject to the terms and
conditions of this Agreement; and

WHEREAS, ABX, is willing to continue operating the Existing Lease Aircraft and
the New Lease Aircraft (as defined herein) under the ACMI Agreement for DHL or
its assignee after the date hereof at DHL’s request; and

WHEREAS, each of the Existing Lease Aircraft has yet to be converted to a full
freighter configuration by Israel Aerospace Industries, Ltd. (“IAI”) in
accordance with IAI’s Special Freighter Conversion Specification (the “767-200SF
Conversion”); and

WHEREAS, ABX owns rights with respect to certain conversion slots at IAI (the
“ABX Conversion Slots”); and

WHEREAS, ABX owns four (4) Boeing model 767-200SF aircraft bearing U.S.
Registration Numbers N752AX, N792AX, N797AX and N798AX (collectively, as more
fully described in Exhibit B hereto, the “Owned Aircraft”), all of which are
currently operated by ABX pursuant to the ACMI Agreement; and

WHEREAS, ABX wishes to grant to DHL an irrevocable option to lease from ABX any
or all of the Owned Aircraft, and DHL seeks such an option, all subject to the
terms and conditions of this Agreement;

 

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NOW, THEREFORE, in consideration of the mutual promises set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, DHL and ABX hereby agree as follows:

AGREEMENT:

1. Incorporation of Recitals. The definitions contained in the above Recitals
are hereby incorporated into this Section 1 as if fully set forth herein.

2. Assumption of Existing Lease Obligations; Indemnification.

(a) DHL hereby absolutely, unconditionally and irrevocably assumes all of the
financial obligations of ABX arising under the Existing Leases on and after
January 31, 2009, other than financial obligations relating to any action or
failure to act of ABX before January 31, 2009 (the “Assumed Obligations”). DHL
shall defend and indemnify ABX from and against any and all claims, damages or
expenses (including, without limitation, reasonable attorneys’ fees) arising
from or relating in any manner to any of the Assumed Obligations.

(b) ABX shall cooperate with DHL and use all commercially reasonable efforts to
minimize the costs to DHL arising from DHL’s assumption of ABX’s financial
obligations pursuant to this Section 2. Without limiting the generality of the
foregoing, such efforts by ABX shall include, upon DHL’s request and at DHL’s
reasonable expense: (i) ensuring that each of the Existing Lease Aircraft meet
the return condition requirements under the Existing Lease for such Existing
Lease Aircraft; (ii) ensuring that each of the Existing Lease Aircraft have
installed the aircraft engines as specified in each applicable Existing Lease
(subject to the right of engine substitution, if any, pursuant to the
requirements of such Existing Lease); and (iii) if requested by DHL, providing
for short-term storage of the Existing Lease Aircraft as reasonably necessary.
In relation to item (ii) above, and in accordance with the terms of the Existing
Leases, ABX acknowledges and agrees that DHL may request that certain engines
currently installed on the Genesis Existing Lease Aircraft be substituted with
other engines, in order that such aircraft shall not significantly exceed the
minimum return conditions for the engines installed on such aircraft.

(c) DHL shall use commercially reasonable efforts to cause the Existing Leases
to be terminated. Upon the termination or assignment of any Existing Lease,
DHL’s obligation under this Section 2 shall automatically terminate without any
further action of either Party hereto, except with respect to any obligations
that may have accrued prior to the termination of such Existing Lease. In the
event that DHL is not able to achieve the termination of the Existing Leases,
then it shall accept assignment of the Existing Leases.

3. Freighter Conversion of Existing Lease Aircraft and “Put” Aircraft. The
Parties further agree as follows with respect to (a) the Existing Lease Aircraft
and (b) any additional aircraft for which ABX exercises a Put Option (as defined
in the ACMI Agreement) pursuant to the ACMI Agreement which have yet to undergo
a 767-200SF Conversion (collectively, the “Unmodified Aircraft”):

(a) Subject to the procedure set forth in Section 3(b) below, ABX hereby grants
to DHL an option, to be exercised in DHL’s sole and absolute discretion, to use
up to five (5) of the ABX Conversion Slots (the option with respect to each ABX
Conversion Slot, a “Conversion Slot Option”) in order to have IAI perform a
767-200SF Conversion on up to five (5) of the Unmodified Aircraft; provided,
however, that the Conversion Slot Options shall be limited such that DHL cannot
use two (2) consecutive ABX Conversion Slots, except to the extent subsequently
agreed upon in writing by the Parties.

 

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(b) In order to exercise any Conversion Slot Option, DHL shall provide ABX
notice of its intent to exercise a Conversion Slot Option at least ninety
(90) days prior to the date of induction for such ABX Conversion Slot as set
forth in the Conversion Schedule attached as Exhibit C hereto (such notice, the
“Slot Option Notice of Intent”). Notwithstanding the foregoing sentence, DHL
shall provide the Slot Option Notice of Intent to ABX within ten (10) days of
the date of this Agreement with respect to any ABX Conversion Slot for which the
date of induction is less than ninety (90) days from the date of this Agreement.
Each Slot Option Notice of Intent shall (i) be in writing, (ii) be sent to ABX
pursuant to the notice requirements of Section 13 hereof and (iii) specify the
ABX Conversion Slot DHL seeks to use.

(c) Should DHL fail to send to ABX a Slot Option Notice of Intent with respect
to an ABX Conversion Slot in a timely manner pursuant to the requirements of
this Section 3, DHL shall lose all right to the use of such ABX Conversion Slot.
Although DHL’s option rights under this Section 3 would thereafter roll to the
next ABX Conversion Slot, under no circumstances shall DHL be entitled to
exercise options rights under this Section 3 with respect to (i) more than five
(5) ABX Conversion Slots and (ii) two consecutive ABX Conversion Slots, except
to the extent subsequently agreed upon in writing by the Parties.

(d) Upon DHL’s exercise of a Conversion Slot Option pursuant to this Section 3,
ABX shall use all commercially reasonable efforts to ensure that DHL receives
the benefit of all rights granted by IAI to ABX with respect to the subject ABX
Conversion Slot, including, without limitation, all favorable pricing and other
conversion terms. DHL shall be liable for, and shall defend and indemnify ABX
from and against, all claims, fees and expenses (including, but not limited to,
all fees and expenses charged by IAI for the subject 767-200SF Conversion)
arising out of DHL’s use of any ABX Conversion Slot. Notwithstanding the
foregoing, DHL shall have no liability or duty to indemnify ABX for its decision
not to exercise a Conversion Slot Option.

4. Lease Option.

(a) ABX hereby grants to DHL an irrevocable option, in DHL’s sole and absolute
discretion, to lease one or more of the Owned Aircraft (the “Lease Option”). The
Lease Option may be exercised individually, collectively or otherwise.

 

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(b) DHL shall exercise its Lease Option, if at all, by providing notice to ABX
prior to February 15, 2010, of its intent to exercise such Lease Option (the
“Lease Option Notice of Intent”). The Lease Option Notice of Intent shall (i) be
in writing, (ii) be sent to ABX pursuant to the notice requirements of
Section 13 hereof and (iii) designate which of the Owned Aircraft DHL intends to
lease. Should DHL fail to exercise its Lease Option prior to February 15, 2010,
pursuant to the requirements of this Section 4(b) with respect to any of the
Owned Aircraft, the Lease Option for such Owned Aircraft shall expire
immediately and automatically and without any required notice or grace period on
February 15, 2010, and ABX shall be under no obligation thereafter to lease such
Owned Aircraft to DHL.

(c) To the extent that DHL exercises its Lease Option pursuant to Section 4(b)
hereof, the Parties, as soon as practicable thereafter and for each subject
Owned Aircraft (each, a “New Lease Aircraft”), shall execute and deliver an
Aircraft Lease Agreement in the form of Exhibit D hereto (collectively, the “New
Leases” and individually, a “New Lease”). The form of each of the New Leases
shall be subject to revision from the form attached as Exhibit D hereto only
(i) upon the mutual written consent of the Parties hereto or (ii) to the extent
required by applicable laws.

(d) From and after the date of this Agreement until delivery of a New Lease
Aircraft, ABX shall not remove or replace an engine or engine module from an
Owned Aircraft unless due to operational necessity or as a result of a scheduled
shop visit, and shall not otherwise discriminate against such Owned Aircraft.

5. Effect on ACMI Agreement.

(a) Except as expressly set forth in this Agreement, this Agreement shall not be
deemed to amend the ACMI Agreement, the terms of which shall remain in full
force and effect for the duration of the ACMI Agreement as amended.

(b) ABX understands that DHL may wish for ABX to continue operating one or more
of the Existing Lease Aircraft and/or the New Lease Aircraft under the ACMI
Agreement until such Existing Lease Aircraft and/or New Lease Aircraft undergoes
a 767-200SF Conversion or is terminated under the ACMI Agreement. At DHL’s
request, ABX shall operate the Existing Lease Aircraft and/or New Lease Aircraft
in accordance with the ACMI Agreement and such operation shall terminate
automatically without any further action by DHL or ABX upon either the
termination by DHL of the Existing Lease Aircraft or the New Lease Aircraft
under the ACMI Agreement or the termination or expiration of the ACMI Agreement.
The monthly cost of such operation shall be fully reimbursable to ABX under (and
subject to) the ACMI Agreement.

(c) ABX shall not have a Put Option (as such term is defined in the ACMI
Agreement) with respect to any of the Owned Aircraft for which DHL has exercised
the Lease Option pursuant to Section 4 hereof, and DHL shall not have a
termination right under the ACMI Agreement with respect to any such Owned
Aircraft prior to the commencement of the term of the New Lease for such Owned
Aircraft.

 

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(d) Notwithstanding Section 5(c) above, between the date hereof and the earlier
of (i) DHL’s exercise of its Lease Option with respect to an Owned Aircraft and
(ii) February 15, 2010, DHL shall retain all termination rights under the ACMI
Agreement for such Owned Aircraft. Should DHL terminate an Owned Aircraft under
the ACMI Agreement during such period: (i) DHL’s Lease Option shall terminate
immediately and automatically with respect to such Owned Aircraft; and (ii) ABX
shall have the right to exercise its Put Option with respect to such Owned
Aircraft under the ACMI Agreement.

6. Financial Adjustments. The Parties agree to the following financial
adjustments:

(a) On the date of this Agreement: (i) ABX shall pay to DHL an amount in cash
equal to the sum of the depreciation and interest charged to DHL from
January 31, 2009, to the date hereof under the ACMI Agreement for each of the
Existing Lease Aircraft; and (ii) DHL shall pay to ABX an amount equal to the
sum of the lease payments which ABX has made under the Existing Leases
pertaining to periods beginning after January 31, 2009.

(b) From and after the date of this Agreement, ABX shall not charge through to
DHL the outstanding book value of any of the Existing Lease Aircraft under the
ACMI Agreement.

(c) The ultimate write-off of the outstanding book value on the Existing Lease
Aircraft shall be for the sole account of ABX.

(d) ABX hereby grants to DHL a credit in the amount of Ten Million Dollars
($10,000,000) as prepaid Basic Rent under (and as defined in) the New Leases
(the “Rent Credit”), with such Rent Credit being apportioned evenly among each
New Lease. With respect to each Owned Aircraft for which DHL does not exercise
its Lease Option, the foregoing $10 million Basic Rent credit shall be reduced
by Two Million Five Hundred Thousand Dollars ($2,500,000), and such amount shall
be offset against DHL’s reimbursement to ABX for termination costs incurred
under the ACMI Agreement.

(e) If any Owned Aircraft is destroyed or otherwise suffers a casualty
occurrence that would constitute a total loss or a constructive total loss under
the terms of the hull insurance maintained for such Owned Aircraft (such
aircraft, a “Destroyed Aircraft”) prior to the commencement or during the term
of the subject New Lease, ABX, to the extent reasonably available, shall provide
to DHL a substitute aircraft of the same configuration and with at least
equivalent utility as the Destroyed Aircraft under the same lease terms and
conditions for the balance of the term of such New Lease. If no equivalent
aircraft is available, ABX will repay to DHL the unamortized balance of the Rent
Credit applicable to the Destroyed Aircraft, and each of the Parties shall be
released of all further obligations under such New Lease.

 

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(f) Any gains (other than the Rent Credit) recorded by ABX due to or arising
from the assumption by DHL of ABX’s obligations under the Existing Leases
pursuant to Section 2 of this Agreement shall not be subject to reimbursement
under the ACMI Agreement.

7. Cooperation and Good Faith. Each of the Parties shall cooperate with the
other and act at all times in complete good faith in seeking to effectuate the
terms of this Agreement. Each of the Parties, at its own expense (except as
otherwise provided in this Agreement), shall take such other and further actions
and execute and deliver such other and further documents as may be reasonably
necessary to effectuate this Agreement.

8. Representations and Warranties. Each of ABX and DHL represents and warrants
to the other as follows:

(a) Such party is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder, and to consummate the transactions contemplated
hereby.

(b) This Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action of such party.

(c) This Agreement has been duly executed and delivered by such party and
constitutes a legal, valid and binding obligation of such party, enforceable
against such party in accordance with its terms.

9. Time of the Essence. The Parties acknowledge and agree that time is of the
essence with respect to the matters set forth in this Agreement.

10. Confidentiality. This Agreement shall be subject to that certain
confidentiality agreement dated January 19, 2009 between DHL and Air Transport
Services Group, Inc., the terms of which the Parties hereby incorporate herein.
In addition, each of DHL and ABX agrees that it shall make no public
announcement or disclosure of the existence of this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party, except to the extent required by applicable law.

11. Applicable Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of New York (other than the
laws of the State of New York relating to choice of law).

 

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12. Jurisdiction; Waiver of Jury Trial.

(a) ABX AND DHL AGREE THAT THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND THE SUPREME COURT OF THE STATE OF NEW YORK LOCATED IN
NEW YORK CITY ARE TO HAVE EXCLUSIVE JURISDICTION OVER ANY DISPUTES ARISING OUT
OF OR RELATING TO THIS AGREEMENT, AND EACH SUBMITS ITSELF AND ITS PROPERTY TO
THE EXCLUSIVE JURISDICTION OF THE FOREGOING COURTS WITH RESPECT TO SUCH
DISPUTES.

(b) EACH OF ABX AND DHL HEREBY (i) WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE COURTS REFERRED TO IN
THIS SECTION 12 ON GROUNDS OF AN INCONVENIENT FORUM OR OTHERWISE AND (ii) WAIVES
TO THE FULLEST EXTENT PERMITTED BY LAW ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN THIS
SECTION 12.

(c) ABX AND DHL HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS
AGREEMENT, WHETHER SUCH ACTION IS BASED ON BREACH OF CONTRACT, TORT, OR ANY
OTHER LEGAL OR EQUITABLE THEORY.

13. Notices. All notices, demands, consents, approvals or other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given to a party if delivered in person or sent by
overnight delivery (providing proof of delivery) to the party at the addresses
set forth below on the date of delivery, or if by facsimile or electronic mail,
upon confirmation of receipt.

 

  (a) If to DHL, to:

DHL Network Operations (USA), Inc.

1200 South Pine Island Road

Plantation, Florida 33324

Attention: Jon Olin – EVP, General Counsel & Secretary

Email: Jon.Olin@dhl.com

Facsimile: (954) 888-7159

 

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  (b) If to ABX, to:

ABX Air, Inc.

145 Hunter Drive

Wilmington, Ohio 45177

Attention: Joe Payne, Vice President, General Counsel & Secretary

Email: Joe.Payne@atsginc.com

Facsimile: (937) 382-2452

14. Amendments; Waivers. Subject to applicable law, this Agreement may only be
amended pursuant to a written agreement executed by both ABX and DHL, and no
waiver of compliance with any provision or condition of this Agreement and no
consent provided for in this Agreement shall be effective unless evidenced by a
written instrument executed by the party against whom such waiver or consent is
to be effective. No waiver of any term or provision of this Agreement shall be
construed as a further or continuing waiver of such term or provision or any
other term or provision.

15. Binding Effect; Assignment. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties and their respective
successors and permitted assigns. No party to this Agreement may assign its
rights or delegate its obligations under this Agreement to any other person,
without the express prior written consent of the other party hereto (such
consent not to be unreasonably withheld or delayed).

16. Execution in Counterparts. To facilitate execution, this Agreement may be
executed in any number of counterparts (including by facsimile or e-mailed
transmission), each of which shall be deemed to be an original, but all of which
together shall constitute one binding agreement on the Parties, notwithstanding
that not all parties are signatories to the same counterpart.

17. Headings; Certain Construction Rules. The section headings contained in this
Agreement are for reference purposes only and do not form a part of this
Agreement and do not in any way modify, interpret or construe the intentions of
the Parties. The words “hereof,” “herein” and “hereunder” and words of similar
import referring to this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Whenever the words “include,”
“includes” or “including” are used in this Agreement, they shall be deemed to be
followed by the words “without limitation.” Unless otherwise specifically
provided for herein, the term “or” shall not be deemed to be exclusive.

18. Entire Agreement. This Agreement, the ACMI Agreement and any other written
agreement between the parties related to the subject matter of this Agreement
constitute the entire agreement between the parties and supersedes any and all
prior and contemporaneous agreements, memoranda, arrangements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof. No representation, warranty, promise, inducement or
statement of intention has been made by either party which is not contained in
this Agreement and no party shall be bound by, or be liable for, any alleged
representation, promise, inducement or statement of intention not contained
herein or therein.

 

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19. Severability. If any provision or any part of any provision of this
Agreement is void or unenforceable for any reason whatsoever, then such
provision shall be stricken and be of no further force or effect. However,
unless such stricken provision goes to the essence of the consideration
bargained for by a party, the remaining provisions of this Agreement shall
continue in full force and effect and, to the extent required, shall be modified
to preserve their validity. Upon such determination that any term or other
provision or any part of any provision is void or unenforceable, the parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.

20. No Third-Party Rights. Nothing in this Agreement, whether express or
implied, is intended to or shall confer any rights, benefits or remedies under
or by reason of this Agreement on any persons other than the Parties and their
respective successors and permitted assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third
persons to any party, nor shall any provisions give any third persons any right
or subrogation over or action against any party.

21. Expenses. Each of the Parties shall be responsible for all of its own costs
incurred in connection with the negotiation and execution of this Agreement and,
for the avoidance of doubt, no such costs or expenses of ABX or its affiliates
shall be chargeable to DHL under the ACMI Agreement.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties have executed this Lease Assumption and Option
Agreement as of the day and year first herein written.

 

ABX AIR, INC. By:   /s/ W. Joseph Payne Name:   W. Joseph Payne Title:   VP,
General Counsel & Secretary

 

DHL NETWORK OPERATIONS (USA), INC. By:   /s/ Jon E. Olin Name:   Jon E. Olin
Title:   EVP

 

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EXHIBIT A

TO

LEASE ASSUMPTION AND OPTION AGREEMENT

 

 

(Attached Description of Existing Leases)

 

 

Aircraft N784AX (master file), Aircraft N785AX and Aircraft N786AX

NOTE: The Owner Trustee is the registered owner and the head lessee for all
three aircraft pursuant to a financing lease with Mitsui & Co Ltd. as head
lessor.

Lease Agreement dated as of August 21, 2001 between Wells Fargo Bank Northwest,
National Association, as Owner Trustee, as lessor (“Owner Trustee”), and ABX Air
Inc., as lessee (“ABX”), with the following attached thereto: (i) Lease
Supplement No. 1 dated August 21, 20011 between the Owner Trustee, as lessor,
and ABX, as lessee; (ii) Lease Supplement No. 2 dated August 21, 20012 between
the Owner Trustee, as lessor, and ABX, as lessee; (iii) Lease Supplement No. 3
dated August 21, 20013 between the Owner Trustee, as lessor, and ABX, as lessee;
and (iv) Assignment Agreement dated as of August 21, 2001 between the Owner
Trustee, as assignor, and Mitsui & Co. Ltd., as assignee; which lease and
attachments were recorded by the Federal Aviation Administration (“FAA”) as one
instrument on September 19, 2001 and assigned Conveyance No. YY031989.

