Exhibit 10.45


 


*** CERTAIN
CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND


FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE


COMMISSION
PURSUANT TO RULE 24B-2 OF THE




SECURITIES EXCHANGE ACT OF 1934, AS AMENDED





 


 


LEASE
AGREEMENT N483HA*


 


 


dated
as of August 29, 2008


 


between


 


WELLS
FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,

not in its individual capacity, except as
expressly
  provided herein, but solely as Owner
Trustee,


 


Lessor


 


and


 


HAWAIIAN
AIRLINES, INC.,


 


Lessee


 






 


 


One
Boeing Model 717-200 Aircraft bearing United States Registration Number N604AT
(to be changed to N483HA) and Manufacturer’s Serial Number 55128, and including
Two Rolls-Royce Deutschland Ltd & Co KG Model BR 700-715 C1-30 Engines
bearing Manufacturer’s Serial Numbers 13392 and 13189


 






 






*The United States
Registration Number of the Aircraft will be changed from N604AT to N483HA




 





 


This Lease Agreement has been executed in multiple counterparts; to the
extent, if any, that this Lease Agreement constitutes chattel paper (as defined
in the Uniform Commercial Code as in effect in any applicable jurisdiction), no
security interest in Lessor’s right, title, and interest in and to this Lease
Agreement may be perfected by possession except as provided in § 17.5
hereof.


 






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treatment and filed separately with the SEC


 

















 


CONTENTS


 


	
  1.

  	
  DEFINITIONS
  AND CONSTRUCTION

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  DELIVERY
  AND ACCEPTANCE

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Delivery and Lease of
  Aircraft

  	
  1

  
	
  2.2

  	
  Acceptance by Lessee

  	
  1

  
	
   

  	
   

  	
   

  
	
  3.

  	
  TERM
  AND RENT

  	
  2

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Term

  	
  2

  
	
  3.2

  	
  Rent

  	
  2

  
	
  3.3

  	
  Payments

  	
  4

  
	
   

  	
   

  	
   

  
	
  4.

  	
  DISCLAIMER;
  CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS

  	
  4

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Disclaimer of
  Warranties

  	
  4

  
	
  4.2

  	
  Warranty Rights

  	
  6

  
	
  4.3

  	
  Quiet Enjoyment

  	
  6

  
	
  4.4

  	
  Investment of Funds
  Held as Security

  	
  6

  
	
  4.5

  	
  Title Transfers by
  Lessor

  	
  7

  
	
  4.6

  	
  Lease For U.S. Federal
  Income Tax Law Purposes; Section 1110 of Bankruptcy Code

  	
  8

  
	
   

  	
   

  	
   

  
	
  5.

  	
  RETURN
  OF AIRCRAFT

  	
  9

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Compliance with Annex
  B

  	
  9

  
	
  5.2

  	
  Storage and Related
  Matters

  	
  9

  
	
  5.3

  	
  Return of Other
  Engines

  	
  10

  
	
  5.4

  	
  Failure to Return
  Aircraft

  	
  10

  
	
   

  	
   

  	
   

  
	
  6.

  	
  LIENS

  	
  11

  
	
   

  	
   

  	
   

  
	
  7.

  	
  REGISTRATION;
  OPERATION; POSSESSION AND SUBLEASING

  	
  13

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Registration and
  Operation

  	
  13

  
	
  7.2

  	
  Possession

  	
  14

  
	
  7.3

  	
  Certain Limitations on
  Subleasing or Other Relinquishment of Possession

  	
  22

  
	
  7.4

  	
  Security Assignment of
  Subleases

  	
  23

  
	
  7.5

  	
  Lessor’s Interest in
  Certain Engines

  	
  23

  



 






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  8.

  	
  MAINTENANCE;
  REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS, AND ADDITIONS;
  OTHER LESSEE COVENANTS

  	
  24

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Maintenance;
  Replacement and Pooling of Parts; Alterations, Modifications, and Additions

  	
  24

  
	
  8.2

  	
  Information,
  Certificates, Notices, and Reports

  	
  24

  
	
  8.3

  	
  Lessee Undertakings in
  Other Documents

  	
  27

  
	
   

  	
   

  	
   

  
	
  9.

  	
  LOSS,
  DESTRUCTION, REQUISITION, ETC.

  	
  27

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Event of Loss to the
  Aircraft

  	
  27

  
	
  9.2

  	
  Event of Loss to an
  Engine; Engine Exchanges

  	
  30

  
	
  9.3

  	
  Conditions to any
  Replacement

  	
  31

  
	
  9.4

  	
  Conveyance to Lessee

  	
  35

  
	
  9.5

  	
  Application of
  Payments

  	
  35

  
	
  9.6

  	
  Requisition of
  Aircraft for Use

  	
  36

  
	
  9.7

  	
  Requisition of an
  Engine for Use

  	
  36

  
	
  9.8

  	
  Application of
  Requisition Payments

  	
  37

  
	
  9.9

  	
  Application of
  Payments During Default

  	
  37

  
	
   

  	
   

  	
   

  
	
  10.

  	
  INSURANCE

  	
  37

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Lessee’s Obligation to
  Insure

  	
  37

  
	
  10.2

  	
  Insurance for Own
  Account

  	
  38

  
	
  10.3

  	
  Indemnification by
  Government in Lieu of Insurance

  	
  38

  
	
  10.4

  	
  Application of
  Insurance Proceeds

  	
  39

  
	
  10.5

  	
  Application of
  Payments During Default

  	
  39

  
	
  10.6

  	
  Lessor’s Right to
  Maintain Insurance

  	
  39

  
	
   

  	
   

  	
   

  
	
  11.

  	
  INSPECTION

  	
  40

  
	
   

  	
   

  	
   

  
	
  12.

  	
  ASSIGNMENT;
  SUCCESSOR LESSOR

  	
  41

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  In General

  	
  41

  
	
  12.2

  	
  Successor Lessor

  	
  41

  
	
   

  	
   

  	
   

  
	
  13.

  	
  LEASE
  EVENTS OF DEFAULT

  	
  42

  
	
   

  	
   

  	
   

  
	
  13.1

  	
  Payments

  	
  42

  
	
  13.2

  	
  Insurance

  	
  42

  
	
  13.3

  	
  Corporate Existence
  and Commercial Airlines Operations

  	
  42

  
	
  13.4

  	
  Certain Covenants

  	
  43

  
	
  13.5

  	
  Other Covenants

  	
  43

  
	
  13.6

  	
  Representations and
  Warranties

  	
  43

  



 






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  13.7

  	
  Bankruptcy and
  Insolvency

  	
  44

  
	
  13.8

  	
  Other Obligations

  	
  45

  
	
  13.9

  	
  Judgments

  	
  45

  
	
   

  	
   

  	
   

  
	
  14.

  	
  REMEDIES
  AND WAIVERS

  	
  45

  
	
   

  	
   

  	
   

  
	
  14.1

  	
  Remedies

  	
  45

  
	
  14.2

  	
  Limitations Under CRAF

  	
  49

  
	
  14.3

  	
  Right to Perform for
  Lessee

  	
  50

  
	
  14.4

  	
  Determination of Fair
  Market Rental Value and Fair Market Sales Value

  	
  50

  
	
  14.5

  	
  Lessor Appointed
  Attorney-in-Fact

  	
  50

  
	
  14.6

  	
  Remedies Cumulative

  	
  51

  
	
   

  	
   

  	
   

  
	
  15.

  	
  LESSEE’S
  OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC.

  	
  51

  
	
   

  	
   

  	
   

  
	
  16.

  	
  ADDITIONAL
  RIGHTS AND OBLIGATIONS

  	
  53

  
	
   

  	
   

  	
   

  
	
  17.

  	
  MISCELLANEOUS

  	
  53

  
	
   

  	
   

  	
   

  
	
  17.1

  	
  Amendments

  	
  53

  
	
  17.2

  	
  Severability

  	
  54

  
	
  17.3

  	
  Third-Party
  Beneficiary

  	
  54

  
	
  17.4

  	
  Reproduction of
  Documents

  	
  54

  
	
  17.5

  	
  Counterparts

  	
  55

  
	
  17.6

  	
  Notices

  	
  55

  
	
  17.7

  	
  Governing Law;
  Jurisdiction and Venue; No Jury Trial

  	
  55

  
	
  17.8

  	
  No Waiver

  	
  57

  
	
  17.9

  	
  Survival

  	
  57

  
	
  17.10

  	
  Entire Agreement

  	
  58

  



 


 


EXHIBITS, SCHEDULES AND ANNEXES


 


	
  EXHIBIT A

  	
  Lease Supplement

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT B

  	
  Aircraft Description

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT C

  	
  Form of Return Acceptance Supplement

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 1

  	
  – Part A

  	
  Certain Terms

  	
   

  
	
   

  	
  – Part B

  	
  Additional Terms

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 2

  	
  Basic Rent

  	
   

  



 






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  SCHEDULE 3

  	
  Stipulated Loss Values

  	
   

  
	
  SCHEDULE 4 -

  	
  [RESERVED]

  	
   

  
	
  SCHEDULE 5

  	
  Notional Debt Amortization

  	
   

  
	
  SCHEDULE 6

  	
  Permitted Countries

  	
   

  
	
  SCHEDULE 7

  	
  Placards

  	
   

  
	
   

  	
   

  	
   

  
	
  ANNEX A 

  	
  – Part 1

  	
  Definitions

  	
   

  
	
   

  	
  – Part 2

  	
  Additional Definitions

  	
   

  
	
   

  	
  – Part 3

  	
  Other Definitions

  	
   

  
	
  ANNEX B

  	
  Return Conditions

  	
   

  
	
  ANNEX C

  	
  Maintenance

  	
   

  
	
  ANNEX D

  	
  Insurance

  	
   

  
	
  ANNEX E 

  	
  – Part 1

  	
  Certain Rights and Obligations

  	
   

  
	
   

  	
  – Part 2

  	
  Additional Rights and Obligations

  	
   

  



 






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LEASE AGREEMENT N483HA*


 


This
Lease Agreement N483HA* (this “Lease”) is
entered into as of August 29, 2008, between (1) Wells Fargo Bank
Northwest, National Association, a national banking association, not in its
individual capacity (except as expressly provided herein) but solely as Owner
Trustee (“Lessor”), and (2) Hawaiian
Airlines, Inc. (“Lessee”), a
Delaware corporation.