Aircraft N789AX

Aircraft Lease Agreement dated as of July 31, 2001 between General Electric
Capital Corporation, as lessor (“GECC”), and ABX Air, Inc., as lessee (“ABX”),
with the following attached thereto: (i) Common Terms Agreement dated as of
July 31, 2001 between GECC and ABX; and (ii) Lease Supplement No. 1 dated
August 2, 2001 between GECC, as lessor, and ABX, as lessee; which lease and
attachments were recorded by the FAA as one instrument on September 13, 2001 and
assigned Conveyance No. II023288; as assigned and assumed by Assignment,
Assumption and Amendment Agreement dated as of December 5, 2006 among GECC, as
assignor, Wells Fargo Bank

 

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Lease Supplement No. 1 covers one (1) Boeing model 767-281 aircraft bearing
manufacturer’s serial number 23017 and United States Registration Number N784AX,
and two (2) General Electric model CF6-80A aircraft engines bearing
manufacturer’s serial numbers 580267 and 580338.

 

2

Lease Supplement No. 2 covers one (1) Boeing model 767-280 aircraft bearing
manufacturer’s serial number 23018 and United States Registration Number N785AX,
and two (2) General Electric model CF6-80A aircraft engines bearing
manufacturer’s serial numbers 580239 and 580153.

 

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Lease Supplement No. 3 covers one (1) Boeing model 767-280 aircraft bearing
manufacturer’s serial number 23019 and United States Registration Number N786AX,
and two (2) General Electric model CF6-80A aircraft engines bearing
manufacturer’s serial numbers 580166 and 580168.

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Northwest, National Association, as Owner Trustee, as assignee, and ABX, as
lessee, which was recorded by the FAA on January 23, 2007 and assigned
Conveyance No. N006940.

Aircraft N790AX

Aircraft Lease Agreement dated as of July 31, 2001 between General Electric
Capital Corporation, as lessor (“GECC”), and ABX Air, Inc., as lessee (“ABX”),
with the following attached thereto: (i) Common Terms Agreement dated as of
July 31, 2001 between GECC and ABX; and (ii) Lease Supplement No. 1 dated
August 2, 2001 between GECC, as lessor and ABX, as lessee; which lease and
attachments were recorded by the FAA as one instrument on September 13, 2001 and
assigned Conveyance No. S116805; as assigned and assumed by Assignment,
Assumption and Amendment Agreement dated as of December 11, 2006 among GECC, as
assignor, Wells Fargo Bank Northwest, National Association, as Owner Trustee, as
assignee, and ABX, as lessee, which was recorded by the FAA on January 26, 2007
and assigned Conveyance No. P007408.

 

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EXHIBIT B

TO

LEASE ASSUMPTION AND OPTION AGREEMENT

 

 

(Following Description of Owned Aircraft)

 

 

That certain Boeing model 767-200SF aircraft bearing manufacturer’s serial
number 23434 and U.S. Registration No. N752AX, together with two (2) General
Electric model CF6-80A aircraft engines bearing manufacturer’s serial numbers
580225 and 580200 (as either of such engines may be replaced pursuant to the
requirements of the foregoing Lease Assumption and Option Agreement) and all
associated parts and documents;

That certain Boeing model 767-200SF aircraft bearing manufacturer’s serial
number 23142 and U.S. Registration No. N792AX, together with two (2) General
Electric model CF6-80A aircraft engines bearing manufacturer’s serial numbers
580173 and 580125 (as either of such engines may be replaced pursuant to the
requirements of the foregoing Lease Assumption and Option Agreement) and all
associated parts and documents;

That certain Boeing model 767-200SF aircraft bearing manufacturer’s serial
number 23147 and U.S. Registration No. N797AX, together with two (2) General
Electric model CF6-80A aircraft engines bearing manufacturer’s serial numbers
580345 and 580196 (as either of such engines may be replaced pursuant to the
requirements of the foregoing Lease Assumption and Option Agreement) and all
associated parts and documents; and

That certain Boeing model 767-200SF aircraft bearing manufacturer’s serial
number 23431 and U.S. Registration No. N798AX, together with two (2) General
Electric model CF6-80A aircraft engines bearing manufacturer’s serial numbers
580289 and 580227 (as either of such engines may be replaced pursuant to the
requirements of the foregoing Lease Assumption and Option Agreement) and all
associated parts and documents.

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

EXHIBIT C

TO

LEASE ASSUMPTION AND OPTION AGREEMENT

 

 

(Conversion Schedule)*

 

 

 

Aircraft

   Induction    Turntime    Redelivery

1

   9/1/2008    272    6/13/2009

2

   4/5/2009    120    8/9/2009

3

   5/3/2009    115    8/28/2009

4

   8/9/2009    115    12/9/2009

5

   8/27/2009    115    12/27/2009

6

   12/8/2009    110    3/28/2010

7

   12/27/2009    110    4/20/2010

8

   3/28/2010    110    7/22/2010

9

   4/19/2010    110    8/10/2010

10

   7/21/2010    110    11/15/2010

11

   8/9/2010    110    12/4/2010

12

   11/14/2010    110    3/4/2011

13

   12/5/2010    110    3/25/2011

14

   3/3/2011    110    6/27/2011

 

* The foregoing schedule mirrors that contained in ABX’s agreement with IAI for
the conversion of the aircraft and does not include painting. DHL may not
exercise a Conversion Slot Option for the ABX Conversion Slots associated with
Aircraft 1, 2 and 3 above.

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

EXHIBIT D

TO

LEASE ASSUMPTION AND OPTION AGREEMENT

 

 

(Attached Form of New Leases)

 

 

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

AIRCRAFT LEASE AGREEMENT

(MSN                     )

Dated as of                     ,         , 20        

BETWEEN

[ABX AIR, INC.]1,

AS LESSOR

AND

[DHL NETWORK OPERATIONS (USA), INC.]1,

AS LESSEE

RELATING TO

ONE BOEING MODEL 767-200SF AIRCRAFT

SERIAL NUMBER                     

U.S. REGISTRATION NO. N                         

This is Counterpart Number              of four (4) serially numbered, manually
executed counterparts of this Aircraft Lease Agreement. To the extent, if any,
that this Aircraft Lease Agreement constitutes chattel paper under the Uniform
Commercial Code in any jurisdiction, no security interest in this Agreement may
be created through the transfer and possession of any counterpart of this
Aircraft Lease Agreement other than the serially numbered counterpart thereof
marked Counterpart Number 1.

 

 

1

The parties have discussed the possibility of substituting a different Lessor
and/or Lessee, subject to the mutual and reasonable agreement of the parties.

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

AIRCRAFT LEASE AGREEMENT

(MSN                     )

THIS AIRCRAFT LEASE AGREEMENT (MSN                     ) (this “Agreement”),
dated as of the              day of                         , 20__, is between
ABX AIR, INC., a Delaware corporation (“Lessor”), and DHL NETWORK OPERATIONS
(USA), INC., an Ohio corporation (“Lessee”).

RECITALS

WHEREAS, Lessee desires to lease the “Aircraft” (as defined below) from Lessor;
and

WHEREAS, Lessor is agreeable to leasing the Aircraft to Lessee, upon and subject
to the terms and conditions of this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the terms and conditions
set forth herein, the receipt and sufficiency of which are hereby acknowledged
by Lessor and Lessee, Lessor and Lessee hereby agree as follows:

1. Definitions. The following terms shall, except where the context otherwise
requires, have the following respective meanings for all purposes of this
Agreement.

1.1. “ABX Operating Agreement” shall mean any sub-lease, operating agreement or
similar agreement in effect at any time during the Term between Lessee and
Lessor, pursuant to which Lessor agrees to operate the Aircraft.

1.2. “AD Term Date” shall mean the date which falls on the first day of the
month immediately after the expiration of ninety-six (96) months after the
Delivery Date.

1.3. “ADs” shall mean (a) any airworthiness directive or comparable document
issued by the Aviation Authority, the FAA (if not the applicable Aviation
Authority) or any other Governmental Entity exercising appropriate jurisdiction
over the subject matter or parties affected thereby requiring compliance or
(b) any mandatory service bulletin issued by a Manufacturer.

1.4. “Affiliate” shall mean any entity controlling, controlled by or under
common control with a party hereto.

1.5. “Agreed Value” shall mean the value specified as such in Appendix B and
shall have the meaning ascribed to it in the London insurance market in relation
to aviation hull policies.

1.6. “Aircraft” shall mean, collectively, the Airframe, the Engines and the
Aircraft Documents.

 

AIRCRAFT LEASE AGREEMENT    1    MSN                               

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1.7. “Aircraft Documents” shall mean the documents listed in Appendix C hereto
and all other records, documents, log books, manuals, drawings and data relating
to the Aircraft and developed or caused to be developed by Lessee or required by
the Aviation Authority, as updated and maintained through the Return Date.

1.8. “Aircraft Return Documents” shall have the meaning ascribed to such term in
Section 18.2 hereof.

1.9. “Airframe” shall mean the Boeing model 767-200SF airframe described in
Appendix A hereto, together with all Parts, excluding, however, the Engines or
any other engines from time to time installed thereon, but including each QEC.

1.10. “Anticipated Delivery Date” shall mean August 15, 2010, which is the date
that the parties anticipate that the Aircraft will be Delivered to Lessee
pursuant to the terms and conditions of this Agreement.

1.11. “APU” shall mean the auxiliary power unit installed on the Aircraft on the
Delivery Date (or any substitution therefor made during the Term pursuant to
this Agreement), together with all Parts installed thereon.

1.12. “APU Hours” shall mean the time as measured in hours and minutes during
which the APU is operated.

1.13. “Aviation Authority” shall mean the FAA and any other Governmental Entity
having jurisdiction over the Aircraft and this Agreement or Lessee’s operations,
and any successors thereto, respectively (with the understanding that, should
the Aircraft, with Lessor’s approval, be registered in a country other than the
United States, this definition shall include all Governmental Entities outside
of the United States with jurisdiction over the Aircraft).

1.14. “Authorized Maintenance Performer” shall mean any repair station licensed
or certified by the Aviation Authority acting within the scope of its
authorization, including, without limitation, the entity performing maintenance
to an Engine under the Delta Engine Program.

1.15. “Basic Rent” shall mean the amount specified as such in Appendix B and
payable pursuant to Section 4.2 hereof.

1.16. “Basic Rent Credit” shall have the meaning ascribed to such term in
Appendix B hereto.

1.17. “Basic Rent Date” shall mean the Delivery Date and the first day of each
calendar month thereafter.

1.18. “Business Day” shall mean any day other than a Saturday, Sunday or other
day on which banking institutions in                     ,                     
or in Wilmington, Ohio are required or authorized by Law to close.

 

AIRCRAFT LEASE AGREEMENT    2    MSN                               

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

1.19. “Cape Town Convention” shall mean the Convention on International
Interests in Mobile Equipment and its Protocol on Matters Specific to Aircraft
Equipment, concluded in Cape Town, South Africa, on November 16, 2001.

1.20. “Claims” shall have the meaning ascribed to such term in Section 10.1
hereof.

1.21. “Cycle” shall mean one take-off and next subsequent landing of the
Aircraft.

1.22. “Default” shall mean any event which, with the giving of notice, lapse of
time, or both, would become an Event of Default.

1.23. “Delivery” shall have the meaning ascribed to such term in Section 3.5
hereof.

1.24. “Delivery Condition Requirements” shall have the meaning ascribed to such
term in Section 3.6 hereof.

1.25. “Delivery Date” shall mean the date on which the Delivery occurs.

1.26. “Delivery Location” shall mean Wilmington Airpark, Wilmington, Ohio, or as
otherwise mutually agreed by Lessor and Lessee.

1.27. “Delta” shall mean Delta Air Lines, Inc., a Delaware corporation.

1.28. “Delta Engine Program” shall mean the program in effect from time to time
with respect to the Engines pursuant to a maintenance agreement between Lessor
(or an Affiliate of Lessor) and Delta.

1.29. “Dollars” and “$” and “US$” shall mean the lawful currency of the United
States of America.

1.30. “Engine” shall mean either of the two (2) engines identified as to
manufacturer and type and by serial number on the Lease Supplement (each of
which shall have more than 550 rated takeoff horsepower or the equivalent of
such horsepower), together with all Parts installed thereon, and any engine
substituted for an Engine pursuant to the terms hereof.

1.31. “Equipment Change” shall have the meaning ascribed to such term in
Section 7.7 hereof.

1.32. “Event of Default” shall mean any one of the events specified in
Section 16.1 hereof.

1.33. “Expiration” shall mean the end of the Term pursuant to this Agreement.

1.34. “Expiration Date” shall mean the day which is sixty-four (64) months and
fifteen (15) days after the Delivery Date (which shall be identified by actual
date in the Lease Supplement).

1.35. “FAA” shall mean the Federal Aviation Administration of the United States
of America and all successors thereto.

 

AIRCRAFT LEASE AGREEMENT    3    MSN                               

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

1.36. “FAR” shall mean the Federal Aviation Regulations issued by the FAA.

1.37. “Flight Hours” shall mean, with respect to the Aircraft, the time as
measured in hours and minutes elapsing from the moment at which the wheels of
the Aircraft leave the ground on a takeoff until the wheels of the Aircraft
touch the ground on the next landing of the Aircraft.

1.38. “Governmental Entity” shall mean: (a) any national government, any
political subdivision thereof, or local authority therein, (b) any agency,
board, commission, department, division, organ, instrumentality, or court of any
of the foregoing, however constituted, and (c) any organization, association, or
institution, of which any of the foregoing is a member or to whose jurisdiction
it is subject or in whose activities it is a participant.

1.39. “Guarantor” shall mean Deutsche Post AG (or such other entity as Lessor
accepts in its sole and absolute discretion).

1.40. “Guaranty” shall mean a guaranty agreement in the form attached as
Appendix I hereto, which, as executed by Guarantor, irrevocably and
unconditionally guaranties the performance of all payment obligations by Lessee
to Lessor under this Agreement.

1.41. “IAI” shall mean Israel Aerospace Industries, Ltd.

1.42. “Indemnified Parties” shall have the meaning ascribed to such term in
Section 10.1 hereof.

1.43. “International Registry” shall mean the registry established and
maintained pursuant to the Cape Town Convention.

1.44. “Law” shall mean: (a) any constitution, statute, decree, regulation,
order, or other directive of the Governmental Entity of any location to, from,
or within which the Aircraft shall operate; (b) any treaty, pact, compact, or
other agreement to which any Governmental Entity is a signatory or party;
(c) any judicial or administrative interpretation or application of any of the
foregoing; and (d) any amendment or revision of any of the foregoing.

1.45. “Lease Supplement” shall mean the Lease Supplement No. 1, substantially in
the form of Appendix E hereto, which, as of the Delivery Date, shall be executed
by Lessor and Lessee and, together with this Agreement, filed with the FAA for
recordation (assuming that the Aircraft is registered in the United States).

1.46. “Lease Termination Documents” shall have the meaning ascribed to such term
in Section 3.10 hereof.

1.47. “Lessor’s Lender” shall have the meaning ascribed to such term in
Section 20.14 hereof.

1.48. “Lessor’s Liens” shall mean Liens on or relating to or affecting the
Aircraft, the Airframe, the Engines or any part thereof arising as a result of
(a) claims against Lessor not relating to this Agreement, (b) acts of Lessor
neither permitted nor required to be taken by

 

AIRCRAFT LEASE AGREEMENT    4    MSN                               

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

Lessor under this Agreement, (c) the transfer by Lessor of its interest or any
part thereof in the Aircraft, (d) Taxes imposed against Lessor which Lessee has
not agreed to indemnify against pursuant hereto or (e) any act, omission or
circumstance occurring or omitted prior to the Delivery Date or after the Return
of the Aircraft and the Aircraft Documents.

1.49. “Lien” shall mean any lien, mortgage, charge, deed of trust, encumbrance,
pledge, hypothecation, attachment, license, assignment by way of security or
security interest, including, without limitation: (a) any preferential
arrangement resulting in a secured transaction or having the same economic or
legal effect as a lien, mortgage, charge, deed of trust, encumbrance, pledge,
hypothecation, attachment, license, assignment by way of security or security
interest; (b) any agreement to give any lien, mortgage, charge, deed of trust,
encumbrance, pledge, hypothecation, attachment, license, assignment by way of
security or security interest; (c) the interest of a vendor or a lessor under
any conditional sale agreement, lease, hire purchase agreement or other title
retention arrangement; or (d) any statutory or other right of a Governmental
Entity to detain, hold or seize an aircraft or any part thereof which is
presently exercisable with respect to such aircraft.

1.50. “Maintenance Program” shall mean (a) with respect to the Engines, the
Delta Engine Program or other maintenance program under which the Engines are
maintained, and (b) with respect to the Aircraft, the maintenance program in
effect for the Aircraft as maintained by Lessee (or Lessee’s sublessee or
operator), as such programs may be amended during the Term, all in accordance
with the requirements of the Aviation Authority.

1.51. “Manufacturer” shall mean: (a) as to the Airframe, The Boeing Company; and
(b) as to the Engines, General Electric Corporation.

1.52. “Minimum Liability Coverage” shall mean the amount specified as such in
Appendix B, designating the minimum Combined Single Limit under the airline
liability insurance required pursuant to this Agreement.

1.53. “Other Aircraft” shall mean the three (3) Boeing model 767-200SF aircraft
bearing manufacturer’s serial numbers                     ,                     
and                     .

1.54. “Other Lease Agreements” shall mean, collectively, each aircraft lease
agreement between Lessor (or an Affiliate of Lessor), as lessor, and Lessee (or
an Affiliate of Lessee), as lessee, concerning, respectively, each of the Other
Aircraft.

1.55. “Parts” shall mean any item, including, without limitation, materials,
accessories, components, equipment, appliances, instruments, avionics,
appurtenances, furnishings and any other equipment or components of whatever
nature (other than the Engines), which are installed in or attached or
appurtenant to the Aircraft or either of the Engines.

1.56. “Permitted Lien” shall have the meaning ascribed to such term in Section 9
hereof.

1.57. “QEC” shall mean all of the “quick engine change” components associated
with each Engine.

 

AIRCRAFT LEASE AGREEMENT    5    MSN                               

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

1.58. “Rent” shall mean Basic Rent.

1.59. “Replacement Engine” shall have the meaning set forth in Section 6.2(c)
hereof.

1.60. “Return” shall mean the return and redelivery of the Aircraft (including
the Aircraft Documents) to Lessor in accordance with Sections 17 and 18 hereof.

1.61. “Return Condition Requirements” shall have the meaning ascribed to such
term in Section 18.1 hereof.

1.62. “Return Date” shall mean the date at Expiration or upon earlier
Termination when the Aircraft (including the Aircraft Documents) are actually
returned to Lessor in conformity with the Return Condition Requirements.

1.63. “Return Location” shall mean Wilmington Airpark, Wilmington, Ohio, or as
otherwise mutually agreed by Lessor and Lessee.

1.64. “Special FAA Counsel” shall mean McAfee & Taft, Oklahoma City, Oklahoma.

1.65. “Surviving Engine” shall have the meaning ascribed to such term in
Section 19.3 hereof.

1.66. “Taxes” shall mean any and all taxes (including, but not limited to,
withholding taxes, value added taxes, deductions, transaction privilege taxes,
sales taxes or assessments of any kind or form), charges, fees, imposts, levies
or other charges of any nature, together with any penalties, fines, or interest
thereon or other additions thereto which are imposed, withheld, levied, or
assessed by or on behalf of, or otherwise payable to, any Governmental Entity.