 


Lessor
and Lessee agree as follows:


 


1.                                      DEFINITIONS
AND CONSTRUCTION


 


The
terms defined in Annex A, when capitalized as in Annex A, have the
same meanings when used in this Lease. 
Annex A also contains rules of usage that control construction
in this Lease. The parties agree that this Lease shall constitute a “finance
lease” (as defined by UCC § 2A-103(g)) for purposes of UCC Article 2A.


 


2.                                      DELIVERY
AND ACCEPTANCE; REGISTRATION OF INTERNATIONAL INTERESTS


 


2.1                               Delivery
and Lease of Aircraft


 


Lessor
hereby leases the Aircraft to Lessee for the Term, and Lessee hereby leases the
Aircraft from Lessor for the Term.


 


2.2                               Acceptance
by Lessee


 


Lessee
hereby confirms to Lessor, as evidenced by Lessee’s execution and delivery of
Lease Supplement No. 1, that Lessee has duly and irrevocably accepted
delivery of the Aircraft for all purposes of this Lease and the other Operative
Agreements.


 






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2.3                               Registration
of International Interests


 


Lessee and Lessor intend that the lease of the Airframe and
each Engine by Lessor to Lessee shall create International Interests vested in,
and in favor of, Lessor, and accordingly, Lessor and Lessee shall cause the CTC


 






* The United
States Registration Number of the Aircraft will be changed from N604AT to
N483HA.


 


Registrations to be effected on the
International Registry, and Lessee hereby consents to the CTC Registrations and
agrees that Lessor shall be entitled to all of the benefits provided for under
the CTC with respect such International Interests.


 


3.                                      TERM
AND RENT


 


3.1                               Term


 


The
Aircraft shall be leased hereunder for the Term, unless this Lease or the
leasing of the Aircraft is earlier terminated in accordance with any provision
of this Lease.


 


3.2                               Rent


 


3.2.1                     Basic Rent


 


During
the Base Term, Lessee shall pay to Lessor, on each Payment Date, Basic Rent in
the amount specified on Schedule 2 for such Payment Date.


 


3.2.2                     Supplemental
Rent


 


Lessee
shall pay to Lessor, or to whomever is entitled to it, any and all Supplemental
Rent (including any Make-Whole Amount that is Supplemental Rent) when and as it
becomes due and owing.  Lessee will also
pay to Lessor, or to whomever is entitled to it, as Supplemental Rent, to the
extent permitted by applicable Law, interest at the Past-Due Rate on any part
of any amount of Rent (including Supplemental Rent) not paid by 2:00 p.m.,
New York time, on the date when due (so long as, in the case of any Person not
a party to the Participation Agreement, Lessee had received timely notice of
the account to which such payment was required to be made), for the period from
and including the date on which the same was due to (but excluding) the date of
payment in full.


 






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3.2.3                     Security
Deposit


 


(a)                                  On
or before the Delivery Date, Lessee shall pay to Lessor a security deposit (the
“Security Deposit”) in the amount set forth on Schedule 1-Part A
hereto.  The Security Deposit will be
held by Lessor for the entire remaining Term of this Lease and may be
commingled with other amounts of Lessor.


 


(b)                                 The
Security Deposit shall be held by Lessor as security for the due and punctual
payment by Lessee of all amounts payable by it, and the due and punctual
observance and performance by Lessee of all of its obligations, hereunder and
under each other Operative Agreement. 
Lessee hereby assigns, transfers and pledges to Lessor, and hereby
grants to Lessor, a first-priority security interest in, the Security Deposit
to secure such payment, observance and performance.  Any interest earned on the Security Deposit
shall be solely for the account of Lessor. 
If an Event of Default shall occur and be continuing, then in addition
to any other rights Lessor may have under applicable Law as a lessor, secured
party or otherwise, or under this Lease or any other Operative Agreement,
Lessor may set off against, use, apply or retain all or any portion of the
Security Deposit in full or partial payment for amounts payable by Lessee under
this Lease or any other Operative Agreement or for amounts necessary to
compensate Lessor and the Indemnitees for their Expenses arising in connection
with such Event of Default.  Any such use
or application shall not, however, be deemed a cure by Lessee, or waiver by
Lessor, of any Event of Default, unless so agreed by Lessor in writing.


 


(c)                                  So
long as no Default or Event of Default shall have occurred and be continuing,
that portion, if any, of the Security Deposit that has not previously been used
or applied, or set off against, as provided for in this Lease, shall be
returned to Lessee by wire transfer of immediately available Dollars to an
account of Lessee located in the United States of America, specified in writing
by Lessee to Lessor at least 10 Business Days prior to the date of such
transfer, (A) on or before the date that is 20 Business Days after and
excluding the date upon which the Aircraft is returned to Lessor in the
condition, and in the manner, required under Annex B to this Lease and
otherwise in accordance with the terms of this Lease, or (B) if an Event
of Loss shall have occurred, and Lessee shall have elected, or shall be deemed
to have elected, the option set forth in Section 9.1.2 hereof, then on or
before the date that is 20 Business Days after and excluding the date upon
which Lessor has 


 






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been paid all amounts required to be paid under, and as provided in, Section 9.1.2(a) hereof.


 


3.3                               Payments


 


(a)                                  Payments
of Rent by Lessee shall be paid by wire transfer of immediately available
Dollars, not later than 2:00 p.m., New York City time, on the date when
due, to the account of Lessor specified in Schedule 1 to the Participation
Agreement (or to such other account in the United States as Lessor specifies to
Lessee in writing at least 10 Business Days before such payment of Rent is
due), or, in the case of any payment of Supplemental Rent expressly payable to
a Person other than Lessor, to the Person that shall be entitled thereto, to
such account in the United States as such Person specifies from time to time to
Lessee at least 10 Business Days before such payment of Rent is due.


 


(b)                                 Except
as otherwise expressly provided herein, whenever any payment of Rent shall be
due on a day that is not a Business Day, such payment shall be made on the next
day that is a Business Day, and, if such payment is made on such next Business
Day, no interest shall accrue on the amount of such payment during such
extension.


 


(c)                                  Except
as expressly set forth herein, all computations of interest under this Lease
shall be made on the basis of a year of 365/366 days and actual days elapsed.


 


(d)                                 The
percentages set forth in Schedule 3 with respect to Stipulated Loss Value Dates
have been computed on the assumption that the Basic Rent payable on the Payment
Date corresponding to any such Stipulated Loss Value Date has not been paid to
Lessor.


 


4.                                      DISCLAIMER;
CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS


 


4.1                               Disclaimer
of Warranties


 


Lessor leases and Lessee
takes the Aircraft “as-is, where-is.” Lessee acknowledges and agrees that, as
between Lessee and each of Lessor and Owner Participant, (a) the Airframe
and each Engine are of a size, design, capacity, and manufacture selected by
and acceptable to Lessee, 


 






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(b) Lessee is satisfied that the Airframe
and each Engine are suitable for their respective purposes, and (c) Lessor
does not make, has not made, and shall not be deemed to have made, and will be
deemed to have expressly disclaimed, and Lessee hereby waives, releases, and
renounces, any warranty, representation, guaranty, liability, and obligation of
Lessor, and any right, claim and remedy of Lessee against Lessor, express or implied,
arising by operation of law, course of performance, course of dealing, usage of
trade, or otherwise, as to:


 


(1)                                 the title, airworthiness, value, condition, design, operation, or any
implied warranty of merchantability or fitness for use or for any particular
purpose of the Airframe, any Engine, any Part, any data, or any other thing
delivered, sold, or transferred hereunder,


 


(2)                                 the quality of the material or workmanship with respect to the
Airframe, any Engine, any Part, any data, or any other thing delivered, sold,
or transferred hereunder,


 


(3)                                 the absence of latent or any other defect or nonconformance in the
Airframe, any Engine, any Part, any data, or any other thing delivered, sold,
or transferred hereunder, whether or not discoverable, or


 


(4)                                 the absence of any actual or alleged infringement of any patent,
trademark, or copyright, or the like.