1.67. “Technical Acceptance Certificate” shall have the meaning ascribed to such
term in Section 3.8 hereof.

1.68. “Term” shall mean the period commencing on the Delivery Date and ending on
the Expiration Date or on any earlier Termination Date, as applicable.

1.69. “Termination” shall mean the termination of the lease of the Aircraft
under this Agreement, which termination arises prior to the Expiration Date
pursuant to Section 2.1, 2.2, 7.1(b)(3), 16.2, 19.1 or 20.15 hereof, or
otherwise under this Agreement.

1.70. “Termination Date” shall mean the date on which a Termination is
effective.

1.71. “Total Loss” shall mean any of the following events with respect to the
Aircraft, the Airframe, an Engine or the Aircraft Documents: (a) the
destruction, damage beyond economical repair, or such property becoming
permanently unfit for normal use, for any reason whatsoever; (b) any event which
results in an insurance settlement on the basis of actual or constructive or
compromised or agreed or arranged total loss; (c) the disappearance of the
Aircraft, if the Aircraft is unreported for a period of thirty (30) days after
commencement of a flight; (d) loss of possession or loss of use by Lessee for a
period of more than thirty (30) days due to hijacking, theft, or other criminal
actions; (e) the condemnation, confiscation,

 

AIRCRAFT LEASE AGREEMENT    6    MSN                               

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

appropriation, expropriation or seizure of, or requisition of title to or use
of, the Aircraft or an Engine by any Governmental Entity, other than a
requisition for use by any Governmental Entity of the United States or any
political subdivision thereof, for a period of six (6) months or more; or
(f) the operation or location of the Aircraft, while under requisition for use
by any Governmental Entity, in any areas excluded from coverage by any insurance
policy in effect with respect to such Aircraft required by the terms of this
Agreement, unless Lessor and Lessee shall have obtained an indemnity in freely
transferable Dollars from that Governmental Entity covering the risks excluded
from coverage and satisfactory to both Lessor and Lessee.

1.72. “Written Summaries” shall have the meaning ascribed to such term in
Section 7.8(a) hereof.

2. Conditions Precedent.

2.1. Lessor’s Conditions Precedent.

(a) Lessor’s obligation to deliver and to lease the Aircraft to Lessee hereunder
shall be subject to satisfaction of each of the following conditions precedent.

(1) All of the representations and warranties of Lessee set forth in
Section 14.1 hereof shall be true and correct in all material respects as of the
date hereof and as of the Delivery Date.

(2) Lessor shall have received, on or before the Delivery Date, all of the
following, all of which shall be in form and substance satisfactory to Lessor:

(A) The Guaranty, in the form attached as Appendix I, as executed by Guarantor;

(B) a certificate of insurance issued by the insurer or broker for Lessee (or
Lessee’s operator) evidencing compliance with the insurance provisions of
Section 11 hereof;

(C) the Technical Acceptance Certificate in the form of Appendix D, executed and
delivered by an authorized representative of Lessee; and

(D) the Lease Supplement, executed and delivered by an authorized representative
of Lessee.

(3) No loss or destruction to the Aircraft shall have occurred, except to the
extent covered by insurance with respect to the Aircraft.

(4) Lessee shall have made payment of the first installment of Basic Rent
pursuant to Section 4.2 hereof.

(5) An Event of Default shall not have occurred and be continuing pursuant to
(and as defined by) any of the Other Lease Agreements.

 

AIRCRAFT LEASE AGREEMENT    7    MSN                               

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

(6) Assuming that the Aircraft is registered in the United States, Lessee shall
have (a) delivered to Special FAA Counsel its original signature for this
Agreement and the Lease Supplement and (b) irrevocably authorized and instructed
Special FAA Counsel to file original counterparts of this Agreement and the
Lease Supplement with the FAA for recordation upon satisfaction of the
conditions precedent set forth in Section 2.2 hereof. If the Aircraft is not
registered in the United States, Lessee shall have taken all required steps to
file or register this Agreement with the applicable Aviation Authority.

(7) Assuming that the Aircraft is registered in the United States, Lessee shall
have (a) taken all required steps to appoint Special FAA Counsel as its
Professional User Entity for purposes of registering its international interest
under this Agreement with the International Registry and (b) irrevocably
authorized and instructed Special FAA Counsel to register such international
interest with the International Registry upon satisfaction of the conditions
precedent set forth in Section 2.2 hereof. If the Aircraft is not registered in
the United States, Lessee nevertheless shall have taken all required steps to
register the international interest under this Agreement with the International
Registry. Notwithstanding the foregoing, Lessee shall be required to satisfy the
provisions of this Section 2.1(a)(8) only to the extent required by Lessor’s
Lender or as required by applicable Law.

(8) Lessee shall have delivered to Lessor the Lease Termination Documents
(unless Lessee elects to accept such documents after Delivery pursuant to
Section 3.10 hereof).

(b) If due to Lessee’s failure to satisfy any of the above conditions precedent
under this Section 2.1 (and expressly not including a failure of Lessor or the
Aircraft to conform to the requirements of Section 2.2 hereof) the Aircraft
shall not have been delivered to and accepted by Lessee within thirty (30) days
after the Anticipated Delivery Date, then Lessor shall have the right (but not
the obligation) to terminate this Agreement by giving notice to Lessee to that
effect, with such notice of termination taking effect immediately. Upon such a
termination occurring, Lessor shall be entitled to retain the amount of the
Basic Rent Credit to compensate it for the loss of a bargain (and not as a
penalty), and neither party hereto shall have any further obligation to the
other with respect to the Aircraft.

2.2. Lessee’s Conditions Precedent.

(a) Lessee’s obligation to lease the Aircraft from Lessor hereunder shall be
subject to satisfaction of each of the following conditions precedent:

(1) Lessee shall have (A) completed its inspection of the Aircraft (including
the Aircraft Documents) pursuant to Section 3.7 hereof and (B) reasonably
determined that the Aircraft complies with the Delivery Condition Requirements.

 

AIRCRAFT LEASE AGREEMENT    8    MSN                               

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

(2) The Aircraft shall not have suffered a Total Loss prior to the Delivery.

(3) The Aircraft shall be validly registered with the FAA in the name of Lessor
(or shall be otherwise registered as approved by Lessor).

(4) Lessor shall have executed and delivered the Lease Supplement.

(5) Assuming that the Aircraft is registered in the United States, Lessor shall
have (a) delivered to Special FAA Counsel its original signature for this
Agreement and the Lease Supplement and (b) irrevocably authorized and instructed
Special FAA Counsel to file original counterparts of this Agreement and the
Lease Supplement with the FAA for recordation upon satisfaction of the
conditions precedent set forth in Section 2.1 hereof. If the Aircraft is not
registered in the United States, Lessor shall have taken all required steps to
file or register this Agreement with the applicable Aviation Authority.

(6) Assuming that the Aircraft is registered in the United States, Lessor shall
have (a) obtained an authorization code from the FAA for the international
interest created by this Agreement with respect to the Airframe and Engines by
filing with the FAA an AC Form 8050-135, (b) taken all required steps to appoint
Special FAA Counsel as its Professional User Entity for purposes of registering
such international interest with the International Registry and (c) irrevocably
authorized and instructed Special FAA Counsel to register such interest with the
International Registry upon satisfaction of the conditions precedent set forth
in Section 2.1 hereof. If the Aircraft is not registered in the United States,
Lessor nevertheless shall have taken all required steps to register the
international interest under this Agreement with the International Registry.
Notwithstanding the foregoing, Lessor shall be required to satisfy the
provisions of this Section 2.2(a)(6) only to the extent required by Lessor’s
Lender or as required by applicable Law.

(b) In the event Lessor fails to tender the Aircraft for Delivery within thirty
(30) days after the Anticipated Delivery Date, Lessee (conditioned upon Lessee
satisfying its conditions precedent under Section 2.1 hereof) shall have the
right (but not the obligation) to terminate this Agreement. Should Lessee desire
to exercise its termination right under this Section 2.2(b), Lessee shall
provide written notice to Lessor of its election to terminate not later than ten
(10) days after the earlier: of (i) the date on which Lessor provides notice to
Lessee that the Delivery will occur more than thirty (30) days after the
Anticipated Delivery Date; or (b) the thirtieth (30th) day after the Anticipated
Delivery Date. Any failure by Lessee to provide such a notice of termination to
Lessor by such date will be deemed a waiver of the termination right provided
under this Section 2.2(b). Upon a termination occurring under this
Section 2.2(b), Lessee shall be entitled to (i) a refund of any Rent payments
made pursuant to this Agreement and (ii) a refund of the Basic Rent Credit, and
this Agreement shall be of no further force or effect.

 

AIRCRAFT LEASE AGREEMENT    9    MSN                               

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3. Lease of Aircraft; Inspection; Technical Acceptance; Delivery.

3.1. Lease of the Aircraft. Commencing on the Delivery Date, Lessor shall lease
the Aircraft to Lessee, and Lessee shall lease the Aircraft from Lessor, for the
Term, and Lessee shall return the Aircraft to Lessor on the Expiration Date (or
upon the earlier Termination of this Agreement as provided herein), upon and
subject to the terms and conditions of this Agreement.

3.2. Term. The Term shall commence on the Delivery Date and continue until the
Expiration Date, subject to earlier Termination as provided herein.

3.3. Anticipated Delivery Date. Lessor and Lessee (a) anticipate that the
Aircraft will be available for delivery to Lessee on or about the Anticipated
Delivery Date and (b) shall act in good faith at all times in an attempt to
effect Delivery on or about the Anticipated Delivery Date.

3.4. A Lease Only. At all times during the Term, full legal title to the
Aircraft (including the Aircraft Documents) shall remain vested in Lessor to the
exclusion of Lessee, notwithstanding the delivery thereof to, and the use by,
Lessee. Lessor and Lessee agree that this Agreement is intended to be a “lease”
within the meaning of 11 U.S.C. Section 1110 and shall constitute a lease for
tax purposes.

3.5. Delivery. On the Delivery Date, if all the conditions set forth in Sections
2.1 and 2.2 hereof have been satisfied or waived, the Aircraft shall be tendered
for delivery to Lessee (which Lessee shall accept) pursuant to the procedure set
forth herein by executing and delivering the Lease Supplement (the “Delivery”).
The Delivery Date shall be the date of the Lease Supplement. The Aircraft and
the Aircraft Documents will be tendered to Lessee for delivery at the Delivery
Location.

3.6. Condition of the Aircraft; Modifications.

(a) Lessor, as a condition of Lessee’s obligation to accept the Aircraft, shall,
at its sole cost and expense, cause the Aircraft, including the Aircraft
Documents, to meet all requirements set forth in Appendix G hereto (the
“Delivery Condition Requirements”) as of the Delivery.

(b) All unserviceable components and all discrepancies identified by Lessee
during the ground or flight inspection conducted pursuant to Section 3.7 hereof
shall be corrected by Lessor at Lessor’s expense prior to the technical
acceptance of the Aircraft by Lessee (except such corrections as shall be
deferred by mutual agreement of Lessee and Lessor, which corrections shall be
performed at Lessor’s sole cost and expense thereafter).

(c) Except as otherwise expressly provided by this Agreement, all configuration
modifications required to fulfill Lessee’s operational demands shall be
performed by Lessee and at Lessee’s cost and expense. All such modifications
shall be performed by an Authorized Maintenance Performer, and shall be subject
to the prior approval of Lessor, which approval shall not be unreasonably
withheld.

 

AIRCRAFT LEASE AGREEMENT    10    MSN                               

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3.7. Inspection.

(a) Prior to the Anticipated Delivery Date, Lessor shall cause the Aircraft and
the Aircraft Documents to be made available for a pre-delivery inspection by
Lessee, at Lessee’s expense, by giving Lessee the opportunity to inspect the
Aircraft, the Engines, all installed Parts and the Aircraft Documents, with such
inspection or inspections taking place at the Delivery Location or at such other
location as Lessor and Lessee may agree in writing.

(b) On or before the later of (i) ten (10) days following the execution of this
Agreement by the parties or (ii) forty-five (45) days prior to the Anticipated
Delivery Date, Lessor shall make available for Lessee’s inspection the Aircraft
Documents which are available at that time (the “Historic Documents”). On or
before the earlier of (A) the thirtieth (30th) day following the date on which
Lessor makes such Historic Documents available to Lessee or (B) the fifth
(5th) day prior to the Anticipated Delivery Date, Lessee shall notify Lessor in
writing of any non-conformities between such Historic Documents and the
requirements of this Agreement. Lessee shall be deemed to have waived any
non-conformities between the Historic Documents and this Agreement to the extent
Lessee fails to identify such non-conformities to Lessor in writing on or before
the date set forth in (A) or (B) above, as applicable.

(c) Any additional Aircraft Documents (“Additional Documents”) which are
generated or otherwise become available from time to time after the date on
which the Historic Documents are made available by Lessor for Lessee’s
inspection shall be made available by Lessor for Lessee’s inspection within two
(2) Business Days after they become available. Lessee shall notify Lessor in
writing of any non-conformities between any such Additional Documents and the
requirements of this Agreement on or before the second (2nd) Business Day
following the date on which such documents are made available by Lessor for
Lessee’s inspection.

(d) Immediately prior to delivery of the Aircraft, Lessor, at the request of
Lessee, shall make the Aircraft available for a test flight (of no more than one
hour in duration) based on the Manufacturer’s test flight program to demonstrate
the satisfactory functioning of the Aircraft and all of its systems. If the
Aircraft is determined to be not in conformity with the Delivery Condition
Requirements, the test flight shall be repeated as necessary pursuant to the
provisions of Section 3.7(e) below. Lessee’s representatives shall be allowed to
attend such test flight on board the Aircraft (but shall be responsible for
their own expenses). Lessor shall arrange for an experienced aircraft crew for
the test flight (which crew, upon mutual agreement of Lessor and Lessee, may be
Lessee’s crew), and Lessor shall bear the operating expense of such test flight
(including the cost of the crew, fuel, and any airport fees). Lessor shall
assume all risk of any loss or damage to the Aircraft in connection with such
test flight except to the extent the same is caused by the gross negligence or
willful misconduct of Lessee or its representatives.

(e) Promptly following the ground and flight inspection, but in no event more
than 24 hours following such ground or flight inspection, Lessee shall notify
Lessor of any defect or non-conformity with the Delivery Condition Requirements
set forth in

 

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Appendix G, whereupon Lessor will advise Lessee of the estimated time required
to effect correction of such defects or discrepancies. Upon the completion of
any required corrections, Lessor will make the Aircraft available to Lessee for
any further ground and/or flight reinspection as necessary (pursuant to
Section 3.7(d) above) to verify compliance with the Delivery Condition
Requirements.

3.8. Acceptance. Upon the completion of the ground and flight inspections
conducted pursuant to Section 3.7 hereof, and the performance by Lessor of any
corrections required to bring the aircraft into conformity with the Delivery
Condition Requirements, Lessee shall execute and deliver to Lessor a Technical
Acceptance Certificate substantially in the form of Appendix D hereto (the
“Technical Acceptance Certificate”).

3.9. Modifications. Except as required to be performed by Lessor as part of the
Delivery Condition Requirements, all work required to be performed on the
Aircraft so as to satisfy Lessee’s operational requirements, to otherwise comply
with the regulations of the Aviation Authority or for any other reason, shall be
performed by an Authorized Maintenance Performer at Lessee’s cost and expense.
Without limiting the generality of the foregoing, should Lessee (at any time
during the Term of this Agreement) elect to make a change from the ABX
Maintenance Program, Lessee shall be responsible for (a) creating the bridge
package for such special program and (b) the cost of returning the Aircraft back
to the ABX Maintenance Program upon the Return of the Aircraft at the end of the
Term.

3.10. Lease Termination Documents. Prior to (and as a condition of) Delivery or,
at Lessor’s sole option, after Delivery and within fifteen days after request of
Lessor during the Term, Lessee shall execute and deliver to Lessor: (a) one or
more executed lease termination agreements in a form or forms acceptable for
filing with the Aviation Authority and each other relevant Governmental Entity;
(b) any other documents required by the Aviation Authority and each other
relevant Governmental Entity, as required in Lessor’s reasonable determination
to effectuate the de-registration of the Aircraft (if determined appropriate by
Lessor) and termination of the Lease; and (c) all documents required to
effectuate a discharge at the International Registry of the international
interest created by this Agreement in respect of the Airframe and Engines (with
such lease termination agreement and other documents referred to, collectively,
as the “Lease Termination Documents”). The Lease Termination Documents shall be
filed by Lessor only upon the occurrence of an Event of Default by Lessee
hereunder (including without limitation any failure by Lessee to provide
documents requested by Lessor to evidence the Expiration or Termination of the
Lease).

4. Guaranty; Payments; Method of Payment.

(a) Guaranty. Lessee shall cause Guarantor to execute and deliver to Lessor the
Guaranty. The Guaranty shall be executed and delivered to Lessor prior to
Delivery, and shall provide for an irrevocable and unconditional guaranty of the
performance of all of Lessee’s payment obligations to Lessor under this
Agreement, which Guaranty shall be capped at an amount as set forth therein.

 

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4.2. Basic Rent; Basic Rent Credit.

(a) Subject to application of that portion of the Basic Rent Credit owing each
month pursuant to Appendix B, Lessee shall pay, in advance, the Basic Rent
specified in Appendix B to Lessor on each and every Basic Rent Date until the
earlier of the following:

(1) in the event of a Total Loss, the payment to Lessor of the Agreed Value in
accordance with Section 19.1;

(2) the Return; or

(3) in the event that the Aircraft and the Aircraft Documents are returned to
Lessor under circumstances in which the Aircraft or the Aircraft Documents do
not conform to the Return Condition Requirements, the date on which Lessor
executes and delivers to Lessee a Return Receipt in the form attached hereto as
Appendix F.

(b) The termination of Lessee’s obligation to pay Basic Rent pursuant to
Section 4.2(a)(3) above shall not be in derogation of Lessor’s other rights and
remedies against Lessee in the event of a return of the Aircraft and Aircraft
Documents under circumstances in which the Aircraft and the Aircraft Documents
as so returned do not conform to the Return Condition Requirements.

(c) Should this Agreement terminate (i) pursuant to Section 2.2(b) hereof (i.e.,
as the result of Lessor failing to satisfy its conditions precedent to
Delivery), (ii) pursuant to Section 19.1 hereof (i.e., upon the occurrence of a
Total Loss of the Aircraft prior to Delivery or during the Term), (iii) as a
result of Lessor’s exercise of its rights under Section 7.1(b)(3) hereof or
(iv) as the result of Lessor breaching its obligations under this Agreement,
Lessor shall be required to make payment to Lessee in an amount equal to the
unapplied portion of the Basic Rent Credit.

4.3. Basic Rent Date.

(a) The first payment of Basic Rent shall be made on or prior to the Delivery
Date, as a condition of the Delivery, in an amount equal to the product of
(i) the monthly Basic Rent multiplied by (ii) a fraction (A) whose numerator is
the number of days from and after the Delivery Date remaining in the month which
includes the Delivery Date and (B) whose denominator is the total number of days
in such month.

(b) On each Basic Rent Date following the Delivery Date (through the time set
forth in Section 4.2(a) hereof, Lessee shall pay the Basic Rent to Lessor as
required by Section 4.2(a).

4.4. Engine Maintenance Program.

(a) Lessor and Lessee shall negotiate in good faith and shall cooperate in
seeking to maintain the Engines under the Delta Engine Program throughout the
Term.