 


Lessee further waives, disclaims,
releases, and renounces any liability, right, claim, remedy, or obligation
based on tort, including strict liability, whether or not arising from the
negligence (whether active, passive, or imputed) of Lessor, any obligation,
liability, right, claim, or remedy for loss of or damage to the Airframe, any
Engine, any Part, any data, or any other thing delivered, sold, or transferred
hereunder, or any other representation or warranty whatsoever, express or
implied, with respect to the Airframe, any Engine, any Part, any data, or any
other thing delivered, sold or transferred hereunder, except as expressly set
forth in the Operative Agreements.


 


Nothing set forth in this § 4.1
shall limit or impair Lessee’s rights and interests under, and as set forth in,
§ 7.4.5(a) of the Participation Agreement.


 






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4.2                               Warranty
Rights


 


Unless
an Event of Default shall have occurred and be continuing, Lessor agrees to
make available to Lessee such rights as Lessor may have under any warranty with
respect to the Aircraft made, or made available, by Airframe Manufacturer or
Engine Manufacturer, or any of their subcontractors or suppliers.  If an Event of Default shall have occurred
and be continuing, and if at such time Owner Participant is an Affiliate of
Airframe Manufacturer, then until such time as Lessor commences the exercise of
any right or remedy in respect of such Event of Default (whether pursuant to Section 14
or otherwise, and which may include, without limitation, a suspension of
performance by Lessor of any of its obligations under this Lease or any of the
other Operative Agreements), Lessor shall not, without Lessee’s prior written
consent (such consent not to be unreasonably withheld or delayed), waive or
release any such rights under any such warranty made by Airframe Manufacturer.


 


4.3                               Quiet
Enjoyment


 


So
long as no Event of Default exists, Lessor shall not interfere with (or permit
any Person acting at the instruction of, or on behalf of, Lessor or Owner
Participant to interfere with) Lessee’s rights hereunder (or, subject always to
§ 7.2.7(d)(3), the rights of any Permitted Sublessee under a Permitted
Sublease and any permitted sub-sub-lessee pursuant to § 7.2.7(j))to continued
possession, use, and operation of, and quiet enjoyment of, the Aircraft during
the Term. The foregoing, however, shall not be construed or deemed to modify or
condition in any respect the obligations of Lessee pursuant to § 15, which
obligations are absolute and unconditional.


 


4.4                               Investment
of Funds Held as Security


 


4.4.1                     Investment


 


Any
money required to be paid to, or retained or otherwise applied by, Lessor and
that (i) is not required to be paid to Lessee pursuant to § 9.9 or
§ 10.5 or otherwise applied by Lessor (whether because a Special Default
or an Event of Default exists or otherwise), or (ii) is held by Lessor
pending payment to Lessee pursuant to § 9.5, § 9.8, § 10.5,
Schedule 2 (with respect to the Commitment Fee and its application to Basic
Rent) or otherwise, or (iii) is required to be paid to Lessee pursuant to
§ 9.5, § 9.8, or § 10.5 after completion of a replacement to be
made pursuant to § 9.1, § 9.2, or § 9.3, shall, until paid to
Lessee as provided in § 9 or § 10 or otherwise, or applied as
provided herein or otherwise, be held by Lessor as security for the obligations
of Lessee under this Lease and the other Operative Agreements (and Lessee 


 






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hereby grants to Lessor a security interest in such money) and shall be
invested by Lessor from time to time as directed in writing by Lessee (or, if
Lessee does not so direct, by or as directed by Lessor in its sole discretion)
and at Lessee’s risk and expense in Cash Equivalents so long as such Cash
Equivalents specified by Lessee or Lessor (as applicable) can be acquired by
Lessor using its commercially reasonable efforts.  Notwithstanding the foregoing, this Section 4.4.1
shall not apply in any respect to (i) the Security Deposit (Sections 3.2.3
and 14.1.6 hereof shall govern the payment, possession, use, application and
repayment of the Security Deposit), or (ii) the Maintenance Reserves (Section F
of Annex C hereto shall govern the payment, possession, use, application and
repayment of the Maintenance Reserves).


 


4.4.2                     Payment of
Gain or Loss


 


Any net gain (including interest received) realized as
the result of investments pursuant to § 4.4.1 (net of any fees, commissions,
and other reasonable expenses incurred in connection with such investment)
shall be held, retained or applied in the same manner as the subject principal
amount is to be held, retained or applied, as set forth in § 9, § 10,
Schedule 2 (with respect to the Commitment Fee and its application to Basic
Rent) or otherwise.  Lessee will promptly
pay to Lessor, on demand, the amount of any loss realized as the result of any
such investment (together with any fees, commissions, and other reasonable
expenses incurred in connection with such investment), such amount so paid to
be held and applied by Lessor as contemplated in § 4.4.1.


 


4.4.3                     Limitation of
Liability


 


All investments under this § 4.4 shall be at
Lessee’s risk and expense, and Lessor shall not be liable for any loss
resulting from any investment made under this § 4.4 other than by reason
of its willful misconduct or gross negligence. Any such investment may be sold
(without regard to its maturity) by Lessor without instructions whenever such
sale is necessary to make a distribution required by this Lease.


 


4.5                               Title
Transfers by Lessor


 


(a)                                  If
Lessor shall be required to transfer title to the Aircraft, the Airframe, or
any Engine to Lessee or any other Person pursuant to § 5.3 or § 9 of
this Lease, then


 


(1) Lessor shall (aa) transfer to Lessee or
such other Person (as 


 






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applicable) all of Lessor’s
right, title, and interest in and to the Aircraft, the Airframe, or such Engine
(as applicable), free and clear of all Lessor Liens attributable to Lessor or
Owner Participant, (bb) [RESERVED], (cc) [RESERVED], and (dd) assign
to Lessee or such other Person (as applicable), if and to the extent permitted,
all claims, if any, for damage to the Aircraft, the Airframe, or such Engine,
in each case on an “as is, where is, and with all faults” basis, free of all
Lessor Liens attributable to Lessor or Owner Participant, and without recourse
or warranty of any kind whatsoever (except as to the transfer described in
clause (aa) above and as to the absence of such Lessor Liens), and


 


(2) Lessor shall promptly deliver to Lessee or
such other Person (as applicable), a bill of sale and agreements of assignment,
evidencing such transfer and assignment, and such other instruments of
transfer, all in form and substance reasonably satisfactory to Lessor and
Lessee (or such other Person, as applicable), as Lessee (or such other Person,
as applicable) may reasonably request; and Lessor shall also promptly consent
to the making of such filings on the International Registry as shall be
necessary and sufficient to register any such transfer and assignment, and
Lessor shall also consent to the discharge on the International Registry of any
registrations of International Interests in favor of Lessor with respect to the
subject Airframe or Engine(s) under this Lease.


 


(b)                                 Any
assignment, sale, transfer, or other conveyance of the Aircraft, the Airframe,
or any Engine by Lessor pursuant to this Lease shall be effective to transfer
or convey all right, title, and interest of Lessor in and to such Aircraft,
Airframe or Engine, as the case may be. 
No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency, or regularity of such assignment, sale,
transfer, or conveyance, or as to the application of any sale or other proceeds
with respect thereto by Lessor.


 


4.6                               Lease
For U.S. Federal Income Tax Law Purposes; Section 1110 of Bankruptcy Code


 


(a)                                  Lessee
and Lessor agree that this Lease is, and shall be treated as, a lease for U.S.
federal income tax purposes of the Aircraft, Airframe, Engines, and Parts.


 


(b)                                 Lessee
and Lessor intend that Lessor shall be entitled to the rights 


 






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and benefits of Section 1110 (or any successor provision of
federal bankruptcy Law), including the right to take possession of the
Aircraft, Airframe, Engines, Parts and Returnable Records as provided in this
Lease, and in any instance where more than one construction of the terms and
conditions of this Lease or any other Operative Agreement is possible, or of
the facts and circumstances underlying the transactions contemplated herein or
therein, Lessor and Lessee agree that a construction which would create and
preserve such rights and benefits shall control over any construction which
would not create and preserve such rights and benefits.


 


(c)                                  Lessor
and Lessee agree that, for all purposes of applicable Law, this Lease
constitutes an agreement of lease, and nothing contained herein shall be
construed as conveying to Lessee any right, title, or interest in the Aircraft,
Airframe, Engines, or Parts except as a lessee only.


 


5.                                      RETURN
OF AIRCRAFT


 


5.1                               Compliance
with Annex B


 


Lessee
shall comply with each of the provisions of Annex B, which provisions are
hereby incorporated by this reference as if set forth in full herein.