 

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Lessor hereby represents to Lessee that, pursuant to the Delta Engine Program,
should an Engine be removed from the Delta Engine Program after performance of a
shop visit with respect to such Engine, Lessor (or an Affiliate of Lessor) shall
be responsible for the payment of buy-out compensation (the “Buy-Out
Compensation”) to Delta in an amount equal to the positive difference between
(i) a reasonable time and material charge for the shop visit, as mutually
determined by Delta and Lessor (or an Affiliate of Lessor) and (ii) the amount
of fees paid to Delta under the Engine Maintenance Program for the Engine prior
to the removal of the Engine from the Delta Engine Program. As a result of such
requirement, should Lessee elect to remove an Engine from the Delta Engine
Program during the Term, Lessee shall be responsible for the payment of any such
Buy-Out Compensation to Delta as required by the Delta Engine Program; provided
that Lessee shall have the right to approve the determination of the
reasonableness of the subject time and material charges, with such approval not
to be unreasonably withheld or delayed.

4.5. Payments in Dollars to Designated Bank Account. All payments owing by
Lessee to Lessor pursuant to this Agreement (including, without limitation, the
payment of Basic Rent) shall be made in Dollars by the wire transfer of
immediately available funds to the bank account designated in Appendix B or to
such other bank account as Lessor may designate in writing to Lessee from time
to time. Payments shall not be considered made by Lessee until the owner of such
bank account has received full credit in its account. Lessee accepts all risks
of delay or blockage of any transfer made in accordance with the terms of this
Agreement.

4.6. Interest on Overdue Amounts. Any amount which is overdue pursuant to this
Agreement shall bear interest at the rate indicated in Appendix B hereto
calculated from the due date of such payment. The payment of such interest shall
be made together with the payment of the overdue amount.

4.7. Due Date Not on Business Day. In the event any payment required hereunder
is due on a day that is not a Business Day, then such payment shall be made on
the next succeeding Business Day.

4.8. No Abatement. Lessee’s obligations to pay Rent hereunder shall be absolute
and unconditional and shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right Lessee may have against Lessor. There shall be no abatement of Rent for
any period when the Aircraft shall be rendered unfit for use, grounded,
unserviceable for any reason whatsoever, hijacked, confiscated, seized,
requisitioned, restrained or appropriated; provided, however, that, should an
ABX Operating Agreement be in effect with respect to the Aircraft, the
provisions of the ABX Operating Agreement shall control with respect to Lessor’s
ultimate responsibility, if any, under the ABX Operating Agreement should the
Aircraft (or any component thereof) become unavailable for use.

5. Registration; Nameplates; Filings.

5.1. Registration. Throughout the Term of this Agreement, the Aircraft shall
remain registered in the United States or in such other jurisdiction as Lessor
(and Lessor’s Lender) shall provide prior written approval, with such approval
not being unreasonably withheld or delayed. At all times during the Term, the
Aircraft shall be registered with the applicable Aviation

 

AIRCRAFT LEASE AGREEMENT    14    MSN                               

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Authority in the name of Lessor (or as otherwise registered with Lessor’s
written consent). To the extent required by Lessor’s Lender or applicable Law,
the international interest created by this Agreement in the Airframe and in the
Engines shall be registered with the International Registry.

5.2. Nameplates. Lessee shall attach or cause to be attached to the Airframe in
a location reasonably adjacent to and not less prominent than the airworthiness
certificate for the Aircraft, and to each Engine, fireproof nameplates in a form
reasonably specified by Lessor which shall evidence the ownership interest of
Lessor (and, as directed by Lessor, the security interest of Lessor’s Lender, as
applicable). Lessee shall keep and maintain all such nameplates plainly,
permanently and conspicuously on the Airframe and Engines throughout the Term.

5.3. Filings. At or before Delivery, this Agreement (absent the provisions of
Appendix B) and such other documents as Lessor may direct shall be filed with
the Aviation Authority and with any other Governmental Entity registrar or
international registrar as provided herein, including, without limitation, the
International Registry. All costs and expenses (including the legal fees charged
by Special FAA Counsel but not including the legal fees charged by Lessor’s
counsel) relating to each of such filings shall be paid as set forth in
Section 20.8 of this Agreement.

6. Possession, Use and Operation of the Aircraft; Risk of Loss or Damage.

6.1. Possession of Aircraft; Wet-Lease.

(a) Lessee, during the Term, shall be entitled to the possession and use of the
Aircraft. Lessee shall not sublease or otherwise transfer possession of the
Aircraft to any person or entity; provided, however, that, so long as no Event
of Default shall have occurred and be continuing:

(1) Lessee may deliver possession of the Aircraft to the Manufacturer or to any
Authorized Maintenance Performer for testing, service, repair, maintenance or
overhaul work thereon or on any Part thereof or for alterations or modifications
in or additions thereto to the extent required or permitted by the terms of this
Agreement; and

(2) Lessee may, with the prior written consent of Lessor, enter into a sublease
with respect to the Aircraft. Lessor’s consent to a sublease by Lessee shall not
be unreasonably withheld or delayed, provided that the failure of Lessor’s
Lender to approve a sublease shall be considered good cause for Lessor to
withhold its approval.

(b) Should Lessee not be an airline or other certificated operator of the
Aircraft, Lessee shall have the right to enter into a sublease or operating
agreement (the “Operating Agreement”) with a certificated operator, subject to
the prior approval of Lessor, with such approval not being unreasonably withheld
or delayed. Should Lessee enter into such Operating Agreement with Lessor (or an
Affiliate of Lessor), as operator, the obligations of the Operating Agreement
shall control with respect to the respective obligations of the parties
concerning the Aircraft.

 

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(c) During the Term, Lessee shall be entitled to enter into and carry out any
charter, “wet-lease” or other agreement with respect to the Aircraft on terms
whereby the Aircraft will at all times be operated by an aircrew employed by and
subject to the operational control of Lessee; provided that any such charter or
other agreement (i) shall be approved by Lessor, such approval not being
unreasonably withheld or delayed, (ii) shall be subordinate in all respects to
this Agreement, (iii) will not extend beyond the end of the Term, (iv) will not
result in any transfer of possession or control of, or create any interest in,
the Aircraft to or in favor of any person or entity, and such possession and
control shall remain at all times exclusively with Lessee and (v) shall not be
entered into or renewed beyond its current term in the event that at the time
Lessee seeks to so enter into or renew such charter, there exists an Event of
Default.

6.2. Possession of Engines.

(a) During the Term, Lessee shall be entitled to the possession and use of each
of the Engines. Lessee shall not, without the prior written consent of Lessor,
transfer possession of any of the Engines to any person or entity; provided,
however, that, so long as no Event of Default shall have occurred and be
continuing, Lessee may, without the prior written consent of Lessor, exercise
the following rights.

(1) Maintenance Workshop. Lessee may deliver possession of any Engine to the
Manufacturer or to an Authorized Maintenance Performer for testing, service,
repair, maintenance or overhaul work on such Engine or any part thereof or for
alterations or modifications in or additions to such Engine to the extent
required or permitted by the terms of this Agreement.

(2) Engines on Airframe Owned by Lessee. Lessee may install any Engine on an
airframe owned by Lessee free and clear of all Liens, except (A) Permitted Liens
or 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 and (B) the Lien of any mortgage
which expressly and effectively provides that such Engine leased to Lessee
hereby shall not become subject to the Lien thereof, notwithstanding the
installation of such Engine on any airframe subject to such Lien, unless and
until Lessee shall become the owner of such Engine.

(3) Engine on Airframe Leased to Lessee. Lessee may install any Engine on an
airframe leased to Lessee or purchased by Lessee subject to a hire purchase or
conditional sale agreement; provided that (A) such airframe is free and clear of
all Liens except (i) Permitted Liens or 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, (ii) the Lien of any mortgage which expressly and effectively
provides that such Engine leased to Lessee hereby shall not become subject to
the Lien thereof, notwithstanding the installation of such Engine on any
airframe subject to such Lien, unless and until Lessee shall become the owner of
such Engine and (iii) the rights of the parties to the lease or hire purchase or
conditional sale

 

AIRCRAFT LEASE AGREEMENT    16    MSN                               

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agreement covering such airframe and (B) there shall be in effect between Lessee
and such lessor or hire vendor or conditional vendor of such airframe a written
agreement (which may be the lease or hire purchase or conditional sale agreement
covering such airframe) whereby such lessor or hire vendor or conditional vendor
expressly and effectively agrees that neither it nor its successors and assigns
will acquire or claim any right, title or interest in such Engine by reason of
such Engine being installed on such airframe at any time while such Engine is
subject to this Agreement; and provided further, that the rights of any transfer
permitted by this Section 6.2 shall be subject and subordinate to all of the
terms of this Agreement, including, without limitation, Lessee’s obligation to
return the Engines at the end of the Term and Lessor’s right to repossession
pursuant hereto, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Agreement to the same extent as if such
transfer had not occurred.

(b) In the event that Lessee shall have entered into a mortgage, lease or
conditional sale agreement complying with the provisions of clause (2) or clause
(3) of Section 6.2(a) hereof, Lessor hereby agrees, for the benefit of the
mortgagee, lessor or conditional vendor under such agreement, that Lessor and
its successors and assigns shall not acquire or claim, as against such
mortgagee, lessor or conditional vendor, any right, title or interest in any
engine owned by such person or entity or in which it has a security or ownership
interest by reason of such engine’s being installed on the Airframe. Any Engine
removed from the Aircraft shall be, during the period such Engine is so removed,
either safely housed and sheltered or repaired or maintained in accordance with
this Agreement, or installed on an aircraft pursuant to this Section 6.2;
provided, further, that: (1) Lessee maintains or causes to be maintained
insurance in accordance with Section 11 in respect of the removed Engine at all
times while it is removed from the Airframe (and, if required by Lessor, Lessee
shall furnish or cause to be furnished to Lessor waivers or acknowledgments by
the insurers of the aircraft on which such removed Engine is installed); and
(2) as soon as reasonably practicable and in any event on or before expiration
of the Term or termination of this Agreement, such removed Engine is reinstalled
on the Airframe.

(c) Notwithstanding anything to the contrary in this Section 6.2, Lessee shall
return the Engines to Lessor at the end of the Term. Either of the Engines at
Return may be a replacement Engine under one of two conditions: (i) upon the
occurrence of a Total Loss with respect to an Engine during the Term (requiring
an Engine replacement pursuant to Section 19.2 of this Agreement); or
(ii) Lessor agreeing to accept an engine in substitution for an Engine upon
Lessee’s request (which Lessor shall not unreasonably deny), subject to Lessee
and such replacement Engine satisfying all of the requirements of Section 19.2
hereof (including, without limitation, the engine condition and title transfer
requirements therein). Any replacement engine which satisfies this
Section 6.2(c) (a “Replacement Engine”) thereafter shall be deemed an “Engine”
for all purposes under this Agreement.

 

AIRCRAFT LEASE AGREEMENT    17    MSN                               

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6.3. Pooling of Parts. Any Part removed from the Aircraft as provided in
Section 7 hereof may be subjected by Lessee to normal interchange or pooling
agreements or arrangements customary in the airline industry and entered into by
Lessee with other licensed air carriers or aviation parts suppliers in the
ordinary course of its business, provided that the part replacing such removed
Part shall be incorporated or installed in or attached to the Aircraft in
accordance with Section 7 promptly upon the removal of such removed Part. In
addition, any replacement part, when incorporated or installed in or attached to
the Aircraft in accordance with Section 7, may be owned by another such air
carrier or aviation parts supplier subject to such pooling arrangement;
provided, further, that the Part so removed remains the property of Lessor and
subject to this Agreement and that Lessee, at its expense, promptly thereafter
either (a) causes title to such replacement part to vest in Lessor free and
clear of Liens other than Permitted Liens, in accordance with Section 7.5, or
(b) replaces such replacement part by incorporating or installing in or
attaching to the Aircraft a further replacement part owned by Lessee free and
clear of all Liens other than Permitted Liens, and causes title to such further
replacement part to vest in Lessor and causes such replacement part to become
subject to this Agreement.

6.4. Commercial Operations. Lessee shall not use or permit the Aircraft to be
operated except (a) in commercial operation for which Lessee (or Lessee’s
sublessee or operator) is duly authorized by the laws of the United States and
any other jurisdiction(s) to whose laws the operation of the Aircraft is subject
and (b) in jurisdictions which are not excluded from coverage by any insurance
policy required by the terms of this Agreement in effect with respect to the
Aircraft.

6.5. Lawful Use. Lessee shall not permit the Aircraft to be maintained, used, or
operated in violation of any Law of any Governmental Entity having jurisdiction,
or contrary to any Manufacturer’s operating manuals and instructions, or in
violation of any airworthiness certificate, license, registration or AD relating
to the Aircraft issued by any such Governmental Entity. Lessee shall not cause
or permit the Aircraft to proceed to, or remain at, any location which is then
the subject of a prohibition order (or any similar order or directive),
sanctions or restrictions by or under any Governmental Entity having
jurisdiction over Lessee or the Aircraft.

6.6. Freight Operations. Lessee shall not use or permit the use of the Aircraft
for the carriage of (a) whole animals, living or dead, except in cargo
compartments according to I.A.T.A. regulations and except domestic pet animals
carried in suitable containers to prevent the escape of any fluids and to ensure
the welfare of the animal or (b) acids, toxic chemicals, other corrosive
materials, explosives, nuclear fuels, nuclear wastes or any nuclear assemblies
except in full compliance with applicable Law.

6.7. Use Within Insurance Coverage. Lessee shall not operate the Aircraft or
suffer the Aircraft to be operated: (a) within or into any geographic area
unless the Aircraft is covered by insurance as required by the provisions of
Section 11 during and with respect to its operations into that area; or
(b) otherwise contrary to the terms or outside the coverage of such insurance as
required by the provisions of Section 11.

6.8. Net Lease.

(a) During the Term, except as otherwise provided by the terms of this
Agreement, Lessee shall bear all costs in connection with the possession, use,
operation, maintenance, overhaul, repair and insurance of the Aircraft.

 

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(b) During the Term, Lessee shall provide and pay for all crews and other
personnel, fuel, lubricants, oil and electric power consumed by and required for
the operation of the Aircraft.

(c) Lessee shall promptly pay (or cause to be paid) all import/export fees (as
applicable), navigation charges, route charges and airport charges (including
landing fees, departure fees, airport handling charges and taxes) the nonpayment
of which could result in a Lien upon the Aircraft or in the Aircraft being held
or seized pending payment of such charges.

6.9. Risk of Loss or Damage. Lessee shall bear all risks of loss or damage to
the Aircraft, Engines, Parts and Aircraft Documents from any and all causes
whatsoever from the Delivery Date until the re-delivery thereof to Lessor;
provided that, in the event of a re-delivery of any one or more of the Aircraft,
Engines, Parts and Aircraft Documents to Lessor, under circumstances which do
not constitute a Return, then Lessee shall be responsible for the cost to Lessor
to insure the Aircraft, Engines, Parts and Aircraft Documents during the period,
following such re-delivery, for which Lessee continues to be obligated to pay
Basic Rent pursuant to Section 4.2 hereof. If the Aircraft is requisitioned by
any Governmental Entity during the Term, then, unless and until the Aircraft
becomes a Total Loss, (a) the Term shall continue and Lessee shall continue to
fulfill all its obligations under this Agreement and (b) Lessee shall, during
the Term, be entitled to all requisition hire paid to Lessor or to Lessee on
account of such requisition. For the avoidance of doubt, Lessor shall not be
liable to supply an aircraft, an engine or any part, if the Aircraft, an Engine
or a Part is lost or damaged or rendered unfit for use or grounded, hijacked,
confiscated, seized, requisitioned, restrained or appropriated; provided,
however, that, should an ABX Operating Agreement be in effect with respect to
the Aircraft, the provisions of the ABX Operating Agreement shall control with
respect to Lessor’s ultimate responsibility, if any, under the ABX Operating
Agreement should the Aircraft (or any component thereof) become unavailable for
use.

7. Maintenance and Modifications.

7.1. Maintenance of the Aircraft; ADs.

(a) General. From the Delivery until the Return of the Aircraft and the Aircraft
Documents, Lessee, at its own expense, shall service, repair, maintain,
overhaul, check or cause the same to be done to the Aircraft, in accordance with
the Maintenance Program so as to keep the Aircraft eligible for FAR Part 121
operations, in the same condition as other Boeing 767 aircraft Lessee owns or
operates, and in such operating condition as may be necessary to enable the
airworthiness certification of the Aircraft to be maintained in good standing at
all times pursuant to the requirements of the Aviation Authority and the FAA (if
not the applicable Aviation Authority).

(b) AD Compliance.

(1) Lessee shall comply with all ADs issued during the Term affecting the
Aircraft and requiring terminating action during the Term or within one year
after the end of the Term (without regard to any deferrals which are or might be
granted).

 

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(2) If the cost of complying with an AD is less than or equal to One Hundred
Thousand Dollars ($100,000), Lessee shall pay all of such cost. If the cost of
such compliance is greater than One Hundred Thousand Dollars ($100,000) (but
only to the extent that such cost relates to work required to comply with an AD
on a terminating action basis, and excluding work performed for any other
purpose, such as compliance with ADs by means of repetitive inspections,
recording compliance work in the Aircraft Documents, and all other maintenance
work), Lessee shall pay the first One Hundred Thousand Dollars ($100,000), and
the balance (the “AD Shared Expenses”) shall be paid initially by Lessee to the
applicable Authorized Maintenance Performer, with Lessee being entitled to
reimbursement from Lessor in an amount equal to the product of (a) the amount of
the AD Shared Expenses times (b) a fraction, the numerator of which is 96 minus
the number of months (rounded to the nearest whole number of months) from the
date of completion of the subject AD work to the AD Term Date, and the
denominator of which is 96.

(3) If the cost of compliance with an AD on a terminating action basis is equal
to or greater than One Hundred Thousand dollars ($100,000), Lessee shall not
perform such terminating action unless Lessor consents in advance in writing;
provided, however, that, should Lessee request such consent on the part of
Lessor and Lessor fail or refuse to provide such consent, then either:
(i) Lessor shall provide to Lessee an alternative, equivalent aircraft under the
same terms and conditions as this Agreement for the remainder of the Term; or
(ii) the Lease shall terminate and (A) Lessor shall pay to Lessee any prepaid
Basic Rent, (B) Lessor shall pay to Lessee the balance of the Basic Rent Credit
which has yet to be applied to the payment of Basic Rent, (C) Lessee shall be
entitled to return the Aircraft to Lessor without complying with the Return
Condition Requirements relating to (and only to) that portion of the Aircraft
subject to the applicable AD (i.e., the Airframe, the applicable Engine or
Engines, the Landing Gear or the APU) and (D) with respect to the portions of
the Aircraft not subject to the AD, Lessor shall assist Lessee in complying with
the applicable Return Condition Requirements by pro-rating the costs of such
compliance based upon a comparison of (x) the number of months between Delivery
and the effective date of the AD and (y) the number of months between the
effective date of the AD and the Expiration Date.

(4) Lessor’s obligation to contribute toward the payment of AD costs pursuant to
this Section 7.1(b) is subject to and contingent upon:

(A) Lessor shall have consented to the applicable terminating action, as
required by Section 7.1(b)(3);

(B) No Event of Default shall have occurred and be continuing;

 

AIRCRAFT LEASE AGREEMENT    20    MSN                               

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(C) Lessor shall have received evidence reasonably satisfactory to Lessor that
the work contemplated by such AD has been completed; and

(D) Lessor shall have received true copies of the invoices and paid receipts
supporting the reported cost of such AD work.

(5) Lessor shall make payment of its share of the AD Shared Expenses within
thirty (30) days of its receipt of all of the documentation reasonably required
by Lessor pursuant to Section 7.1(b)(4)(C) and (D) hereof. Lessee shall not
offset the amount due from Lessor for its portion of the AD Shared Expenses
against Rent or other amounts due to Lessor hereunder.