 


5.2                               Storage
and Related Matters


 


If
Lessor gives written notice to Lessee, not less than 30 days nor more than 120
days before the end of the Term, requesting storage of the Aircraft upon its
return hereunder, Lessee will provide Lessor (or cause Lessor to be provided)
with outdoor parking facilities for the Aircraft for a period up to 180 days,
starting on the date of such return, at Mojave, California or Marana, Arizona
or Victorville, California, as Lessor may specify, or if Lessor elects not to
store the Aircraft at any of such locations, then the Aircraft shall be stored
at such storage facility in the 48 contiguous states of the United States as
Lessee may select and which is used as a location for the storage of large
commercial aircraft.  At Lessor’s written
request, Lessee shall maintain insurance (if available) for the Aircraft during
such storage period, provided, that
Lessor shall reimburse Lessee for Lessee’s actual incremental out-of-pocket
cost of providing such insurance for any period following the initial 90 days
of such storage period.  Such storage
shall be at Lessor’s risk, and Lessor 


 






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shall pay all applicable storage fees, except that Lessee shall pay the
parking fees for the initial 90 days of such storage period; provided,  that Lessee’s
obligation to provide parking shall be subject to Lessor’s entering into an
agreement with the storage facility, before the storage period begins,
providing that, as between the storage facility, Lessee, and Lessor, Lessor
shall bear all maintenance charges (other than maintenance required as a result
of Lessee’s failure to comply with the provisions of Annex B hereto) and other
costs incurred (other than parking fees for the initial 90 days of such storage
period).  In addition, upon the return of
the Aircraft, Lessor shall have no obligation with respect to the amount of any
fuel or oil contained in the fuel or oil tanks of the Aircraft, it being
agreed, however, that Lessee shall not be obligated to return the Aircraft with
any fuel or oil other than as required pursuant to § 7(13) of Annex B.


 


5.3                               Return
of Other Engines


 


If
any Engine owned by Lessor is not installed on the Airframe at the time of
return hereunder, Lessee shall return the Airframe hereunder with a Replacement
Engine meeting the requirements of, and in accordance with, § 9 and
Annex B, as if the Engine replaced had suffered an Event of Loss on or
before the return date and had been replaced on the return date. Thereupon,
Lessor will transfer to Lessee the Engine constituting part of the Aircraft but
not installed on the Airframe at the time of the return of the Airframe, and
will deliver the documentation required therefor pursuant to § 4.5.


 


5.4                               Failure
to Return Aircraft


 


If
Lessee shall, for any reason whatsoever, fail to return the Aircraft and the Returnable
Records at the time and in the manner specified herein, all obligations of
Lessee under this Lease (including the obligation to pay Basic Rent, as
provided in § 4 of Annex B) shall continue in effect with respect to the
Aircraft until the Aircraft and Returnable Records are returned to Lessor; provided, that (i) this § 5.4 shall not be
construed as permitting Lessee to fail to meet its obligation to return the
Aircraft or the Returnable Records at the time and in the manner specified
herein or constitute, or be deemed to constitute, a waiver of any Event of
Default resulting from Lessee’s failure to return the Aircraft or the
Returnable Records or otherwise, and (ii) if Lessee fails to return any
Returnable Records at the time and in the manner specified herein, and if such
failure does not materially impair, delay or otherwise interfere with the
inspection, operation, maintenance, testing, repair, overhaul, marketing,
storage, sale, lease or other disposition of the Aircraft, Airframe or any Engine,


 






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and if Lessee otherwise
fully performs its obligation to return the Aircraft and the Returnable Records
at the time and in the manner specified herein, then, notwithstanding any such
failure, Lessee shall not be obligated to continue to pay Basic Rent, as set
forth above in this § 5.4.


 


6.                                      LIENS


 


Lessee
shall not, directly or indirectly, create, incur, assume, or suffer to exist
any Lien on or with respect to the Aircraft, the Airframe, any Engine, any
Part, or the Returnable Records, title to any of the foregoing, or any interest
of Lessee therein, or Lessee’s rights in and to this Lease or any Permitted
Sublease, except


 


(a) the rights of Lessor (including, without
limitation, the International Interests of Lessor constituted under this Lease
with respect to the Airframe and Engines), the Owner Participant, and Lessee
under the Operative Agreements, and the rights of any Permitted Sublessee under
any Permitted Sublease, and the rights of Lessor under any assignment by Lessee
to Lessor of a Permitted Sublease (including, without limitation, the
Assignment of any International Interests by Lessee to Lessor, in respect of
any such Permitted Sublease);


 


(b) Lessor Liens attributable to Owner Trustee
(both in its capacity as trustee under the Trust Agreement and in its
individual capacity) or Owner Participant;


 


(c) the rights of others under agreements or
arrangements to the extent permitted by § 7.2, § 7.3, or § C of
Annex C;


 


(d) Liens for Taxes either not yet due or being
contested in good faith by appropriate proceedings if such Liens and such
proceedings do not involve any material risk of the sale, forfeiture, or loss
(including loss of use) of the Aircraft, the Airframe, any Engine or any of the
Returnable Records, or any interest therein or any discernible risk of criminal
liability or any material risk of civil penalty against Lessor or any Owner
Participant;


 


(e) materialmen’s, mechanics’, workers’,
repairers’, employees’, or other like Liens arising in the ordinary course of
business for amounts 


 






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the payment of which
either is not yet delinquent or is being contested in good faith by appropriate
proceedings, if such Liens and such proceedings do not involve any material
risk of the sale, forfeiture, or loss (including loss of use) of the Aircraft,
the Airframe, any Engine, or any of the Returnable Records, or any interest
therein or any discernible risk of criminal liability or any material risk of
civil penalty against Lessor or any Owner Participant;


 


(f) Liens arising out of any judgment or award
against Lessee or any Permitted Sublessee, if, within 45 days after the entry
thereof, that judgment or award is discharged or vacated, or has its execution
stayed pending appeal, or is discharged, vacated, or reversed within 45 days
after the expiration of such stay, and if during any such 45-day period there
is not, or any such judgment or award does not involve, any material risk of
the sale, forfeiture, or loss (including loss of use)of the Aircraft, the
Airframe, any Engine or any of the Returnable Records, or any interest therein
or any discernible risk of criminal liability or any material risk of civil
penalty against Lessor or any Owner Participant;


 


(g) any other Lien with respect to which Lessee
or any Permitted Sublessee provides a bond, cash collateral, or other security
that, in the reasonable opinion of Lessor, fully covers the obligations and
liabilities associated with such Lien; and


 


(h) only at the sole discretion of, and only upon
the prior written consent of, Lessor, any other Lien.


 


Lessee,
at its own cost and expense, shall promptly take or cause to be taken such
action as may be necessary duly to discharge and remove (by bonding or
otherwise) any Lien not excepted above that arises in respect of the Aircraft,
the Airframe, any Engine, any Part, any of the Returnable Records, or all or
any other part of the Trust Estate during the Term, and shall promptly notify
Lessor of, and provide to Lessor evidence of, such discharge and removal.


 






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7.                                      REGISTRATION;
OPERATION; POSSESSION AND SUBLEASING


 


7.1                               Registration
and Operation


 


7.1.1                     Registration
and Recordation


 


Lessee
shall cause the Aircraft to be, and at all times during the Term to remain,
duly registered with the FAA under the Transportation Code, in the name of
Lessor as owner and lessor (except to the extent that such registration under
the Transportation Code is prevented or lost because of Lessor’s or Owner
Participant’s failure to comply with the citizenship requirements for
registration of the Aircraft under the Transportation Code).  Lessor shall execute and deliver all such
documents as Lessee reasonably requests for the purpose of effecting and
continuing such registration.


 


7.1.2                     Markings


 


On
or reasonably promptly after the Delivery Date, Lessee will cause to be affixed
to, and maintained in, the cockpit of the Airframe and on each Engine, in each
case in a clearly visible location, a placard of a reasonable size and shape
bearing the legend set forth in Schedule 7. Such placards may be removed
temporarily, if necessary, in the course of maintenance of the Airframe or
Engines. If any such placard is damaged or becomes illegible, Lessee shall
promptly replace it with a placard complying with the requirements of this
§ 7.1.2. Lessee will not allow the name of any Person to be placed on the
Airframe or any Engine as a designation that reasonably would be interpreted as
a claim of ownership.


 


7.1.3                     Compliance
With Laws


 


Lessee
shall not, and shall not allow any other Person to, operate, use, maintain,
service, test, inspect, repair, or overhaul the Aircraft (a) in violation
of any Law binding on or applicable to Lessee or to the Aircraft, the Airframe,
any Engine, or any of the Aircraft Documents, or to the operation, use,
maintenance, service, repair, or overhaul of the Aircraft, the Airframe, or any
Engine, or (b) in violation of any airworthiness certificate, license, or
registration of any Government Entity relating to Lessee or to the Aircraft,
the Airframe, or any Engine, except (1) immaterial and non-recurring
violations with respect to which corrective measures are taken promptly by
Lessee or a Permitted Sublessee (as applicable) upon discovery thereof, and (2) to
the extent Lessee or any Permitted Sublessee is contesting the validity or
application of any such Law or requirement relating to any such certificate,
license, or registration in good faith in any reasonable manner which does not
involve any material risk of the sale, forfeiture, or loss (including loss of
use) of the Aircraft, the Airframe, any Engine, or any of the Returnable
Records, or any interest therein, or any discernible risk of criminal liability
or any material risk of civil penalty against Lessor or Owner Participant.