7.2. Maintenance of the Aircraft Documents.

(a) From the Delivery until the Return of the Aircraft, Lessee, at its own
expense, shall maintain and update (or shall cause to be maintained and
updated), in the English language, all Aircraft Documents as required by
applicable Laws and by the regulations of the Aviation Authority and the FAA (if
not the applicable Aviation Authority). Lessee shall at all times cause the
Aircraft Documents to be stored (1) at a location disclosed to and accepted by
Lessor and (2) in a complete and organized format.

(b) When incorporating ADs, service bulletins, modifications, repairs or any
other engineering changes to the Aircraft, Lessee shall revise or cause to be
revised the customized documentation for the Aircraft in order to incorporate
and reflect such ADs, service bulletins, modifications or repairs, as
applicable.

(c) Together with each transmission of the Written Summaries required under
Section 7.8 hereof, Lessee shall provide to Lessor an electronically-scanned
copy (in CD, DVD or electronic format reasonably acceptable to Lessor) of all
Aircraft Documents changed or added since the scanned copy last provided to
Lessor, so that the scanned copy in Lessor’s possession will be correct and
complete as of the date of such Written Summaries.

7.3. Authorized Maintenance Performer. All maintenance on the Airframe, Engines
and Parts shall be performed by an Authorized Maintenance Performer.

7.4. Replacement of Parts. Except as otherwise provided herein, Lessee, at its
own expense, shall as soon as practicable replace (or cause to be replaced) all
Parts that may from time to time be incorporated or installed in or attached to
the Aircraft and that may become unserviceable, worn out, lost, stolen,
destroyed, seized, confiscated or damaged beyond repair. In addition, in the
ordinary course of maintenance, service, repair, overhaul, or testing, Lessee
may remove (or caused to be removed) any Part, provided that Lessee shall
replace (or cause to be replaced) such Part as promptly as practicable. All
replacement parts shall be free and clear of all Liens, except for Permitted
Liens, and shall be in good operating condition, shall be lawful for
installation and use on the Aircraft under applicable Aviation Authority
regulations and other applicable Law, and shall be certificated for use on a
Boeing 767-200SF aircraft.

 

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7.5. Title to Parts. All Parts at any time removed from the Aircraft shall
remain the property of Lessor, no matter where located, until such time as:
(a) such Parts shall be replaced by parts that have been incorporated or
reinstalled in or attached to the Aircraft and that meet the requirements for
replacement parts specified above in Section 7.4, and (b) title thereto shall
have passed to Lessor free and clear of all Liens other than Permitted Liens.
Immediately upon the incorporation or installation in or attachment in or to the
Aircraft of any replacement part as above provided, and without further act
(c) title to the removed Part shall vest in Lessee, free and clear of all rights
of Lessor and any Lessor’s Liens and (d) such replacement part shall be subject
to this Agreement and shall be deemed a Part of the Aircraft for all purposes
hereof to the same extent as the Parts originally incorporated and installed in
or attached to the Aircraft.

7.6. Removal of Engines. Lessee shall be entitled, so long as no Event of
Default shall have occurred and be continuing, to remove or permit the removal
of any Engine from the Airframe and to install on the Airframe an engine,
provided, that the removed Engine is, during the period of substitution, either
being safely housed and sheltered or repaired or maintained in accordance with
this Agreement, or is installed on an aircraft pursuant to Section 6.2 hereof
(and the provisions of Sections 6.2(a)(2) or 6.2(a)(3), as applicable,
concerning preservation of title shall apply to the removed Engine); provided,
further, that:

(a) Lessee maintains or causes to be maintained insurance in accordance with
Section 11 in respect of the removed Engine at all times while it is removed
from the Airframe (and, if required by Lessor, Lessee shall furnish or cause to
be furnished to Lessor waivers or acknowledgments by the insurers of the
aircraft on which such removed Engine is installed); and

(b) as soon as reasonably practicable and in any event on or before end of the
Term, such engine is removed from the Airframe and the removed Engine is
reinstalled on the Airframe (subject to the Replacement Engine provisions of
Section 6.2(c) of this Agreement).

7.7. Equipment Changes.

(a) Except as expressly provided herein or as a result of an AD or service
bulletin or other requirement of the Aviation Authority or the Manufacturer, the
Aircraft shall not be modified, altered, converted, or added to (an “Equipment
Change”), provided that, subject to Lessor’s prior approval in writing, and in
compliance with any conditions reasonably imposed by Lessor, Lessee may, at
Lessee’s own expense, make (or cause to be made) such Equipment Changes to the
Aircraft as Lessee may deem desirable, so long as such Equipment Change does not
result in a diminution in the value or utility of the Aircraft. All such
Equipment Changes shall be consistent with the rules and regulations of the
Aviation Authority.

(b) Title to all Parts incorporated or installed in or attached or added to the
Aircraft as the result of such Equipment Change shall, without further act, vest
in Lessor and shall become subject to this Agreement, free of all Liens other
than Permitted Liens; provided, however, that so long as no Event of Default
shall be continuing, Lessee may remove (or cause to be removed) any such Part
if: (1) such Part is in addition to, and not

 

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in replacement of or in substitution for, any Part originally incorporated or
installed in or attached to the Aircraft at the time of Delivery or any part in
replacement of or in substitution for any such original Part; (2) such Part is
not required to be incorporated or installed in or attached or added to the
Aircraft pursuant to the provisions of Sections 7.1 hereof; and (3) such Part
can be removed from the Aircraft without diminishing or impairing the value or
airworthiness which the Aircraft would have had such Equipment Change not
occurred. Without limiting the generality of the immediately prior sentence, all
loose equipment owned by Lessee which is placed on board the Aircraft (and
remains loose equipment) shall remain owned by Lessee.

(c) Upon the removal by Lessee of any such Part as above provided, title thereto
shall, without further act, vest in Lessee free and clear of all Lessor’s Liens
and rights of Lessor and such part shall no longer be deemed part of the
Aircraft. Any Part not removed by Lessee as above provided prior to the Return
of the Aircraft shall remain the property of Lessor; provided that Lessor may
require Lessee, by notice to Lessee given not later than the 60th day prior to
end of the Term (except during the continuance of an Event of Default), to
remove any Parts incorporated or installed in the Aircraft as a result of an
Equipment Change and to restore the Aircraft to its condition prior to such
Equipment Change, prior to the end of the Term.

7.8. Summary of Flight Hours, Cycles; Technical Information.

(a) Lessee, at its own expense, shall, within ten (10) days after the end of
each calendar month of the Term and on the Return Date, provide (or cause to be
provided) to Lessor written summaries (the “Written Summaries”) of the following
events occurring during the previous calendar month: (1) Flight Hours and Cycles
accrued on the Airframe and Engines, certified by an officer of Lessee; (2) all
maintenance performed on the Airframe or Engines; and (3) any Engine changes.

(b) Lessee shall give Lessor not less than fifteen (15) days’ prior written
notice of the anticipated time and location of all partial or complete C-Checks,
Engine shop visits, and other major maintenance to be performed on the Aircraft.

(c) During the Term, Lessee shall furnish to Lessor such additional information
concerning the location, condition, use and operation of the Aircraft as Lessor
may reasonably request, including, without limitation, records reflecting the
Airframe, Engine and APU service history.

(d) All information furnished by Lessee to Lessor concerning monetary amounts
(whether in the Written Summaries or otherwise) shall be denominated in Dollars.

(e) Together with each transmission of Written Summaries, Lessee shall provide
to Lessor the electronically-scanned copies of the Aircraft Documents required
under Section 7.2(c) hereof.

 

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7.9. Inspections.

(a) Lessor may, but shall not be obligated to, upon giving five (5) Business
Days prior notice to Lessee of its intention to do so (or any other notice which
is reasonable under the circumstances), inspect the Aircraft, the Aircraft
Documents, and any maintenance performed by or on behalf of Lessee during normal
business hours, provided that such inspection does not unreasonably interfere
with Lessee’s operations. Lessor shall be entitled, as part of any such
inspection, to open any of the panels, bays and doors of the Aircraft. All
inspections performed by Lessor shall be at its cost (except that, during the
continuance of an Event of Default, such inspection shall be at Lessee’s cost
and may be conducted without prior notice to Lessee).

(b) Lessee shall assist and not interfere with any person designated by Lessor
to conduct any inspection pursuant to this Section 7.9. Lessor shall not incur
any liability or obligation by reason of not making an inspection and no failure
by Lessor to make such inspection shall lessen any obligation of Lessee under
this Agreement, including but not limited to Lessee’s obligations under this
Section 7. In addition, Lessee shall at all times permit Lessor’s technical
representatives to be present at and inspect any maintenance being conducted on
the Aircraft or any constituent thereof. Lessee shall, upon Lessor’s request,
provide Lessor with letters to the Authorized Maintenance Performer allowing the
disclosure to Lessor of all matters relating to the maintenance of the Aircraft.

(c) Lessor Not Obligated. Except as otherwise expressly provided in this
Agreement, Lessor shall have no obligation whatsoever to service, repair,
maintain, check or cause the same to be done to the Aircraft, or to keep the
Aircraft in an airworthy condition.

8. Taxes.

8.1. General Tax Indemnity. Lessee agrees to timely pay, and to indemnify Lessor
against, any and all Taxes, whether such Taxes are now existing or hereafter
adopted, enacted or amended, that may be asserted, levied or imposed on or
against Lessor upon or with respect to or measured by: (a) the Aircraft or any
Part thereof or interest therein; (b) this Agreement, and the performance of any
of the transactions contemplated hereby or the exercise of remedies under this
Agreement with respect to an Event of Default; (c) the delivery, testing,
transportation, rental, sale, replacement, substitution, repossession,
abandonment, transfer, rebuilding, leasing, subleasing, possession, presence,
use, operation, condition, storage, maintenance, modification, alteration,
repair or return of the Aircraft or any Part thereof or interest therein
occurring subsequent to the Delivery Date; and (d) Rent payable under this
Agreement.

8.2. Certain Exceptions. The provisions of Section 8.1 hereof shall not apply
to, and Lessee shall have no liability to Lessor thereunder with respect to,
Taxes excluded under any of the following provisions or any combination thereof:

(a) Taxes which are not yet due;

 

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(b) Taxes on, based on, measured by or with respect to the net or gross income,
or net or gross receipts, capital, net worth, franchise, or conduct of business
of Lessor (other than Taxes in the nature of sales, withholding, use or property
Taxes) imposed by any federal, state or local government or taxing authority in
the United States or any foreign government or foreign taxing authority, or by
any possession or territory of the United States; and

(c) Taxes that would not have been imposed but for any failure of Lessor to
(1) file proper and timely reports or returns or to pay any Taxes when due, or
(2) comply with any certification, information, documentation, reporting or
other similar requirements concerning the nationality, residence, identity or
connection with the jurisdiction imposing such Taxes, if such compliance is
required to obtain or establish relief or exemption from or reduction in such
Taxes and Lessor was eligible to comply with such requirement.

8.3. Indemnities Payable on After-Tax Basis; Payments in Respect of Tax
Benefits. Lessee agrees that, with respect to any payment or indemnity to Lessor
under this Section 8, Lessee’s indemnity obligations shall include an amount
necessary to hold Lessor harmless from all Taxes (other than Taxes described in
Section 8.2) required to be paid by Lessor with respect to the receipt or
accrual of such payment or indemnity (including any payment by Lessor of any
Taxes in respect to any indemnity payments received or receivable under this
Section 8).

8.4. Payment of Tax Indemnities. If (a) any Taxes are required to be deducted or
withheld by Lessee from any payment of Rent or other amounts due to Lessor under
this Agreement (“Withholding Taxes”) and (b) Lessee is required to indemnify
Lessor against such Withholding Taxes pursuant to this Section 8 (“Indemnifiable
Withholding Taxes”), then Lessee shall, at the time of paying such Rent, or
other amount, pay to Lessor such additional amounts as may be necessary in order
that the net amount of such payment of Rent or other amount, after deduction or
withholding for Indemnifiable Withholding Taxes, will be equal to the amount
Lessor would have received if such Indemnifiable Withholding Taxes had not been
deducted or withheld. Any other amount payable to or on behalf of Lessor,
pursuant to Section 8.1 hereof shall be paid to Lessor or, if so directed by
Lessor, directly to the relevant taxing authority, within thirty (30) days after
receipt by Lessee of a written demand therefor from Lessor accompanied by a
written statement describing in reasonable detail the Taxes that are the subject
of and basis for such payment or indemnity and the computation of the amount so
payable.

9. Liens.

9.1 During the Term, Lessee shall not create or suffer to exist any Lien upon or
against the Aircraft, the Aircraft Documents or any of its rights under this
Agreement, other than the following (“Permitted Liens”):

(a) Lessor’s Liens;

(b) repairers’ or other like Liens arising in the ordinary course of business,
in respect of obligations which are neither overdue nor deferred;

 

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(c) the rights of others permitted under Sections 6 and 7 hereof;

(d) Liens for taxes of any kind not yet due and payable or being contested in
good faith by appropriate proceedings that do not involve any material risk of
the sale, forfeiture or loss of the Aircraft or the Aircraft Documents or any
interest therein;

(e) Liens arising out of judgments or awards against Lessee with respect to
which there shall have been procured a stay of execution;

(f) salvage rights of insurers under insurance policies maintained pursuant to
Section 11; and

(g) the respective rights of Lessor and Lessee as provided herein.

9.2 All Liens excepted above under Section 9.1(b) shall be cleared by Lessee in
the ordinary course of business, but not later than the end of the Term. If at
any time during the Term a Lien (other than a Permitted Lien) shall be created
or suffered to exist by Lessee, or be levied upon or asserted against the
Aircraft or the Aircraft Documents, or if any person or entity should assert any
Lien (other than a Permitted Lien) on any right of Lessee under this Agreement,
Lessee shall notify Lessor and Lessee shall cause such Lien (other than
Permitted Liens) forthwith to be discharged by bond or otherwise unless Lessor
shall otherwise consent in writing. If Lessee shall fail to discharge any Lien
(other than Permitted Liens), Lessor may do so, and Lessee shall pay to Lessor
on demand the amount paid by Lessor together with Lessor’s losses, costs, and
expenses, including reasonable legal fees and expenses. The obligations set
forth in this Section 9 shall survive the Expiration or Termination of this
Agreement.

10. Indemnification.

10.1. Indemnification and Holding Harmless. Lessee agrees to defend, indemnify,
reimburse, and hold harmless Lessor, Lessor’s Lender, and their respective
affiliates, subsidiaries, successors, assigns and subcontractors, together with
each of such entities’ respective directors, officers, agents, shareholders and
employees (hereinafter individually and collectively the “Indemnified Parties”)
from and against any and all claims, damages, losses, liabilities, demands,
suits, judgments, causes of action, legal proceedings, penalties, fines, other
sanctions and any costs and expenses in connection therewith, including but not
limited to reasonable attorneys’ fees and expenses (any and all of which are
hereafter referred to as “Claims”) that in any way result from or arise out of
or in relation to: (a) the condition, manufacture, delivery under this
Agreement, possession, return, disposition after an Event of Default, use or
operation of the Aircraft either in the air or on the ground; (b) any defect in
the Aircraft arising from the material or any article used therein or from the
design, testing or use thereof, or from any maintenance, service, repair,
overhaul or testing of the Aircraft, regardless of when such defect shall be
discovered, and regardless of where the Aircraft may then be located; (c) any
breach by, or noncompliance by Lessee with, any provision of this Agreement or
any other agreement or document contemplated hereby or given or entered into by
Lessee in connection herewith; or (d) any bodily injury suffered by any person,
or any property damage suffered by any person or entity, in the course of or as
a result of the use, operation, maintenance, service, repair, overhaul, testing,
possession, delivery under this Agreement or return of the

 

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Aircraft. The foregoing indemnity shall not apply to (1) any Claim that
constitutes a Permitted Lien, (2) Claims for Taxes, it being agreed that
Section 8 represents Lessee’s entire obligation with respect to Taxes,
(3) Claims attributable to the gross negligence or willful misconduct of any
Indemnified Party, (4) Claims attributable to any misrepresentation by any
Indemnified Party herein or in any agreement or document delivered by it in
connection herewith or (5) with the exception of clause (c) above, Claims
attributable to acts or events occurring before the Delivery Date or following
Expiration or Termination of this Agreement and the Return of the Aircraft to
Lessor.

10.2. Lessee’s Waiver and Release. Lessee hereby waives and releases any Claim
now or hereafter existing against the Indemnified Parties on account of any
Claim of or on account of or arising from or in any way connected with injury to
or death of personnel of Lessee or loss or damage to property of Lessee that may
result from or arise in any manner out of or in relation to the condition, use
or operation of the Aircraft, either in the air or on the ground, during the
Term, or that may be caused during the Term by any defect in the Aircraft
arising from the material or any article used therein or from the design,
testing or use thereof, or from any maintenance, service, repair, overhaul or
testing of the Aircraft, except to the extent that such claim arises out of the
breach by any Indemnified Party of its obligations hereunder or under any
agreement or document delivered in connection herewith, regardless of when such
defect may be discovered, and regardless of the location of the Aircraft at any
such time. The foregoing waiver and release shall not apply to any Claim arising
out of the gross negligence or willful misconduct of any Indemnified Party.

10.3. Surviving Obligations. The indemnities and agreements contained in this
Section 10 shall survive the end of the Term and the Return of the Aircraft. The
indemnities contained in this Section 10 are expressly made for the benefit of
and shall be enforceable by the Indemnified Parties.

10.4. Not an Indemnified Party. Notwithstanding anything to the contrary in this
Section 10, no manufacturer, repairer, servicer, modifier or the like shall be
considered an Indemnified Party unless expressly referenced herein, and the
Lessee and their insurers retain full right of subrogation and recourse against
all but the Indemnified Parties in accordance with this Section 10.

11. Insurance.

11.1 Aviation Third Party Legal Liability Insurance. As of the Delivery Date and
continuing for a period of two years following the end of the Term or, if
earlier, until the next major Aircraft maintenance check, Lessee shall carry at
its expense (or shall cause to be carried) with insurers of internationally
recognized standing, aviation legal liability insurance in respect of the
Aircraft in amounts denominated in United States Dollars not less than the
Minimum Liability Coverage amount designated in Appendix B hereto combined
single limit for bodily injury and property damage each occurrence (and in the
aggregate as respects aviation products/completed operations and third party
liability war and allied perils), and subject to customary sub-limits for
non-aviation coverages. Such insurance shall include third party legal liability
including passenger liability, liability war and allied perils, property damage
liability (including cargo, baggage (checked and unchecked) and mail liability),
premises liability,

 

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products/completed operations liability, contractual liability and political
risk (including expropriation) insurance in the amounts set forth in Appendix B.
All such insurance shall be in form and substance reasonably satisfactory to
Lessor. Lessee covenants that any insurance policies carried in accordance with
this Section 11.1 and any policies taken out in substitution or replacement for
any of such policies shall: (i) be endorsed to name Lessor, Lessor’s Lender,
each of the other Indemnified Parties and such other parties as Lessor may from
time to time reasonably designate by notice to Lessee as additional insureds for
their respective interests with respect to the Aircraft (hereinafter each an
“Additional Insured” and collectively the “Additional Insureds”); (ii) provide
that in respect of the interests of any Additional Insured in such policies, the
insurance shall not be invalidated by any act or omission (including
misrepresentation and non-disclosure), provided that the Additional Insured so
protected has not caused, contributed to or knowingly condoned the said act or
omission; (iii) provide that insurers waive all rights of subrogation against
the Additional Insureds; (iv) provide that, if such insurance is canceled or
allowed to lapse for any reason whatsoever, or if any material change is made in
such insurance that adversely affects the interest of any Additional Insured,
such cancellation, lapse or change shall not be effective as to any Additional
Insured for thirty (30) days (seven (7) days, or such other period as is then
customarily obtainable in the industry, in the case of any war and allied perils
liability coverage) after the giving of written notice from such insurers or
Lessee’s appointed insurance broker to Lessor and Lessor’s Lender; (v) be
primary without right of contribution from any other insurance maintained by any
Additional Insured; (vi) provide a severability of interests provision
applicable to each insured and Additional Insured under the policy such that all
of the provisions of the insurance required hereunder, except the limits of
liability, shall operate in the same manner as if there were a separate policy
covering each insured and Additional Insured; (vii) waive any right of the
insurers to any setoff, counterclaim or other deduction against the Additional
Insureds, and; (viii) provide for worldwide coverage, subject to such
limitations and exclusions as may be expressly set forth in the certificates of
insurance delivered pursuant to Section 11.4 hereof provided such limitations
and exclusions are not applicable to the territories where the Aircraft is
operated by Lessee, or as Lessor may otherwise agree in writing.