 






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7.1.4                     Operation


 


Lessee
agrees not to operate, use, or locate the Aircraft, the Airframe, or any Engine,
or allow the Aircraft, the Airframe, or any Engine to be operated, used, or
located, (a) in any area excluded from coverage by any insurance required
by the terms of § 10, except in the case of a requisition by the U.S.
Government where the U.S. Government provides an indemnity in lieu of such
insurance, or insurance from the U.S. Government, covering such area, in
accordance with § 10.3, or (b) in any recognized or threatened area
of hostilities unless fully covered in accordance with Annex D by war-risk
insurance as required by the terms of § 10 (including § 10.3), unless
in any case referred to in this § 7.1.4 the Aircraft is only temporarily
operated, used, or located in such area as a result of an emergency, equipment
malfunction, navigational error, hijacking, weather condition, or other similar
unforeseen circumstances, so long as Lessee diligently and in good faith
proceeds to remove the Aircraft from such area immediately.


 


7.1.5                     Grounding and
Storage


 


Subject
to § 7.1.4, and the other provisions hereof, Lessee may voluntarily store
or ground the Aircraft, Airframe or any Engine or Part if and for so long
as (i) the equipment so stored or grounded is fully covered by all
insurance required to be maintained under § 10 and Annex D hereof, and (ii) such
storage or grounding is effected and maintained in accordance with the
Maintenance Program, and with Airframe Manufacturer’s or Engine Manufacturer’s
recommended storage guidelines, as the case may be, and with all applicable
Laws, including, without limitation, all rules, regulations and directives of
the FAA.


 


7.2                               Possession


 


Lessee
will not, without the prior written consent of Lessor, sublease or otherwise in
any manner deliver, transfer, or relinquish possession of the Aircraft, the
Airframe, or any Engine, or install any Engine, or permit any Engine to be
installed, on any airframe other than the Airframe; provided,
that, (i) subject to the provisions of § 7.3, and (ii) if, but
only for so long as, all approvals, consents, or authorizations required to be
obtained from the Aviation Authority or any other Government Entity, in
connection with any sublease, delivery, transfer, or relinquishment of
possession described below, have been obtained and remain in full force and
effect, then Lessee may, without such prior written consent, do any of the
following:


 






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7.2.1                     Interchange
and Pooling


 


Subject or permit any Permitted Sublessee to subject
any Engine to normal interchange agreements or pooling agreements or
arrangements, in each case customary in the commercial airline industry and
entered into in writing by Lessee, or such Permitted Sublessee, in the ordinary
course of business of Lessee or such Permitted Sublessee; provided, no such agreement or arrangement contemplates or requires
the transfer of title to such Engine, but if Lessor’s title to any such Engine
is divested under any such agreement or arrangement, then such Engine shall be
deemed to have suffered an Event of Loss as of the date of such divestiture,
and consequently Lessee shall be required to replace such Engine with a
Replacement Engine meeting the requirements of, and in accordance with,
§ 9.


 


7.2.2                     Testing and
Service


 


Deliver or permit any Permitted Sublessee to deliver
possession of the Aircraft, Airframe or any Engine to the manufacturer thereof
or to any third-party maintenance provider, for testing, service, repair, maintenance,
or overhaul work on the Aircraft, Airframe or any Engine, or, to the extent
required or permitted by the terms of § D of Annex C, for alterations
or modifications in or additions to the Aircraft, the Airframe or any Engine
(and delivery of Engines may be accomplished by transport on licensed or bonded
common carriers qualified in the shipping and transport of such items).


 


7.2.3                     Transfer to
U.S. Government


 


Transfer, or permit any Permitted Sublessee to
transfer, possession of the Aircraft, the Airframe, or any Engine to the U.S.
Government pursuant to CRAF or otherwise, in which event Lessee shall
immediately notify Lessor and Owner Participant in writing of any such transfer
of possession and in such notification shall identify by name, address, and
telephone numbers the Contracting Office Representative(s) for the
Military Airlift Command of the United States Air Force to whom notices must be
given and to whom requests or claims must be made; and if such transfer
continues beyond the end of the Term, then the Aircraft, Airframe, or
Engine(s), as the case may be, shall be deemed to have suffered an Event of
Loss with the effect that Lessee would be required to pay, in accordance with
§ 9.6, the amounts specified in § 9.1.2.


 






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7.2.4                     Installation
of Engines on Owned Airframes


 


Install or permit any Permitted Sublessee to install
an Engine on an airframe owned by Lessee or such Permitted Sublessee, free and
clear of all Liens except (a) Permitted Liens, (b) Liens that do not
(at any time) apply to the Engines, and (c) the rights of third parties
under normal interchange or pooling agreements and arrangements of the type
permitted under § 7.2.1.


 


7.2.5                     Installation
of Engines on Other Airframes


 


Install or permit any Permitted Sublessee to install
an Engine on an airframe leased to Lessee or such Permitted Sublessee, or
purchased or owned by Lessee or such Permitted Sublessee subject to a security
agreement, conditional sale, or other secured financing arrangement, but only
if (a) such airframe is free and clear of all Liens except (1) the
rights of the parties to such lease or secured financing arrangement, covering
such airframe, and (2) Liens of the type permitted by clauses (a) and
(b) of § 7.2.4, and (b) Lessee or such Permitted Sublessee has
received from the lessor, secured party, or conditional seller, in respect of
such airframe, a written agreement (which may be a copy of the lease, security
agreement, conditional sale agreement, or other agreement covering such
airframe), whereby such Person agrees, for the effective and enforceable
benefit of Lessor and Owner Participant, that neither it nor its successors or
assigns will acquire or claim any right, title, or interest in, or Lien on,
such Engine by reason of the installation of such Engine on such airframe at
any time while such Engine is subject to this Lease or is owned by Lessor.


 


7.2.6                     Installation
of Engines on Financed Airframes


 


Install or permit any Permitted Sublessee to install
an Engine on an airframe owned by Lessee or such Permitted Sublessee, leased to
Lessee or such Permitted Sublessee, or purchased or owned by Lessee or such
Permitted Sublessee subject to a conditional sale or other security agreement
under circumstances where neither § 7.2.4 nor § 7.2.5 applies; provided, that any such installation shall be deemed an
Event of Loss with respect to such Engine as of the date of such installation,
with the effect that Lessee shall be required to replace such Engine with a
Replacement Engine meeting the requirements of, and in accordance with,
§ 9. Until § 9 has been fully complied with, Lessor’s interest in any



 






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such Engine shall
continue in full force and effect.


 


7.2.7                     Subleasing


 


With respect to the Aircraft, the Airframe, or any
Engine, if no Special Default exists, enter into a sublease with any Permitted
Air Carrier, or (if neither Airframe Manufacturer nor any of its Affiliates is
the Owner Participant) any Permitted Manufacturer, but only if:


 


(a)                                  Lessee
provides written notice to Lessor at least 15 days (30 days, if the Sublessee
is not a U.S. Air Carrier) before the sublease term begins;


 


(b)                                 at
the time that Lessee enters into such sublease, such Permitted Air Carrier or
Permitted Manufacturer shall not be subject to any bankruptcy, insolvency,
liquidation, reorganization, dissolution, or similar proceeding, and shall not
have substantially all of its property in the possession of any liquidator,
trustee, receiver, or similar Person;


 


(c)                                  any
such sublease shall provide for payment of rent, or any amount in lieu of rent,
no less frequently than monthly and all such rent shall be payable in advance;


 


(d)                                 any
such sublease


 


(1) shall
end before the date that is three months prior to the expiration of the Term;


 


(2) shall
include provisions for the registration, maintenance, operation, possession,
inspection, and insurance of the Aircraft that are the same in all substantive
respects as the applicable provisions of this Lease;


 


 (3) shall be expressly subject and
subordinate to all the terms of this Lease and to Lessor’s rights, powers, and
remedies hereunder, including Lessor’s rights under § 14 to repossess the
Aircraft, Airframe, Engines, and Returnable Records, and to terminate such
sublease if an Event of Default exists; and


 


(4) shall
include no purchase option respecting the Aircraft;


 






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(e)                                  in
connection with a sublease to a Permitted Foreign Air Carrier, all necessary
governmental approvals (if any) required for the Aircraft, Airframe, or Engine(s) to
be imported to the applicable jurisdiction shall have been obtained prior to
commencement of any such sublease, and any foreign exchange permits necessary
to allow all rent and other payments provided for under such sublease shall be
in full force and effect; and Lessee shall have provided to Lessor (if the same
is reasonably obtainable in such jurisdiction) a power-of-attorney, reasonably
satisfactory in form and substance to Lessor, permitting Lessor to exercise all
rights of Lessee under such sublease in such jurisdiction, upon the occurrence
and continuation of an Event of Default;


 


(f)                                    in
connection with a sublease to a Permitted Foreign Air Carrier or non-U.S.
Permitted Manufacturer, Lessee furnishes to Lessor a favorable opinion, in form
and substance reasonably satisfactory to Lessor, of counsel, selected by Lessee
and reasonably satisfactory to Lessor, located in the country of domicile of
such Permitted Foreign Air Carrier or non-U.S. Permitted Manufacturer, that


 