11.2 Aircraft Hull Insurance.

(a) On or prior to the Delivery Date and throughout the Term, Lessee shall
maintain (or cause to be maintained) in full force and effect, at its expense
and on terms substantially similar to and no less favorable than insurance
carried by Lessee on similar aircraft in its fleet, all-risk ground and flight
aircraft hull insurance covering the Aircraft including coverage of the Engines
and Parts while temporarily removed from or not installed on the Aircraft and
not replaced with similar components in amounts denominated an payable in United
States Dollars not less than, in respect of the Aircraft, the Agreed Value as
set forth in Appendix B hereto, and with respect to any Engines or Parts while
removed from the Aircraft on a replacement value basis. Lessee shall maintain
such insurance covering any loss or damage arising from:

(i) war, invasion, acts of foreign enemies, hostilities (whether war be declared
or not), civil war, rebellion, revolution, insurrection, martial law, military
or usurped power or attempts at usurpation of power;

(ii) strikes, riots, civil commotions or labor disturbances;

 

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(iii) any act of one or more persons, whether or not agents of a sovereign
power, for political or terrorist purposes and whether the loss or damage
resulting therefrom is accidental or intentional;

(iv) any malicious act or act of sabotage;

(v) confiscation, nationalization, seizure, restraint, detention, appropriation,
requisition for title or use by or under the order of any government (whether
civil, military or de facto) or public or local authority; and

(vi) hijacking or any unlawful seizure or wrongful exercise of control of the
Aircraft or any Engine or any airframe on which any Engine is installed or crew
in flight (including any attempt at such seizure or control) made by any person
or persons on board the Aircraft or such airframe acting without the consent of
the insured.

(b) The hull war and allied perils insurances shall be in accordance with
Lloyd’s Aviation Underwriters Association Standard Policy Form LSW 555D unless
otherwise approved by Lessor in writing. Lessee covenants that all policies and
subsequent policies taken out in accordance with this Section 11.2 shall: (A) be
issued by insurance companies or underwriters of internationally recognized
standing in the aviation industry; (B) be endorsed to name Lessor or (as
directed by Lessor) Lessor’s Lender as the loss payee to the extent of its
interests in respect of hull claims that become payable on the basis of a total
loss and shall provide that any other loss shall be settled (net of any relevant
policy deductible) with such party(ies) as may be necessary to repair the
Aircraft unless otherwise agreed in writing after consultation among the
insurers, Lessor and Lessor’s Lender (it being agreed that where the loss is not
expected to exceed U.S.$500,000 and, unless Lessor has notified the insurers to
the contrary, such loss will be settled with and paid to Lessee); (C) be amended
to name the Additional Insureds as additional insureds for their respective
interest with respect to the Aircraft; (D) provide that, in respect of the
interest of any Additional Insureds in such policies, the insurance shall not be
invalidated by any act or omission, provided that the Additional Insured so
protected has not caused, contributed to or knowingly condoned the said act or
omission; (E) provide that none of the Additional Insureds shall have
responsibility for the payment of premiums or any other amount payable under
such policies; (F) provide that insurers shall waive all rights of subrogation
as against the Additional Insureds; (G) provide that, if such insurance is
canceled or allowed to lapse for any reason whatsoever, or if any material
change is made in such insurance which adversely affects the interest of an
Additional Insured, such cancellation, lapse or change shall not be effective as
to any Additional Insured for thirty (30) days (seven (7) days, or such other
period as is then customarily obtainable in the industry, in the case of any
hull war and allied perils coverage) after the giving of written notice from
such insurers or Lessee’s appointed insurance broker to Lessor and Lessor’s
Lender; (H) waive any right of the insurers to any setoff, counterclaim or other
deduction against the Additional Insureds; (I) provide for worldwide coverage,
subject to such limitations and exclusions as may be set forth in the
certificates of insurance delivered pursuant to Section 11.4 hereof provided
such limitations and exclusions are not applicable to the territories where the
Aircraft is operated by Lessee, or as Lessor may otherwise agree in writing;
(J) contain a 50/50 claims funding clause in the form of Lloyd’s standard
provision AVS103 in the event of a dispute as to which policy in respect of the
hull insurance set forth in this Section 11.2 shall pay in the event of a loss;
and (K) have deductibles

 

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(not applicable in case of a total, constructive total and/or arranged total
loss) standard in the industry which do not exceed, per occurrence, the lesser
of (i) $500,000 and (ii) such amounts carried by Lessee with respect to other
aircraft similar to the Aircraft and operated on similar routes or which are
otherwise reasonably acceptable to, and approved in writing by Lessor, provided,
however, any deductibles shall be assumed by and at the sole risk of Lessee and
to the extent applicable shall be paid by Lessee.

(c) All insurance coverage shall be subject to Endorsement AVN67B (or a
comparable endorsement).

11.3 Default. If Lessee shall default in effecting, keeping or maintaining any
insurance or if any insurance shall for any reason become void, Lessor may (but
without any obligation to do so and without prejudice to Lessor’s other rights
and remedies hereunder) effect, keep up or maintain such insurance at the cost
of Lessee and Lessee will forthwith upon demand repay or cause to be repaid to
Lessor all premiums and other moneys from time to time paid or payable by Lessor
in respect of such insurance.

11.4 Certificates. Not less than ten (10) business days before the Delivery
Date, unless otherwise approved by Lessor in writing, and promptly upon each
renewal thereafter, Lessee will furnish to Lessor certificates of insurance
written in English from an authorized representative of the insurers providing
the insurance required hereunder and certificates of reinsurance from
reinsurance brokers (together with a letter of undertaking from each of such
representative and such reinsurance brokers stating that such insurance and
reinsurance complies with the terms hereof) describing in detail the insurance
and reinsurance carried and maintained on the Aircraft. Such certificates of
insurance shall be in form and substance reasonably satisfactory to Lessor and
Lessor’s Lender. Failure of Lessee to furnish certificates of insurance or
procure and maintain the insurance required herein or the failure of Lessor and
Lessor’s Lender to request such certificates shall not constitute a waiver of
Lessee’s obligations hereunder.

11.5 Premiums. Lessee agrees to pay the premiums (or installments thereof) as
required by the terms of such policies.

11.6 Claims. After a Total Loss in relation to the Aircraft shall have occurred
and so long as no Default or an Event of Default shall have occurred and be
continuing, Lessee may pursue any and all claims against the insurers in respect
of the insurance with respect to the Aircraft, subject to consultation with
Lessor; provided that no settlement or compromise of any such claim may be made
without the approval of Lessor (which approval shall not be unreasonably
withheld or delayed). Should a Default or an Event of Default have occurred and
be continuing and any claim be made under any of the insurance policies, Lessor
shall have full power to make, enforce, settle or compromise all claims with the
insurers in respect of the insurance (other than the liability insurance) or for
compensation and to sue for, recover, receive and give discharge for all moneys
payable by virtue thereof, to be held and applied in accordance with
Section 11.2 hereof. Lessee shall irrevocably and unconditionally assign or
cause to be assigned the insurance to Lessor (or, if requested by Lessor, to
Lessor’s Lender) if such an assignment is advisable for the purpose of the
preceding sentence. Lessee shall do or cause to be done all things necessary and
provide or cause to be provided all documents, evidence and information to
enable the assignee or loss payee referred to above to collect or recover any
moneys due or to become due in respect of the insurance.

 

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11.7 Self-Insurance. Except for the deductibles permitted by Section 11.2 hereof
or otherwise permitted in writing by Lessor, Lessee shall not be permitted to
self-insure against any of the risks required to be covered by the insurance
described in this Section 11.

11.8 Application of Payments During Existence of Default or Event of Default.
Any amount referred to in Section 11.2 hereof which is payable to or retainable
by Lessee shall not be paid to or retained by Lessee if, at the time of such
payment or retention, a Default or an Event of Default shall have occurred and
be continuing, but shall be held by or paid over to Lessor (or, as directed by
Lender, to Lessor’s Lender) as security for the obligations of Lessee under this
Agreement. Upon the earlier of (i) such time as there shall not be continuing
any such Default or Event of Default or (ii) the end of the Term, such amount
shall be paid to Lessee to the extent not previously applied in accordance with
the terms hereof.

12. Assignment.

12.1. Assignment by Lessee. Lessee shall not assign or transfer all or any of
its rights or obligations under this Agreement without the prior written consent
of Lessor; provided, however, that such consent shall not be required so long as
(a) such assignment is to an Affiliate of Lessee, (b) the assignee assumes in
writing all of the obligations of the “Lessee” under this Agreement for the
benefit of Lessor and (c) Lessee provides written notice of such assignment to
Lessor.

12.2. Assignment by Lessor.

(a) Lessor may, at its own expense and without the prior consent of Lessee,
assign or transfer all of its rights and obligations under this Agreement to an
Affiliate of Lessor upon providing prior written notice of such assignment to
Lessee. Any other assignment by Lessor shall be subject to the prior consent of
Lessee, which such consent shall not be unreasonably withheld or delayed. Any
assignment by Lessor pursuant to this Section 12.2 shall include an express
assignment of Lessor’s liability associated with the Basic Rent to the assignee.
Upon (1) any such assignment becoming effective and (2) the assignee assuming
all of Lessor’s obligations under this Agreement, Lessor shall be released of
any further obligations hereunder.

(b) After notice from Lessor of any such sale or transfer of the Aircraft or any
assignment or transfer of all or any of Lessor’s rights and obligations under
this Agreement, upon request from Lessor and at Lessor’s expense, Lessee shall,
as soon as practicable, execute any agreements or other instruments that may be
necessary or reasonably requested by Lessor in order to allow, give effect to,
or perfect any assignment or transfer of Lessor’s rights and obligations under
this Agreement (including, without limitation, certificates confirming (to the
extent that such matters are accurate) (1) the continuing truth and accuracy of
Lessee’s representations as set forth herein, (2) the continuing viability of
Lessee’s warranties, indemnities, covenants and other obligations set forth
herein, (3) that no Event of Default has occurred and is continuing, (4) that no
Total Loss has occurred, (5) that the Lease is in full force

 

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and effect, (6) that the insurance as required pursuant to this Agreement
remains in full force and effect with the assignee named as sole loss payee and
added as an additional insured to the existing additional insureds as of the
assignment, and (7) such other matters as reasonably requested by Lessor).

(c) In any instance where a transfer or assignment effected by Lessor is to more
than one person, such transferees or assignees shall select an agent who shall
act on behalf of all such transferees or assignees and with whom Lessee may deal
exclusively, and notify Lessee thereof.

12.3. Assignment of Warranties.

(a) As of the Delivery Date and unless a Default or Event of Default shall have
occurred and be continuing, Lessor hereby assigns to Lessee, to the fullest
extent permitted by law and contract: (a) all warranties (to the extent still
existing) covering the Aircraft and all components, parts and accessories
installed on, or delivered with the Aircraft; and (b) Lessor’s right to and
possession of all manuals, diagrams and support materials and all records
covering the Aircraft and related components, parts and accessories; in the case
of the Airframe and the Engines. To the extent that such warranties are not
assignable, Lessor shall cooperate with Lessee in enforcing all such warranties
for the benefit of Lessee. Upon an Event of Default, the assignment hereunder
shall automatically terminate and all rights assigned to Lessee pursuant to this
Section 12.3 shall automatically revert back to Lessor.

(b) On the Return Date, Lessee shall be deemed to have assigned or reassigned to
Lessor all warranties covering the Aircraft without further action on the part
of Lessee; provided, that Lessee may retain the right to pursue remedies and to
receive benefits with respect to claims of Lessee arising in respect of events
prior to the Return Date; provided further, that, to the extent requested by
Lessor, Lessee shall execute a separate assignment of warranties in favor of
Lessor at the Return. To the extent that any of such warranties are not
assignable, Lessee shall cooperate with Lessor in enforcing all such warranties
for the benefit of Lessor.

13. “As-Is” Condition, Disclaimer and Release. EXCEPT AS SPECIFICALLY SET FORTH
IN THIS AGREEMENT, FROM AND AFTER THE DELIVERY, THE AIRCRAFT AND OTHER ITEMS
DELIVERED HEREUNDER ARE LEASED TO LESSEE IN THEIR “AS IS, WHERE IS” CONDITION,
AND LESSEE HEREBY WAIVES, RELEASES AND RENOUNCES ANY AND ALL WARRANTIES,
OBLIGATIONS AND LIABILITIES, EXPRESS OR IMPLIED, DIRECT OR INDIRECT, OF LESSOR,
ITS SUCCESSORS AND ASSIGNS AND ALL OTHER INDEMNIFIED PARTIES, AND ANY AND ALL
RIGHTS, CLAIMS, AND REMEDIES, EXPRESS OR IMPLIED, DIRECT OR INDIRECT, OF LESSEE
AGAINST LESSOR, ITS SUCCESSORS AND ASSIGNS AND ALL OTHER INDEMNIFIED PARTIES,
ARISING BY LAW OR OTHERWISE (EXCEPT ANY SUCH SET FORTH IN THIS AGREEMENT) WITH
RESPECT TO THE AIRCRAFT OR ANY PARTS OR THE USE OR OPERATION THEREOF OR ANY
NONCONFORMANCE OR DEFECT THEREIN, INCLUDING BUT NOT LIMITED TO: (a) ANY WARRANTY
AS TO THE CONDITION OF THE AIRCRAFT; (b) ANY IMPLIED WARRANTY OF MERCHANTABILITY
OR FITNESS FOR ANY PARTICULAR PURPOSE; (c) ANY IMPLIED WARRANTY ARISING FROM
COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE; (d) ANY

 

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LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR NOT ARISING FROM THE
STRICT LIABILITY OR THE ACTUAL OR IMPUTED NEGLIGENCE OF LESSOR AND ITS
RESPECTIVE SUCCESSORS OR ASSIGNS OR ANY OTHER INDEMNIFIED PARTY; AND (e) ANY
STATUTORY OR OTHER WARRANTY, CONDITION, DESCRIPTION OR REPRESENTATION, EXPRESS
OR IMPLIED, AS TO THE STATE, QUALITY, VALUE, CONDITION, DESIGN, OPERATION OR
FITNESS OF THE AIRCRAFT. IN ADDITION TO ALL OTHER REQUIREMENTS OF THIS
AGREEMENT, THIS SECTION 13 SHALL NOT BE MODIFIED EXCEPT BY WRITTEN AGREEMENT
SIGNED ON BEHALF OF LESSOR BY ITS DULY AUTHORIZED REPRESENTATIVE.

14. Representations and Warranties.

14.1. Lessee’s Representations and Warranties. Lessee represents and warrants as
follows, as of the date hereof and as of the Delivery Date.

(a) Legal Form and Qualification. Lessee is a corporation organized and existing
in good standing under the laws of Ohio and has full power to conduct its
operations as presently conducted.

(b) Authority. Lessee has full power, authority and legal right to enter into,
deliver and perform this Agreement and all agreements or instruments required
hereunder.

(c) Binding Obligations. This Agreement constitutes and any related documents,
when entered into, will constitute, legal, valid and binding obligations of
Lessee enforceable against Lessee in accordance with the terms hereof or
thereof, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting enforcement of creditors’ rights generally
as well as by general principles of equity.

(d) No Additional Consents or Approvals. Neither the execution and delivery by
Lessee of this Agreement or any other document delivered by it in connection
herewith nor the consummation of any of the transactions contemplated thereby
requires the consent or approval of, the giving of notice to, or the
registration with, any Governmental Entity.

(e) Registration, Filing of the Agreement. It is not necessary or advisable
under any applicable Law in order to ensure the validity, effectiveness and
enforceability of this Agreement that this Agreement or any other instrument
relating hereto be filed, registered or notarized or that any other action be
taken, other than those provided for in Section 5 hereof.

(f) No Violation. Neither the execution and delivery nor the performance by
Lessee of this Agreement and any other document delivered by Lessee in
connection herewith, nor consummation of any of the transactions as contemplated
thereby, will result in any violation of, or be in conflict with, or constitute
a default under, or result in the creation of any Lien upon any property of
Lessee under any of the provisions of Lessee’s charter or by-laws, or of any
indenture, mortgage, chattel mortgage, deed of

 

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trust, conditional sales contract, lease, note or bond purchase agreement,
license, bank loan, credit agreement or other agreement to which Lessee is a
party or by which Lessee is bound, or any law, judgment, governmental rule,
regulation or order of any Governmental Entity.

(g) Protection of Ownership. Except for the registration and filings provided
for in Section 5 hereof, no other filing or registration of any instrument or
document is necessary in order to protect Lessor’s title to and ownership of the
Aircraft.

(h) No Default. No Default or Event of Default has occurred and is continuing
under this Agreement (or under any of the Other Lease Agreements).

(i) No Litigation. There are no suits, litigation, arbitration or other
proceedings pending or, to the knowledge of Lessee, threatened against or
affecting Lessee that, if adversely determined, would have a material adverse
effect upon Lessee’s financial condition or business or its ability to perform
its obligations hereunder.

(j) Withholding Tax. Neither the payment of Rent nor the payment of any other
amount required under this Agreement is subject to deduction or withholding
taxes or the equivalent under the laws of any Governmental Entity.

(k) Pari Passu Ranking. The obligations of Lessee to make payments hereunder
will rank at least pari passu in right of payment with all other unsecured,
unsubordinated obligations of Lessee.

(l) Sovereign Immunity. Lessee does not enjoy or claim any sovereign or
governmental immunity from suit or enforcement of private contracts.

14.2. Lessor’s Representations and Warranties. Lessor represents and warrants as
follows, as of the date hereof and of the Delivery Date.

(a) Organization. Lessor is a corporation organized and existing in good
standing under the laws of Delaware, and has all requisite power, authority and
legal right to enter into and perform its obligation under this Agreement and
any other document delivered by Lessor in connection herewith.

(b) Authorization. Lessor has duly authorized, executed and delivered this
Agreement and, assuming this Agreement has been duly authorized, executed and
delivered by Lessee, this Agreement constitutes a legal, valid and binding
obligation of Lessor enforceable against Lessor in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting enforcement of creditors’ rights generally as well as
by general principles of equity.

(c) No Violation. Neither the execution and delivery or performance by Lessor of
this Agreement and any other document delivered by Lessor in connection
herewith, nor consummation of any of the transactions as contemplated thereby,
will result in any violation of, or be in conflict with, or constitute a default
under, or result in the creation of any Lien upon any property of Lessor under
any indenture, mortgage,

 

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chattel mortgage, deed of trust, conditional sales contract, lease, note or bond
purchase agreement, license, bank loan, credit agreement or other agreement to
which Lessor is a party or by which Lessor is bound, or any law, judgment,
governmental rule, regulation or order of any Governmental Entity.

(d) No Consents or Approvals. Neither the execution and delivery by Lessor of
this Agreement or any other document delivered by it in connection herewith nor
the consummation of any of the transactions contemplated thereby requires the
consent or approval of, the giving of notice to, or the registration with, any
Governmental Entity located in the United States.

(e) Citizenship. Lessor is (1) a “citizen of the United States” as that term is
defined in Section 40102(a) (15) of Title 49 of the United States Code and (2) a
“United States person” as that term is defined in Section 7701(a)(30) of Title
26 of the United States Code.

(f) No Litigation. There are no suits, litigation, arbitration or other
proceedings pending or, to the knowledge of Lessor, threatened against or
affecting Lessor that, if adversely determined, would have a material adverse
effect upon Lessor’s financial condition or business or its ability to perform
its obligations hereunder.

(g) Ownership. As of the Delivery, Lessor holds legal title to the Aircraft.

15. Covenants.

15.1. Lessee’s Covenants. Lessee hereby covenants with Lessor that during the
Term, Lessee shall fully comply with and perform the following obligations.

(a) Lessee shall punctually pay to Lessor when due all the monies specified and
calculated in accordance with the terms of this Agreement and at the time and in
the manner herein specified and shall punctually and duly observe and perform
Lessee’s obligations under this Agreement.

(b) Lessee shall maintain (or shall cause to be maintained) insurance in respect
of the Aircraft, its liabilities and properties in accordance with good airline
practice and the terms and conditions of this Agreement.

(c) Lessee shall preserve its existence and maintain all rights, privileges,
licenses and franchises necessary to its business or material to its performance
of its obligations under this Agreement.

(d) Lessee shall provide Lessor with notice of any change in its chief executive
office prior to such change, provided that such notice shall not be required
more than five (5) days prior to such change; and further provided that Lessor
shall keep such information confidential until after the change occurs.

(e) To the extent that Lessee is a certified operator, Lessee shall keep in full
force Lessee’s operator’s certificate(s) issued by the Aviation Authority and
each other

 

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Governmental Entity, including all special conditions and obligations to be
fulfilled by Lessee, and of all renewals, amendments and modifications thereto.

(f) Lessee shall promptly, upon becoming aware of the same, notify Lessor in
writing of the occurrence of any Event of Default or of any event which with the
giving of notice or passage of time could become an Event of Default.

(g) Lessee shall not do or knowingly permit to be done or omit or knowingly
permit to be omitted to be done any act or thing which might reasonably be
expected to jeopardize the rights of Lessor as owner and lessor of the Aircraft
and as an additional insured or loss payee under the insurance required under
this Agreement.

(h) Lessee shall not, on any occasion when the ownership of the Aircraft, any
Engine or any Part is relevant, claim any interest in the Aircraft other than as
Lessee under this Agreement.

(i) Lessee shall not at any time (1) represent or hold out Lessor as carrying
goods or passengers on the Aircraft or as being in any way connected or
associated with any operation or carriage (whether for hire or reward or
gratuitously) which may be undertaken by Lessee or (2) pledge the credit of
Lessor.

(j) Lessee shall not attempt, or hold itself out as having any power, to sell,
lease or otherwise dispose of the Aircraft, the Aircraft Documents, any Engine
or any Part, except as provided in Section 6 hereof.

(k) Lessee shall maintain (or cause to be maintained) in good standing a current
certificate of airworthiness for cargo operations for the Aircraft issued by the
Aviation Authority.

(l) Lessee shall maintain the Aircraft (or cause the Aircraft to be maintained)
in all respects so as to be in compliance with FAR Part 121.

(m) Lessee shall not discriminate against the Aircraft (as compared to other
aircraft owned or operated by Lessee in its commercial cargo fleet) in
contemplation of the expiration or termination of this Agreement, with respect
to Lessee’s use, operation or maintenance of the Aircraft or the performance by
Lessee of ADs or service bulletins (other than withdrawal of the Aircraft from
use and operation as is necessary to prepare the Aircraft for return to Lessor
upon such termination or expiration).

(n) Lessee will take all steps reasonably requested by Lessor, required or
necessary to cause: (i) this Agreement, and all supplements and all amendments
thereto to be promptly filed and recorded, or filed for recording, to the extent
permitted by the Aviation Authority or required under any other applicable Law;
and (ii) as required by Lessor’s Lender or applicable Law, the international
interests with respect to this Agreement to be registered with the International
Registry.

 

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15.2. Lessor’s Covenant of Quiet Enjoyment. Lessor hereby covenants with Lessee
that, during the Term, so long as no Event of Default hereunder shall be
continuing, neither Lessor, any person acting on its behalf or in its stead, any
predecessor or successor in interest of Lessor, nor any person claiming an
interest in the Aircraft by or through Lessor, shall interfere with Lessee’s
rights hereunder or Lessee’s quiet and undisturbed use and enjoyment of the
Aircraft; provided, however, that this Section 15.2 shall not limit Lessor’s
right of inspection as set forth in this Agreement. Should such an interference
occur, Lessor shall promptly eliminate the cause of such interference upon
receipt of a notice thereof from Lessee.

16. Default by Lessee; Remedies.

16.1. Events of Default. An Event of Default shall mean the occurrence and
continuance of any of the following events.

(a) Lessee shall fail to make any payment of Rent within ten (10) days of the
relevant due date at the place and in the funds required under this Agreement.

(b) Lessee shall fail to make any other payment due hereunder within the later
of thirty (30) days of the relevant due date at the place and in the funds
required under this Agreement.

(c) Lessee shall fail to carry and maintain insurance on or in respect of the
Aircraft (or to cause the effectiveness of such insurance) in accordance with
the provisions of this Agreement or shall operate (or allow the operation of)
the Aircraft without such insurance coverage being in full force and effect with
regard to such operation.

(d) Any representation or warranty made, by Lessee herein shall have been
incorrect in any material respect at the time made or deemed to be made.

(e) Lessee shall fail to return possession of the Aircraft and the Aircraft
Documents to Lessor at the Return Location on the Return Date.

(f) Lessee shall:

(1) create or suffer to exist any Lien for taxes of any kind or arising out of a
judgment or award against Lessee which Lien does not constitute a Permitted
Lien;

(2) fail to perform or observe any of the covenants or agreements set forth in
Sections 5.1, 6.1 or 9 hereof, and if such failure shall continue unremedied for
a period of thirty (30) days after written notice thereof by Lessor; or

(3) fail to perform or observe any other covenant, condition or agreement to be
performed or observed by it hereunder, and if such failure shall continue
unremedied for a period of thirty (30) days after written notice thereof by
Lessor; provided, however, that such failure shall not constitute an Event of
Default hereunder if (A) such failure is not capable of being cured within the
thirty-day period following such notice from Lessor and (B) a cure is diligently

 

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pursued by Lessee thereafter; provided, further, however, that in any event such
failure shall constitute an Event of Default hereunder if it continues for more
than 120 days following such notice from Lessor.

(g) Lessee shall (1) apply for or consent to the appointment of a receiver,
trustee or liquidator for all or substantially all of its property, (2) cease to
pay its debts generally as they become due or admit in writing its general
inability to pay its debts as they mature, (3) make a general assignment for the
benefit of its creditors of all or substantially all of its property, (4) be
adjudicated as bankrupt or insolvent, or (5) file a voluntary petition in
bankruptcy, or a petition or an answer seeking reorganization or an agreement
with creditors or to take advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation, or similar law or
statute, or an answer admitting the material allegations of a petition filed
against it in any proceeding under any such law, or if corporate action shall be
taken by Lessee for the purpose of effecting any of the foregoing.

(h) An order, judgment or decree shall be entered, without the application,
approval or consent of Lessee, by any court of competent jurisdiction, approving
a petition seeking reorganization of Lessee or appointing a receiver, trustee or
liquidator of Lessee or for all or a substantial part of its assets, and such
order, judgment or decree shall continue unstayed and in effect for a period of
ninety (90) consecutive days.

(i) An order shall be entered of any governmental authority or any court of
competent jurisdiction which shall not be stayed or discharged within ninety
(90) days from the date of entry thereof, preventing Lessee from carrying on its
business as presently conducted on the date of execution of this Agreement.

(j) Lessee shall have created a default under the Delta Engine Program.

16.2. Remedies . If one or more Events of Default shall be continuing, Lessor
may, at Lessor’s option, exercise any one or more of the following remedies, to
the extent permitted by law.

(a) Lessor may exercise any right or take any action that may reasonably be
required to cure any Event of Default (which shall be performed on Lessee’s
account).

(b) Lessor may instruct Lessee to ferry the Aircraft (including the Aircraft
Documents) to the Return Location or such other airport as the parties may
mutually agree, and to ground the Aircraft at such airport until all Events of
Default have been cured, whereupon Lessee shall immediately do so.

(c) Lessor may take any other remedial action available to Lessor under
applicable Law.

 

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(d) Lessor may terminate the lease of the Aircraft to Lessee under this
Agreement by:

(1) serving notice of such termination on Lessee in writing in accordance with
Section 20.11, specifying the occurrence giving rise to such Event of Default,
which notice shall cause this Agreement to terminate immediately (without any
further act, service, notification or proceeding being necessary), whereupon
Lessee shall promptly return the Aircraft and the Aircraft Documents in
compliance with the Return Condition Requirements to Lessor at the Return
Location or at any airport in the continental United States specified by Lessor
(and should Lessee fail to comply with the Return Condition Requirements, Lessor
may do or cause to be done, at Lessee’s expense, whatever may be necessary to
cause the Aircraft to so comply); or

(2) with or without notice to Lessee, taking possession of the Aircraft and the
Aircraft Documents, for which purpose Lessor by its servants or agents may enter
upon Lessee’s premises where the Aircraft and the Aircraft Documents may be
located, or cause the same to be redelivered to Lessor at any airport in the
continental United States specified by Lessor; and to effect the foregoing,
Lessor may use self-help and any and all reasonable and lawful means necessary
to take immediate possession of and remove (by summary proceedings or otherwise)
the Aircraft and the Aircraft Documents from Lessee’s premises, or from Lessee’s
possession wherever the same are located, all without liability accruing to
Lessor; and upon exercise by Lessor of its powers under this Section 16.2(d)(2),
such termination shall be deemed to take effect upon such taking of possession
by Lessor or such re-delivery of the Aircraft and the Aircraft Documents to
Lessor at said airport (without any further act, notification or proceeding
being necessary).

(e) Whether or not Lessor shall have exercised, or shall thereafter at any time
exercise, any of its rights described in this Section 16.2 with respect to the
Aircraft, and regardless of whether Lessor shall have terminated this Agreement
pursuant to Section 16.2(d) hereof, Lessor shall be entitled to (i) recover from
Lessee all past due and unpaid Rent and all other amounts owing under this
Agreement, (ii) declare as immediately due and payable all future Basic Rent
owing under this Agreement and (iii) institute any and all legal and equitable
actions required to recover such amounts and otherwise enforce its rights under
this Agreement (subject to Lessor’s obligation to perform all acts reasonably
required to mitigate its damages with respect to accelerated Basic Rent).

(f) In addition to the remedies hereinabove and without limiting any remedies
Lessor may have at law or in equity, Lessor may lease, sell or otherwise dispose
of the Aircraft as Lessor in its sole discretion may determine.

16.3. Interest on Overdue Amounts. Overdue amounts required to be paid pursuant
to Section 4 hereof, this Section 16 or Appendix B hereto shall bear interest at
the rate indicated in Appendix B.

16.4. No Waiver. No implied waiver by Lessor of any Event of Default or failure
or delay of Lessor in exercising any right hereunder shall operate as a waiver
thereof. The acceptance by Lessor of partial payments from Lessee or any third
party, whether made before or after a termination pursuant to Section 16.2,
shall not operate as waiver by Lessor of an Event of

 

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Default and shall not be construed as an intent to continue the contractual
relationship or as a reinstatement of this Agreement. Nothing in this
Section 16.4 shall be construed to permit Lessor to obtain a duplicate recovery
of any element of damages to which Lessor is entitled. No express or implied
waiver by Lessor of any Default or Event of Default shall in any way be, or be
construed to be, a waiver of any future or subsequent Default or Event of
Default.

16.5. Costs and Expenses. Lessee agrees to pay to Lessor, upon demand, all
reasonable costs, expenses and disbursements (including, without limitation,
reasonable attorney’s fees, legal fees and expenses) incurred by Lessor in
exercising its rights or remedies under this Agreement.

17. Return of Aircraft.

17.1. Return, Place and Time of Return. Lessee shall at its own expense return
the Aircraft and the Aircraft Documents by delivering the same to Lessor at the
Return Location on the Expiration Date or promptly upon the earlier Termination,
except where Termination occurs pursuant to Section 19 as a result of a Total
Loss.

17.2. Aircraft Return Condition Requirements. The Aircraft at the time of its
return to Lessor shall satisfy all of the Return Condition Requirements
described in Section 18 hereof.

17.3. Return Receipt. Upon return of the Aircraft and the Aircraft Documents in
accordance with the terms of this Agreement, Lessor and Lessee shall execute a
Return Receipt substantially in the form of Appendix F hereto. Lessee shall
additionally execute such additional documents as Lessor may reasonably require
to evidence the termination of this Agreement.

17.4. Specific Performance. Timely return of the Aircraft and the Aircraft
Documents on the Return Date and at the Return Location is of the essence of
this Agreement and if the Aircraft and the Aircraft Documents are not returned
on the Return Date and at the Return Location, Lessor may obtain a court order
requiring Lessee to immediately return the Aircraft and the Aircraft Documents
at the Return Location.

17.5. Lessee’s Obligations Continue.

(a) In the event the Return of the Aircraft and the Aircraft Documents is not
effected at the time and location specified herein for any cause, then the
obligations of Lessee under this Agreement shall continue until the Aircraft and
the Aircraft Documents are actually returned to Lessor. In particular (except to
the extent that a delay in the Return of the Aircraft is attributable to acts or
a failure to act on the part of Lessor), until Lessee has complied with the
Return Condition Requirements, Lessee shall continue to pay Rent to Lessor,
shall continue to insure the Aircraft pursuant to this Agreement and shall be
responsible for all storage fees for the Aircraft (with such storage being
effected pursuant to all requirements of the Aviation Authority and the
Manufacturer).

(b) Neither the continued performance by Lessee of any of its obligations after
the end of the Term nor the acceptance by Lessor of payments of Basic Rent or
otherwise made by Lessee shall be considered a renewal of the terms of this
Agreement or a waiver of any right of Lessor hereunder, and Lessee shall not be
entitled to the quiet enjoyment of the Aircraft or any part thereof.

 

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18. Return Condition Requirements.

18.1. Condition. On the Return Date, the Aircraft and the Aircraft Documents
shall be in the condition required by Appendix H hereto (the “Return Condition
Requirements”).

18.2. Aircraft Documents. At the time the Aircraft is returned to Lessor, Lessee
shall deliver to Lessor all Aircraft Documents previously provided by Lessor to
Lessee, updated and maintained through the Return Date in accordance with this
Agreement and the rules and regulations of the Aviation Authority and the FAA
(if not the applicable Aviation Authority), and in addition, all records,
documents, manuals, drawings and data that were developed or caused to be
developed by Lessee and/or required by the Aviation Authority and the FAA (if
not the applicable Aviation Authority) (herein individually and collectively
referred to as “Aircraft Return Documents”). All such Aircraft Return Documents
shall be complete and accurate and in the English language. Any Aircraft Return
Document not already owned by Lessor shall become the property of Lessor upon
its delivery to Lessor.

18.3. Final Inspection. Prior to the Return Date, Lessee shall make the Aircraft
and the Aircraft Documents available to Lessor for inspection in order to verify
that the condition of the Aircraft complies with the requirements set forth in
the Return Condition Requirements (the “Final Inspection”). Such Final
Inspection will take place at the Return Location. Lessee, at its cost, shall
promptly correct any discrepancies observed during the Final Inspection and
communicated by Lessor to Lessee.

18.4. Test Flight. Promptly after completion of the corrections, if any,
required under Section 18.3 hereof (relating to the Final Inspection), and at
the option of Lessor, a test flight (of up to one (1) hour) based on
Manufacturer’s test flight program shall be conducted by Lessee for the purpose
of demonstrating to Lessor the compliance of the Aircraft with the provisions of
this Section 18. All costs of such test flight shall be paid by Lessee,
including without limitation the cost of fuel, flight crew and insurance.
Lessor’s representatives may participate in the test flight as observers. All
pilot-reported discrepancies and all discrepancies identified by Lessor during
the test flight shall be corrected by Lessee at its Lessee’s expense. There
shall be no deferred items on the Aircraft except as the parties may mutually
agree.

18.5. Conditions Cumulative. None of the Return Condition Requirements is
intended to be exclusive, but each shall be cumulative and in addition to any
other condition and requirement.

18.6. Financial Adjustments. To the extent that either Lessee or Lessor is
allowed or is required to make financial adjustment payments at Return in light
of the Aircraft and its Engines either failing to satisfy or exceeding Return
Condition Requirements, the amount of such payments shall be determined as
specified in Appendix H hereto.

 

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19. Total Loss.

19.1. Total Loss of the Aircraft.

(a) If the Aircraft shall become a Total Loss prior to the Return Date, Lessee
(i) shall notify Lessor of such Total Loss within three (3) days after its
occurrence and (ii) shall pay the Agreed Value to Lessor (or cause the insurers
to make such payment, with any deductible being the responsibility of Lessee)
within ninety (90) days after the occurrence of the Total Loss. The letting of
the Aircraft shall terminate upon the earlier to occur of (1) receipt of the
Agreed Value by Lessor and (2) the receipt by Lessor of written confirmation
from the insurer of the Aircraft to the effect that such insurer will pay to
Lessor the Agreed Value of the Aircraft. Thereupon Lessor shall transfer title
to the remains of the Aircraft to the insurers or to Lessee, as appropriate
under the insurance policies.

(b) If the Aircraft shall become a Total Loss prior to Delivery to Lessee, this
Agreement shall terminate immediately. Any termination under this
Section 19.1(b) shall discharge all obligations and liabilities of the parties
hereunder, except that Lessee shall be entitled to a return of any prepaid Rent
and any other monies paid to Lessor pursuant hereto, including the Basic Rent
Credit. All such returns shall be made by Lessor to Lessee within five
(5) Business Days after Lessor’s receipt of a valid written determination of a
Total Loss.

19.2. Engine Total Loss. Subject to any applicable requirements of the Delta
Engine Program, upon a Total Loss of an Engine not then installed on the
Aircraft or a Total Loss of an Engine installed on the Aircraft not involving a
Total Loss of the Aircraft, Lessee shall give Lessor prompt notice thereof, and
Lessee shall replace such Engine as soon as reasonably possible by duly
conveying to Lessor and causing to become subject to this Agreement as a
replacement for such Engine, title to another engine, which engine shall be free
and clear of all Liens other than Permitted Liens, and shall be the same model
as the Engines (or an improved model of the same manufacturer suitable for
installation and use on the Airframe) and shall have a value and utility at
least equal to, and be in at least as good operating condition as the Engine
which sustained such Total Loss, assuming such Engine was in the condition and
repair required by the terms hereof immediately prior to such Total Loss;
provided that Lessor shall transfer to Lessee, free and clear of all rights of
Lessor and all Lessor’s Liens (but otherwise without recourse or warranty), all
of Lessor’s right, title and interest in such replaced Engine. Such replacement
engine after approval and acceptance by Lessor, shall be deemed an “Engine” as
defined in Section 1. Lessee agrees to take such action as Lessor may reasonably
request in order that title to any such replacement Engine shall be duly and
properly vested in Lessor and leased under this lease to the same extent as the
Engine replaced thereby. Lessee’s obligation to pay Rent hereunder shall
continue in full force and effect, but Lessee shall be entitled to retain or to
be reimbursed by Lessor the amount of insurance or condemnation proceeds, if
any, received by Lessor with respect to such replaced Engine.