(1) the
terms of such sublease are legal, valid, and binding obligations of the parties
thereto, enforceable under the laws of such jurisdiction, subject to applicable
bankruptcy, reorganization, or similar laws affecting creditors’ rights
generally (provided that any such qualification, as applied to this part of the
opinion, or to the opinion as a whole, shall not qualify, condition or
otherwise limit the scope or application of that part of the opinion required
under subparagraph (6) of this paragraph (f);


 


(2) it
is not necessary for Owner Participant or Lessor to register or qualify to do
business in such jurisdiction, if not already so registered or qualified, as a
result of the proposed sublease;


 


(3) Lessor’s
title to the Aircraft, Airframe, and Engines will be recognized and enforceable
in such jurisdiction;


 


(4) such
jurisdiction maintains normal diplomatic relations with the United States, and
the Laws of such jurisdiction of domicile require fair compensation by the
government of such jurisdiction, payable in a currency freely convertible into
Dollars, for the loss of use of or title to the Aircraft, Airframe, or Engines
in 


 






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the event of the requisition by such government of
such use or title (unless Lessee provides insurance in the amounts required
with respect to hull insurance under § 10 covering the requisition of use
of or title to the Aircraft, Airframe, or Engines by the government of such
jurisdiction so long as the Aircraft, Airframe, or Engines are subject to such
sublease);


 


(5) such
Permitted Air Carrier’s or Permitted Manufacturer’s agreement that its rights
under the sublease are subject and subordinate to all the terms of this Lease
is enforceable against such Permitted Air Carrier or Permitted Manufacturer
under applicable law;


 


(6) the
Laws and the courts of such jurisdiction (aa) will recognize the rights and
interests of Lessor (including Lessor’s title to the Aircraft), and of Owner
Participant, as such rights and interests are described in, and are intended to
be created under, the Operative Agreements, and (bb) will provide that there
are no possessory rights in favor of Lessee, any Permitted Sublessee, or any
third party (including any Government Entity) which would, upon bankruptcy or
other default by Lessee or any Permitted Sublessee, prevent or delay the return
of the Aircraft, Airframe, Engines, Parts or Returnable Documents to Lessor in
accordance with and when required or permitted by the terms of this Lease, or,
if such possessory rights exist, they are not materially greater than those
available to lessees of newly manufactured large passenger aircraft (assuming
such lessees to be U.S. Air Carriers) under then current United States Law
(including Section 1110), and there are no procedural or other impediments
to the return of the Aircraft to Lessor materially greater than under United
States Law (including Section 1110), and there is no material impediment
under the Laws of such jurisdiction to the enforceability (other than immaterial
differences in procedures of enforcement) of the rights and remedies of Lessor
provided for in and under the Operative Agreements;


 


(7) there
is no tort liability imposed on lenders or lessors having no operational
interest in the Aircraft, Airframe, or Engine(s), except liabilities that
Lessee or a Permitted Sublessee has agreed to insure against at its expense to
the reasonable 


 






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satisfaction of Owner Participant; and


 


(8) neither
Lessor nor Owner Participant shall be subjected to any adverse tax consequences
as a result of such sublease, unless Lessee is required to indemnify such Person,
under § 9.2 of the Participation Agreement (or otherwise agrees to
indemnify such Person pursuant to a separate indemnity agreement reasonably
satisfactory to such Person) against all such adverse tax consequences;


 


(g)                                 in
connection with any sublease to any U.S. Air Carrier for a term of more than
three months (including any permitted renewals or “back-to-back” or “replacement”
lease arrangements), Lessee shall provide Lessor and Owner Participant an
opinion of counsel (which may be from counsel to the subject sublessee, and may
be the same opinion to be given to Lessee, with the addition of Lessor and
Owner Participant as addressees of such opinion) in form and substance
reasonably satisfactory to Lessor and Owner Participant as to, among other things,
the due authorization, execution and delivery of such sublease (and as to such
other matters, including, without limitation, the legality, validity, binding
effect and enforceability of such sublease, as Lessee may, in using its
commercially reasonable efforts, obtain for its benefit and the benefit of
Lessor and Owner Participant); provided that any such opinion, as provided to
Lessor and Owner Participant, shall be no less favorable in form or substance
than any opinion given to Lessee or to any other party in connection with such
sublease transaction;


 


(h)                                 Lessee
furnishes to Lessor and Owner Participant evidence reasonably satisfactory to
Lessor that the insurance required by § 10 remains in effect;


 


(i)                                     all
necessary documents are duly filed, registered, or recorded in such public
offices as are required fully to establish, protect, and preserve the title of
Lessor in the Aircraft, Airframe, and Engines;


 


(j)                                     no
Sublessee may sub-sublease or otherwise Transfer the Aircraft, the Airframe, or
any Engine, except that a Permitted Manufacturer may sub-sublease to any
Permitted Sublessee to whom a sublease would be permitted under this
§ 7.2; provided, that (i) such
sub-sublease shall not permit any sub-sub-subleasing of the Aircraft, the
Airframe, or any Engine (and Lessee shall ensure that the same does not


 






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occur), (ii) Lessee shall comply, and shall cause such
sub-sublease to comply, with all requirements of this § 7.2 as if such
sub-sublease were a direct sublease from Lessee to the sub-sublessee, and (iii) such
sub-sublease meets the requirement of a Permitted Sublease;


 


(k)                                  the
Permitted Sublessee shall not be eligible to assert, or shall have effectively
waived, any right to sovereign immunity;


 


(l)                                     Lessee
shall reimburse Lessor and Owner Participant for all of their reasonable
out-of-pocket fees and expenses (including reasonable fees and disbursements of
counsel) incurred in connection with any such sublease; and


 


(m)                               [RESERVED].


 


In addition to the foregoing requirements, Lessee shall deliver to
Lessor and Owner Participant: (i) on or before the date specified in
§ 7.2.7(a), a notice stating the identity of the sublessee and a copy of
the proposed sublease agreement, (ii) on or before the date specified in
§ 7.2.7(a), an officer’s certificate of a Responsible Officer of Lessee
stating that no Special Default exists and that such sublease complies with
this § 7.2, (iii) on or before the commencement of the Permitted
Sublease, the registration of the International Interests of Lessee constituted
under such Permitted Sublease (if, in Lessor’s reasonable judgment, such
registrations are appropriate or desirable), (iv) on or before the
commencement of the Permitted Sublease, the sublease assignment referred to in
§ 7.4 and (x) financing statements or similar documents under the
applicable Laws of the country of the Permitted Sublessee confirming the
perfected first-priority security interest of Lessor in such Permitted
Sublease, duly executed and delivered, in form and substance reasonably
satisfactory to Lessor and Owner Participant, and duly filed or recorded in all
appropriate places, and (y) such filings and registrations on the
International Registry as may, in Lessor’s reasonable judgment, be appropriate
or desirable with respect to Lessee’s assignment to Lessor of all Associated
Rights relating to Lessee’s International Interests constituted under such
Permitted Sublease, and (z) such evidence as may be reasonably
satisfactory to Lessor that no other filing or registration has been made on
the International Registry that would have priority over Lessor’s interests as
assignee of such Associated Rights, and (iv) on or before the commencement
of the Permitted Sublease, the consent of the Permitted Sublessee to (x) the
registration of the International Interests of Lessee constituted under such
Permitted Sublease (if, in Lessor’s reasonable judgment, such registrations are
appropriate or desirable, and (y) the 


 






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assignment of its Permitted Sublease pursuant to § 7.4, and the
registration on the International Registry of such assignment (as described
above in clause (iv)(y)), in each case in a form reasonably satisfactory to
Lessor.  Lessee shall pay all reasonable
out-of-pocket costs and expenses (including reasonable counsel fees and
disbursements) of Lessor and Owner Participant in connection with any sublease
or other transfer pursuant to this § 7.2. 
No sublease or other transfer of any Airframe, Engine, or Part shall
in any way discharge or diminish any of Lessee’s obligations or liabilities
under this Lease or under any other Lessee Operative Agreement.


 


7.3                               Certain
Limitations on Subleasing or Other Relinquishment of Possession


 


Notwithstanding
anything to the contrary in § 7.2:


 


(a)                                  The
rights of any Person who receives possession of the Aircraft in accordance with
§ 7.2 shall be subject and subordinate to all the terms of this Lease, and
to Lessor’s rights, powers, and remedies hereunder, including (1) Lessor’s
right to repossess the Aircraft pursuant to § 14, (2) Lessor’s right
to terminate and avoid such sublease, delivery, transfer, or relinquishment of
possession if an Event of Default has occurred and is continuing, and (3) the
right to require such Person to deliver the Aircraft, the Airframe, and Engines
subject to such transfer forthwith if an Event of Default has occurred and is
continuing.


 


(b)                                 Lessee
shall remain primarily liable hereunder for the performance of all the terms of
this Lease to the same extent as if such transfer had not occurred, and no
transfer of possession of the Aircraft, the Airframe, any Engine, any Part, or
any Aircraft Document shall in any way discharge or diminish any of Lessee’s
obligations to Lessor hereunder or under any other Operative Agreement.


 


(c)                                  Lessee
shall ensure that no sublease, delivery, transfer, or relinquishment permitted
under § 7.2 shall affect the United States registration of the Aircraft.