19.3. Surviving Engine. If a Total Loss of the Airframe occurs and any Engine or
Engines (a “Surviving Engine”) shall not have become a Total Loss, Lessor, at
the request of Lessee, shall, subject to any applicable insurance policy which
provides to the contrary, and

 

AIRCRAFT LEASE AGREEMENT    42    MSN                               

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further subject to any applicable requirements of the Delta Engine Program,
transfer to Lessee free and clear of all rights of Lessor and all Lessor’s Liens
(but otherwise without recourse or warranty), all of Lessor’s right, title and
interest, if any, in and to any such Surviving Engine; provided, that prior to
transferring such right, title and interest in such Surviving Engine, Lessor
shall have received either (1) the Agreed Value of the Aircraft or (2) written
confirmation from the insurer of the Aircraft to the effect that such insurer
will pay to Lessor the Agreed Value of the Aircraft.

20. Miscellaneous.

20.1. Appendices Part of the Agreement. The Appendices of this Agreement form an
integral part hereof. References in any of the Appendices to “the Lease” or “the
Agreement” shall refer to this Agreement as may be supplemented or amended from
time to time. Unless otherwise defined therein, all capitalized terms appearing
in the Appendices shall have the meaning ascribed to such terms in this
Agreement.

20.2. Headings for Convenience Only. The headings of clauses and the index are
inserted for convenience of reference only and shall be ignored in the
interpretation of this Agreement.

20.3. Entire Agreement. This Agreement constitutes the entire agreement between
Lessor and Lessee with respect to the Aircraft and supersedes any and all
previous understandings, commitments, agreements or representations whatsoever,
whether oral or written, including without limitation any and all terms sheets,
letters of intent or similar documents.

20.4. Modifications of the Agreement. This Agreement shall not be modified or
amended except by an instrument in writing, signed by Lessor and Lessee.

20.5. Partial Invalidity. If any provision of this Agreement shall be invalid or
unenforceable, the parties shall replace this provision by such valid and
enforceable provision which to the nearest degree possible reflects the
commercial intent and purpose of the invalid or unenforceable provision.

20.6. Applicable Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of New York, United States of
America (other than the laws of the State of New York relating to choice of
law).

20.7. Jurisdiction; Waiver of Jury Trial.

(a) LESSOR AND LESSEE AGREE THAT THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND THE SUPREME COURT OF THE STATE OF NEW YORK
LOCATED IN NEW YORK CITY ARE TO HAVE EXCLUSIVE JURISDICTION OVER ANY DISPUTES
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND EACH SUBMITS ITSELF AND ITS
PROPERTY TO THE EXCLUSIVE JURISDICTION OF THE FOREGOING COURTS WITH RESPECT TO
SUCH DISPUTES.

 

AIRCRAFT LEASE AGREEMENT    43    MSN                               

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(b) EACH OF LESSOR AND LESSEE HEREBY (1) WAIVES TO THE FULLEST EXTENT PERMITTED
BY LAW ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE COURTS REFERRED
TO IN THIS SECTION 20.7 ON GROUNDS OF AN INCONVENIENT FORUM OR OTHERWISE AND
(2) WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO
IN THIS SECTION 20.7.

(c) LESSOR AND LESSEE HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS
AGREEMENT, WHETHER SUCH ACTION IS BASED ON BREACH OF CONTRACT, TORT, OR ANY
OTHER LEGAL OR EQUITABLE THEORY.

(d) Nothing in this Section 20.7 limits the right of Lessor to bring proceedings
against Lessee in connection with this Agreement in any other court of competent
jurisdiction or concurrently in more than one jurisdiction.

20.8. Legal Costs and Expenses.

(a) Lessor and Lessee each shall bear the cost of their own legal fees,
inspection and appraisal fees, and related expenses associated with the
negotiation, preparation and execution of this Agreement; provided, however,
that Lessor and Lessee shall split evenly the fees and expenses charged by
Special FAA Counsel (and otherwise incurred) in performing the filings and
registrations required in Section 5 of this Agreement.

(b) Lessee shall pay all reasonable attorneys’ fees, costs and expenses
(including costs and disbursements of counsel) incurred by Lessor after the date
hereof arising out of or otherwise in connection with (i) any supplements or
amendments of this Agreement (including, without limitation, any related
recording and registration costs) requested by Lessee or made reasonably
necessary as the result of the actions of Lessee, (ii) any Default by Lessee and
any enforcement or collection proceedings resulting therefrom or in connection
with the negotiation of any restructuring or “work-out” (whether or not
consummated) and (iii) all other actions taken by Lessor to enforce its rights
under this Agreement.

(c) Should Lessor or Lessee be required to take action to enforce the terms of
this Agreement (such action including, without limitation, the preparing of
demand and default notices and the filing and prosecution of litigation), the
prevailing party shall be entitled to recover from the other party all
associated reasonable costs and expenses, including reasonable attorneys’ fees
and court costs.

 

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20.9. DISCLAIMER OF DAMAGES. LESSOR AND LESSEE EACH AGREES THAT IT SHALL NOT BE
ENTITLED TO RECOVER, AND HEREBY DISCLAIMS AND WAIVES, ANY RIGHT THAT IT MAY
OTHERWISE HAVE TO RECOVER CONSEQUENTIAL, INDIRECT AND SPECIAL DAMAGES AS A
RESULT OF ANY BREACH OR ALLEGED BREACH BY THE OTHER PARTY OF ANY OF THE
AGREEMENTS, REPRESENTATIONS OR WARRANTIES OF THE OTHER PARTY CONTAINED IN THIS
AGREEMENT.

20.10. Further Assurances. Lessee and Lessor shall, from time to time, do and
perform such other-and further acts and execute and deliver any and all other
and further instruments as may be required by law or reasonably requested by
either party to establish, maintain and protect the respective rights and
remedies of the other party and to carry out and effect the intent and purposes
of this Agreement.

20.11. Demands, Notices; Language.

(a) All demands, notices, technical reports and other communications hereunder
shall be given in English and in writing and shall be deemed to have been duly
given when personally delivered, sent by facsimile or e-mail, or delivered by an
internationally-recognized courier service to either party to the address of
that party set forth below. A copy of any notice provided by facsimile or by
e-mail shall also be provided by means of an internationally-recognized express
courier service, sent on the same day as the transmission of the facsimile or
e-mail copy of such notice, provided, however, that the date and time of the
subject facsimile or e-mail delivery of that notice shall be controlling.

 

  (1) If to Lessee:

DHL Network Operations (USA), Inc.

1200 South Pine Island Road

Plantation, Florida 33324

Attention: Jon Olin – EVP, General Counsel & Secretary

E-Mail: Jon.Olin@dhl.com

Facsimile: (954) 888-7159

 

  (2) If to Lessor:

ABX Air, Inc.

145 Hunter Drive

Wilmington, Ohio 45177

Attention: Joseph Payne, Vice President and General Counsel

E-Mail: Joe.Payne@atsginc.com

Facsimile: (937) 382-2452

(b) Either party, by notice to the other delivered in accordance with this
Section 20.11, may designate another address as its address for notice under
this Agreement.

 

AIRCRAFT LEASE AGREEMENT    45    MSN                               

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20.12. Counterparts. This Agreement may be signed in any number of counterparts,
each of which shall be an original, and together shall have the same effect as
if the signatures thereto were upon the same instrument.

20.13. Brokers. Each of the parties hereto represents and warrants to the other
that it has not employed any brokers or sale agents in the creation of or the
negotiations relating to this Agreement, nor has it given any brokers or sales
agents such broad powers as to encompass the transactions described in this
Agreement, and each party shall indemnify and hold harmless the other party by
reason of any breach or alleged breach by such party of its representation and
warranty under this Section 20.13.

20.14. Lessor’s Lender. Lessee understands and acknowledges that (a) the
Aircraft may be subject to one or more security interests from time to time as
the result of Lessor or an Affiliate of Lessor borrowing funds from one or more
entities (collectively, “Lessor’s Lender”) and (b) as a result, Lessor may be
required to collaterally assign part or all of its interest in the Aircraft and
in and under this Agreement to secure the performance of its repayment and other
obligations owing to Lessor’s Lender. Lessee agrees that, upon the written
direction of Lessor, it shall consent to any such collateral assignment of
Lessor’s rights under this Agreement; provided, however, that Lessor shall
reimburse Lessee for any additional, out-of-pocket expenses (as reasonably
supported by receipts and other documentation) associated with complying with
this Section 20.14.

20.15. Early Termination. Commencing twenty-four (24) months after Delivery (but
not before), Lessee shall have the right to terminate this Agreement, in its
sole and absolute discretion and with or without cause, by providing written
notice of such intent to terminate (pursuant to the notice requirements of
Section 20.11 hereof) to Lessor at least 180 days prior to the specified
termination date (the “Termination Effective Date”). As a condition precedent to
the effectiveness of such a Termination: (a) Lessee shall make a lump sum
payment to Lessor in an amount equal to what would have been owing by Lessee in
Basic Rent payments over the next six (6) months after the Termination Effective
Date; and (b) Lessee shall Return the Aircraft to Lessee pursuant to the
requirements of this Agreement, including, without limitation, Sections 17 and
18 hereof and Appendix H hereto. The parties shall execute and file any and all
documentation required or allowed by the Aviation Authority evidencing such
Termination.

[Signature Page Follows]

 

AIRCRAFT LEASE AGREEMENT    46    MSN                               

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IN WITNESS WHEREOF, the parties hereto have executed this Aircraft Lease
Agreement (MSN                     ) as of the day and year first herein
written.

 

LESSOR: ABX AIR, INC. By:     Name:     Title:     LESSEE: DHL NETWORK
OPERATIONS (USA), INC. By:     Name:     Title:    

 

AIRCRAFT LEASE AGREEMENT    47    MSN                               

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GUARANTY

This Guaranty (this “Guaranty”) is entered into as of                          ,
2010 by Deutsche Post AG, a corporation formed under the laws of Germany
(“Guarantor”), in favor of ABX Air, Inc., a Delaware corporation (or its
assignee under the Leases, as defined below) (“Lessor”).

RECITALS

WHEREAS, Lessor, as lessor, and DHL Network Operations (USA), Inc. (“Lessee”),
as lessee, have entered into one or more lease agreements with respect to the
lease of one or more of the Boeing model 767-200SF aircraft bearing
manufacturer’s serial numbers 23434, 23142, 23147 and 23431 (collectively, to
the extent executed, the “Leases”); and

WHEREAS, Guarantor owns (either directly or indirectly) all of the capital stock
of Lessee: and

WHEREAS, in consideration for Lessor agreeing to grant to Lessee certain
financial and other concessions in the Leases, Guarantor desires to guarantee
the performance of Lessee’s payment obligations under the Leases;

NOW, THEREFORE, based upon the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Guarantor hereby agrees as follows:

Section 1. Definitions. The definitions set forth in the above Recitals are
hereby incorporated as if fully set forth in this Section 1.

Section 2. Guaranty. Guarantor, as a primary obligor and not as surety, hereby
guarantees, without any setoff or other deduction, to Lessor the due, punctual
and full payment of all of Lessee’s payment obligations under each and all of
the Leases when and as the same shall become due and payable by Lessee in
accordance with the terms thereof, without regard to how such payment
obligations are described or characterized in each of the Leases (with all of
the obligations, covenants, terms, conditions, undertakings and liabilities
described in this Section 2 collectively referred to as the “Guaranteed
Obligations”).

This Guaranty is continuing, irrevocable, absolute and unconditional and a
guaranty of payment and not of collectibility, and is in no way conditioned or
contingent upon any attempt to collect from or enforce performance or compliance
by Lessee or the exercise or assertion of any other right or remedy to which
Lessor is or may be entitled under or in connection with the Leases. If for any
reason whatsoever Lessee shall fail or be unable duly, punctually and fully to
pay such amounts as and when the same shall become due and payable in accordance
with the terms of any of the Leases, Guarantor will promptly pay or cause to be
paid such amounts under the terms of such Leases.

Notwithstanding anything to the contrary herein, the aggregate maximum amount
recoverable under this Guaranty is limited to Sixty Million U.S. Dollars
(US$60,000,000), or Fifteen Million Dollars (US$15,000,000) per Lease, plus
expenses as set forth in Section 9 hereof.

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Section 3. Character of Obligations of Guarantor. Subject to the provisions of
Section 8 hereof, the obligations of Guarantor set forth in this Guaranty shall
remain in full force and effect until payment of the Guaranteed Obligations in
full, and shall not be released, discharged or in any way affected by any of the
following:

(a) any amendment, modification, addition, deletion or supplement to or of or
other change in the Guaranteed Obligations or any of the Leases;

(b) any failure, omission or delay on the part of Lessee to conform or comply
with any term of any of the Leases;

(c) any voluntary or involuntary bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation, dissolution, winding up or
similar proceeding with respect to Lessee; or

(d) any merger or consolidation of Lessee or Guarantor into or with any other
corporation, or any other corporate change in Lessee or Guarantor, or any sale,
lease or transfer of any of the assets of Lessee or Guarantor to any other
person, or any change in the ownership of any shares of capital stock of Lessee
or Guarantor.

Section 4. Waiver and Agreement. Guarantor waives any and all notice of the
creation, modification, extension or accrual of any of the Guaranteed
Obligations and notice of or proof of reliance by Lessor upon this Guaranty or
acceptance of this Guaranty, and the Guaranteed Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred in
reliance upon this Guaranty. Guarantor unconditionally waives, to the extent
permitted by applicable law:

(a) acceptance of this Guaranty and proof of reliance by Lessor hereon;

(b) notice of any of the matters referred to in Section 3 hereof, or any right
to consent or assent to any thereof;

(c) any right to the enforcement, assertion or exercise by Lessor against Lessee
of any right, power, privilege or remedy conferred upon Lessor in any of the
Leases or otherwise;

(d) any requirement of diligence on the part of any person; and

(e) any requirement that Lessee or any other person be joined as a party to any
proceeding for the enforcement of any term of any of the Leases.

 

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Section 5. Subrogation. Guarantor shall be subrogated to any rights of Lessor
against Lessee in respect of which a payment shall be made by Guarantor
hereunder; provided, however, that Guarantor shall not enforce or attempt to
enforce such rights until such time as the Guaranteed Obligations at issue have
been discharged in full.

Section 6. Lessor’s Remedies. Each and every remedy of Lessor under or with
respect to this Guaranty shall, to the extent permitted by law, be cumulative
and shall be in addition to any other remedy given hereunder, or under each of
the Leases, or now or hereafter existing at law or in equity; provided, however,
that Lessor shall not be entitled to any double recovery.

Section 7. Representations and Warranties. Guarantor hereby represents and
warrants to Lessor that the following statements are true and correct as of the
date of this Guaranty:

7.1. Guarantor is a corporation duly organized, validly existing and in good
standing under the laws of Germany.

7.2. Guarantor has the corporate power and authority to enter into this
Guaranty. The making, execution and performance of this Guaranty by Guarantor
has been duly authorized by all necessary corporate action, this Guaranty has
been duly executed and delivered by Guarantor and this Guaranty constitutes the
valid and binding obligation of Guarantor, enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to creditors rights generally, including,
without limitation, fraudulent conveyance laws, and by general principles of
equity, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of specific
performance or injunctive relief, whether considered in a proceeding in equity
or at law.

7.3. The execution, delivery and performance of this Guaranty: (a) does not
violate any provision of any existing law or regulation binding on Guarantor, or
any order, judgment, award or decree of any court, arbitrator or governmental
authority binding on Guarantor, or the charter or bylaws of, or any securities
issued by Guarantor, or of any mortgage, indenture, lease, contract or other
agreement, instrument or undertaking to which Guarantor is a party or by which
Guarantor or any of its assets may be bound, the violation of which would have a
material adverse effect on the business, operations, assets or financial
condition of Guarantor, and (b) will not result in the creation or imposition of
any encumbrance on any of Guarantor’s property, assets or revenues pursuant to
the provisions of any such mortgage, indenture, lease, contract or other
agreement, instrument or undertaking. No consent, license, approval, order or
authorization of, or registration, filing, or declaration with, any governmental
authority is required to be obtained by Guarantor, and no consent of any third
party is required to be obtained by Guarantor, in connection with the execution,
delivery and performance of this Guaranty or the taking of the actions
contemplated hereby, except for consents, authorizations, filings and notices
that have been obtained or made. There is no order or action pending or, to the
knowledge of Guarantor, threatened against Guarantor, in either case as of the
date of this Guaranty, that individually or when aggregated with one or more
other actions has or would reasonably be expected to have a material adverse
effect on Guarantor’s ability to perform this Guaranty.

Section 8. Expiry. This Guaranty and all guaranties, covenants and agreements of
Guarantor contained herein are valid and shall continue in full force and effect
until such time as all of the Guaranteed Obligations, including expenses that
the Guarantor is obligated to pay

 

AIRCRAFT LEASE AGREEMENT    3    MSN                               

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pursuant to Section 9 hereof, are paid finally and irrevocably in full.
Notwithstanding the foregoing, all of the Guarantor’s obligations under this
Guaranty shall terminate absolutely, whether or not this Guaranty has been
returned to the Guarantor by the Lessor, to the extent that Lessor has not made
a demand for payment under this Guaranty prior to six (6) months after the last
Return (as defined in the Leases) of each of the aircraft under the Leases.

Section 9. Expenses. Guarantor shall pay to Lessor on demand each cost and
expense (including, without limitation, attorneys’ fees) hereafter incurred by
Lessor in endeavoring to enforce any obligation of Guarantor pursuant to this
Guaranty or to preserve or exercise any right or remedy against Guarantor
pursuant to this Guaranty or arising as a result of this Guaranty; provided,
however, in connection with any legal action Lessor shall not be entitled to
such costs or expenses if Lessor does not prevail.

Section 10. Amendments. The terms of this Guaranty may not be waived, altered,
modified, amended, supplemented or terminated in any manner whatsoever except by
written instrument signed by Guarantor and Lessor.

Section 11. Applicable Law. This Guaranty shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York, without
regard to principles of conflicts of laws.

Section 12. Section Headings. The section headings are inserted for convenience
only and are not to be construed as part of this Guaranty.

Section 13. Notices. All notices and other communications to be made or given
pursuant to this Guaranty shall be made or given in the manner provided in
Section 20.11 of each of the Leases, if to Guarantor, to the following location:

Deutsche Post AG

Headquarters

Charles de Gaulle Strasse 20

53113 Bonn

Germany

Attention: Head of Corporate Finance

Section 14. Assignment. Guarantor may not assign this Guaranty, and its rights
and obligations hereunder, without the prior written consent of Lessor, which
consent shall not be unreasonably withheld. This Guaranty may not be transferred
or assigned by Lessor without the prior written consent of Guarantor; provided
that Lessor may transfer and assign this Guaranty to any Affiliate (as defined
in the Leases) of Lessor without Guarantor’s prior consent.

Section 15. Successor. This Guaranty is binding upon any successor to Guarantor.

Section 16. No Other Writing. This writing is intended by the parties as the
final expression of this Guaranty and is also intended as a complete and
exclusive statement of the terms of their agreement with respect thereto.

 

AIRCRAFT LEASE AGREEMENT    4    MSN                               

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IN WITNESS WHEREOF, Guarantor has executed this Guaranty by its duly authorized
officer as of the date first above written.

 

DEUTSCHE POST AG By:     Its:     Title:    

 

ACCEPTED AND AGREED: ABX AIR, INC. [or assignee] By:     Its:     Title:    

 

AIRCRAFT LEASE AGREEMENT    5    MSN