 


(d)                                 Any
event that constitutes, or would with the passage of time constitute, an Event
of Loss under clauses (3), (4), (5), and (6) of the definition of Event of
Loss set forth in Annex A hereto shall not be deemed to violate the provisions
of § 7.2 hereof.


 






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(e)                                  No
Wet Lease shall constitute a delivery, transfer, or relinquishment of
possession for purposes of § 7.2, nor shall it be prohibited by the terms
hereof.


 


7.4                               Security
Assignment of Subleases


 


As security for Lessee’s due and punctual payment of all Rent and
performance of all of its other covenants and obligations in the Operative
Agreements, Lessee hereby grants to Lessor a first-priority security interest
in all of Lessee’s right, title, and interest in and to each Permitted Sublease
of any Aircraft, Airframe, or Engine, and all payments, including payments of
rent, insurance proceeds (other than public liability insurance proceeds), and
other amounts due or to become due thereunder. 
Lessee shall enter into a “Sublease Assignment”, in form and substance
reasonably satisfactory to Lessor, with respect to each Sublease.  In furtherance of the provisions of this
§ 7.4; Lessee agrees that each Permitted Sublease shall be accompanied by
such Uniform Commercial Code financing statements, FAA filings, filings and
registrations on the International Registry and other filings and documents as
shall, in Lessor’s reasonable opinion, be required to perfect and protect the
security interest of Lessor in such Permitted Sublease.


 


7.5                               Lessor’s
Interest in Certain Engines


 


If Lessee or a
Permitted Sublessee shall have received from the lessor, conditional seller, or
secured party, in respect of any airframe leased to, or owned by, Lessee or any
Permitted Sublessee and subject to a lease, conditional sale, or other security
agreement, a written agreement complying with clause (b) of
§ 7.2.5, then Lessor agrees, for the benefit of each lessor, conditional
seller, or secured party of any engine leased to, purchased by, or owned by
Lessee or such Permitted Sublessee and subject to a lease, conditional sale, or
other security agreement, that Lessor will not acquire or claim, as against
such lessor, conditional seller, or secured party, any right, title, or
interest in such engine as the result of the installation of such engine on the
Airframe at any time while such engine is subject to such lease, conditional
sale, or other security agreement and owned by such lessor or conditional
seller or subject to a security interest in favor of such secured party.


 






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8.                                      MAINTENANCE;
REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS, AND ADDITIONS;
OTHER LESSEE COVENANTS


 


8.1                               Maintenance;
Replacement and Pooling of Parts; Alterations, Modifications, and Additions


 


At all times
during the Term, Lessee shall comply with (or cause to be complied with) each
of the provisions of Annex C, which provisions are hereby incorporated by
this reference as if set forth in full herein.


 


8.2                               Information,
Certificates, Notices, and Reports


 


8.2.1                     Financial
Information


 


To the extent not
otherwise publicly available, Lessee will furnish to Lessor and Owner
Participant:


 


(a)                                  within
60 days after the end of each of the first three fiscal quarters in each fiscal
year of Lessee, a consolidated balance sheet of Lessee as of the end of such
quarter, and related statements of income and cash flows for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarter, setting forth in each case in comparative form the corresponding figures
for the corresponding period in the preceding fiscal year, prepared in
accordance with GAAP; provided, that
while Lessee is subject to the reporting requirements of the Exchange Act, a
copy of Lessee’s report on Form 10-Q for such fiscal quarter (together
with all documents not available on EDGAR (or its successor) containing such
financial information incorporated by reference therein, if not previously
delivered to Lessor and Owner Participant) will satisfy this clause (a).


 


(b)                                 within
120 days after the end of each fiscal year of Lessee, a consolidated balance
sheet of Lessee as of the end of such fiscal year and related statements of
income and cash flows of Lessee for such fiscal year, in comparative form with
the preceding fiscal year, prepared in accordance with GAAP, together with a
report of Lessee’s independent certified public accountants with respect to
their audit of such financial statements; provided, that
while Lessee is subject to the reporting requirements of the Exchange Act, a
copy of Lessee’s report on Form 10-K for such fiscal year (together with
all documents not available on 


 






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EDGAR (or its successor) containing such financial information
incorporated by reference therein, if not previously delivered to Lessor and
Owner Participant) will satisfy this clause (b).


 


8.2.2                     Annual
Certificate


 


Within 120 days
after the close of each fiscal year of Lessee, Lessee shall deliver to Lessor
and Owner Participant an Officer’s Certificate of Lessee to the effect that
such officer is familiar with or has reviewed or caused to be reviewed the
relevant terms of this Lease and the other Operative Agreements, and has made,
or caused to be made under his or her supervision, a review of the transactions
and condition of Lessee during the preceding fiscal year, and that following
such review such officer does not have knowledge of the existence as at the
date of such certificate of any Default (or, if to such officer’s knowledge any
Default existed or exists, specifying the nature and period of existence
thereof and the action Lessee has taken or is taking or proposes to take with
respect thereto).


 


8.2.3                     SEC Reports


 


To the extent not
otherwise publicly available, Lessee will furnish to Lessor and Owner
Participant:


 


(a)                                  promptly
after filing with the SEC, copies of Lessee’s annual reports on Form 10-K
(including all corresponding publicly-available annual reports to stockholders,
if not previously furnished), if any, and quarterly reports on Form 10-Q,
if any (in each case, excluding exhibits unless any such recipient requests
otherwise); and


 


(b)                                 if
provided by Lessee from time to time to aircraft lessors and other aircraft
creditors generally, then (1) promptly after filing with the SEC, copies
of current reports on Form 8-K, or any similar reports filed with the SEC
(in each case, excluding exhibits unless any such recipient requests otherwise),
and (2) promptly upon distribution thereof, copies of all periodic reports
furnished by Lessee to its respective stockholders generally.


 


8.2.4                     Notice of
Default


 


Lessee will furnish to
each of Lessor and Owner Participant, immediately upon acquiring Actual
Knowledge that a Default has occurred, a certificate of 


 






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Lessee, signed by any such officer of Lessee, describing such Default
in reasonable detail, with a statement describing the action Lessee has taken
or is taking or proposes to take with respect thereto.


 


8.2.5                     Information
for Filings


 


Upon the
reasonable request of Lessor or Owner Participant, Lessee shall promptly
furnish to Owner Participant and Lessor such information (other than with
respect to the citizenship of Owner Participant and Lessor) within Lessee’s or
any Permitted Sublessee’s possession, or reasonably available to or obtainable
by Lessee or such Permitted Sublessee, as may be required to enable Lessor to
file in a timely manner any reports required to be filed by it as lessor under
the Lease or to enable Owner Participant to file in a timely manner any reports
required to be filed by it as the beneficiary of the Trust Estate, in either
case, with any Government Entity because of, or in connection with, the
interest of Owner Participant or Lessor in the Aircraft, the Airframe, the
Engines, this Lease, or any other part of the Trust Estate; provided, that, with respect to any such information which
Lessee reasonably deems commercially sensitive or confidential, Owner
Participant or Lessor (as applicable) shall afford Lessee a reasonable
opportunity to seek from any such Government Entity a waiver of the obligation
of Owner Participant or Lessor to file any such information, or shall consent
to the filing of such information directly by Lessee in lieu of filing by Owner
Participant or Lessor, and if any such waiver or consent is evidenced to the
reasonable satisfaction of Owner Participant or Lessor (as applicable), then
Lessee shall not be required to furnish such information to Owner Participant
or Lessor.


 


8.2.6                     Other
Information


 


Lessee shall
promptly furnish to Lessor and Owner Participant from time to time such
information with respect to Lessee, the Aircraft, the Airframe, the Engines,
the Aircraft Documents, or Lessee’s financial condition, or otherwise relating
to the transactions or matters contemplated herein and in the other Operative
Agreements, in each case if and to the extent within Lessee’s or any Permitted
Sublessee’s possession, or reasonably available to or obtainable by Lessee or
such Permitted Sublessee, as Lessor or Owner Participant reasonably requests.


 






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8.3                               Lessee
Undertakings in Other Documents


 


Lessee hereby
agrees with Lessor that it shall perform the agreements, covenants, and
indemnities set forth in the Participation Agreement and the other Operative
Agreements, and hereby restates Lessee’s representations and warranties set
forth in such documents, in each case as fully and to the same extent and with
the same force and effect as if such agreements, covenants, indemnities,
representations and warranties were set forth in full in this § 8.3.


 


9.                                      LOSS,
DESTRUCTION, REQUISITION, ETC.


 


9.1                               Event
of Loss to the Aircraft


 


9.1.1                     Notice and
Election


 


(a)                                  If
an Event of Loss to the Airframe (and any Engine(s) installed thereon)
occurs, Lessee shall promptly (and in any event within 15 days after such
occurrence, or, if later, within 15 days after the determination that an Event
of Loss has occurred) notify Lessor and Owner Participant of such Event of
Loss. Within 45 days after such occurrence or determination, Lessee shall give
to Lessor and Owner Participant written notice of Lessee’s election to make
payment in respect of such Event of Loss, as provided in § 9.1.2, or to
replace the Airframe and any such Engine(s) as provided in § 9.1.3.


 


(b)                                 Lessee’s
failure to give the notice of election described in § 9.1.1(a) shall
be deemed to be an election of the option set forth in § 9.1.2. In
addition, Lessee shall not be entitled to elect the option set forth in
§ 9.1.3 if, at the time Lessor or Owner Participant receives such notice
from Lessee, a Special Default exists.


 


(c)                                  For
purposes of § 9.1.2, an Event of Loss to the Airframe shall be deemed to
constitute an Event of Loss to the Aircraft. For purposes of § 9.1.3, any
Engine not actually suffering an Event of Loss shall not be required to be
replaced.


 


(d)                                 If
insurance proceeds are received, with respect to any Event of Loss, at any time
prior to (1) the date of Lessee’s election, pursuant to paragraph (a) of
this § 9.1, under § 9.1.2 or § 9.1.3, or (2) the date upon
which any amounts are required to be paid by Lessee under § 9.1.2(a) or
§ 9.1.3(c), then such proceeds shall immediately be paid to Lessor to be
held as security 


 






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for Lessee’s obligations under this § 9.1.  Any amounts paid to Lessor pursuant to this
paragraph shall be credited against any amounts subsequently payable to Lessor
under § 9.1.2(a) or § 9.1.3(c), whichever is applicable.


 


9.1.2                     Payment of
Loss and Termination of Lease


 


(a)                                  If
Lessee elects, in accordance with § 9.1.1, to make payment in respect of
any such Event of Loss, then Lessee shall pay, in the manner and in funds of
the type specified in § 3.3, on the SLV Date next following the earlier of
(x) the 150th day following the date of the occurrence of such Event of
Loss, and (y) the second Business Day following the receipt of the
insurance proceeds with respect to such occurrence (but in any event not
earlier than the date of Lessee’s election under § 9.1.1 to make payment
under this § 9.1.2)(such SLV Date, referred to herein as the “SLV Payment
Date”), Lessee shall pay to Lessor:


 


(1)                                  all
unpaid Basic Rent payable at any time before the SLV Payment Date (it being
understood and agreed that if such SLV Payment Date is also a Payment Date, no
Basic Rent shall be payable on and as of such Date); plus


 


(2)                                  the
Stipulated Loss Value of the Aircraft computed as of the SLV Payment Date; plus


 


(3)                                  all
Transaction Expenses (excluding brokerage commissions and similar expenses
payable to any Person not retained by Lessee) incurred by Lessor and Owner
Participant in connection with such Event of Loss and the related termination
of the Lease; plus


 


(4)                                  to
the extent not taken into account in the foregoing clauses (2) and (3),
all Supplemental Rent due by Lessee to Lessor, Owner Participant or any other
Person entitled thereto, and remaining unpaid under the Lease or any other
Operative Agreement; plus


 


(5)                                  as
provided in § 3.2.2 of the Lease, interest on the amounts specified in the
foregoing clauses (1) through (4) at the Past-Due Rate from and
including the date on which any such amount was due to the date of payment of
such amount in full;


 


provided, that,
(x) if a Payment Date shall occur at any time before the SLV Payment Date,
then Lessee shall pay the Basic Rent due on such Payment Date, and (y) if
a Payment Date shall occur on the SLV Payment Date, or on a 


 






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date occurring after the
SLV Payment Date but before the date of payment of the amounts specified above
in this clause (a), then Lessee shall pay the Basic Rent due on such Payment
Date, and thereupon such amounts payable under this clause (a) shall be
reduced by the amount of such payment of Basic Rent.


 


(b)                                 Upon
payment in full of all amounts described in the foregoing § 9.1.2(a), the
Term for the Aircraft shall end, and Lessor will transfer the Aircraft to
Lessee, as-is and where-is, and subject to any insurer’s salvage rights, but
otherwise in the manner described in § 4.5.


 


9.1.3                     Replacement
of Airframe and Engines


 


(a)                                  If
Lessee elects, in accordance with § 9.1.1, to replace the Airframe and any
Engine(s) suffering the Event of Loss, then Lessee shall, as promptly as
possible and in any event within 180 days after the occurrence of such Event of
Loss, convey or cause to be conveyed to Lessor, in compliance with § 9.3
and as replacement for the Airframe and any such Engine(s), title to a
Replacement Airframe (which shall comply with § 9.1.3(b)), and for each
such Engine a Replacement Engine, in each case free and clear of all Liens
other than Permitted Liens not of record. If Lessee makes such election, but
for any reason does not effect such replacement within such time period and in
compliance with the requirements set forth in § 9.3, then Lessee shall be
deemed to have initially made the election set forth in § 9.1.2 with the
effect that Lessee shall pay, in the manner and in funds of the type specified
in § 3.3, the amounts required under, and in accordance with,
§ 9.1.2.


 


(b)                                 Any
such Replacement Airframe shall be an airframe that is the same model as the
Airframe to be replaced thereby, or an improved model, and that has a value,
utility, and remaining useful life (without regard to hours or cycles remaining
to the next regular maintenance check) at least equal to, and is in at least as
good operating condition as, the Airframe to be replaced thereby (assuming that
such Airframe was of the value and utility and in the condition and repair
required by the terms hereof immediately prior to the occurrence of the Event
of Loss). Any such Replacement Engine shall meet the requirements of, and be
conveyed by Lessee to Lessor in accordance with, § 9.2 (other than the
notice requirement set forth in § 9.2.1).


 


(c)                                  If
Lessee elects, in accordance with § 9.1.1, to replace the Airframe and any
Engine(s) suffering the Event of Loss, and has not effected such
replacement within 60 days after the Event of Loss occurred, then Lessee shall
immediately pay to Lessor the amounts required pursuant to § 9.1.2(a), to
be 


 






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held as security for Lessee’s obligations under this § 9.1. If
Lessee elects, under § 9.1.1, the replacement option in § 9.1.3, and
pays the deposit required by the preceding sentence, and has not effected such
replacement within 180 days, then Lessee shall be deemed to have originally
elected the option set forth in § 9.1.2 and such deposit shall be applied
to Lessee’s obligations under § 9.1.2, and Lessee shall pay any remaining
amounts due under § 9.1.2.


 


9.2                               Event
of Loss to an Engine; Engine Exchanges


 


9.2.1                     Notice


 


If an Event of
Loss to an Engine occurs under circumstances in which no Event of Loss to the
Airframe occurs, Lessee shall promptly (and in any event within 15 days after
acquiring Actual Knowledge of such occurrence) notify Lessor and Owner
Participant of such Event of Loss.


 


9.2.2                     Replacement
of Engine


 


Upon the
occurrence of any such Event of Loss, Lessee shall, within the time period set
forth below, convey or cause to be conveyed to Lessor, in compliance with
§ 9.3 and as replacement for the Engine with respect to which such Event
of Loss occurred, title to a Replacement Engine, free and clear of all Liens
other than Permitted Liens not of record. Such Replacement Engine shall be an
engine manufactured by Engine Manufacturer that is the same model as the Engine
to be replaced thereby, or an improved model (but, in either event, the same
model as the other Engine then subject to this Lease), and that has the same or
better modification status as the Engine to be replaced thereby, and that is
suitable for installation and use on the Airframe.


 


Any such
Replacement Engine shall also be required to have performance and durability
characteristics, and a value and utility at least equal to, and a remaining
useful life (without regard to hours or cycles remaining to the next regular
maintenance check) substantially comparable to, and to be in at least as good
operating condition as, the Engine to be replaced thereby (assuming that such
Engine was of the value and utility and in the condition and repair required by
the terms hereof immediately prior to the occurrence of the Event of
Loss).  Any such replacement shall be
effected promptly after the occurrence of such Event of Loss but in any event
within 60 days thereafter, or within such longer period (not to exceed 120 days
thereafter) if such longer period is reasonably necessary in order to obtain a
Replacement Engine on commercially reasonable terms.


 






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9.3                               Conditions
to any Replacement


 


9.3.1                     Documents


 


Before or at the
time of conveyance of title to any Replacement Airframe or Replacement Engine
to Lessor, Lessee shall promptly take each of the following actions, and shall
promptly furnish the following agreements, instruments, certificates, and
documents to (and in each case reasonably satisfactory in form and substance
to) Owner Participant:


 


(a)                                  furnish
Lessor with an FAA bill of sale (in the case of a Replacement Airframe) and a
full warranty (as to title) bill of sale duly conveying to Lessor such
Replacement Airframe or Replacement Engine, in form and substance reasonably
satisfactory to Lessor (together with such evidence of title as Lessor may
reasonably request), and cause such Replacement Airframe to be duly registered
in the name of Lessor pursuant to the Transportation Code, and further cause
such filings to be made on the International Registry as shall, in Lessor’s
reasonable judgment, be necessary and sufficient to register such full warranty
bill of sale as a contract of sale on the International Registry and otherwise
reflect such transfer of title, in such Replacement Airframe or Replacement
Engine, as the case may be, to Lessor;


 


(b)                                 cause
(1) a supplement to this Lease, in form and substance reasonably
satisfactory to Lessor, subjecting such Replacement Airframe or Replacement
Engine to this Lease, duly executed by Lessee, to be delivered to Lessor for
execution, and, upon such execution, to be filed for recordation with the FAA
pursuant to the Transportation Code (or such other applicable law referred to
in clause (a)), and (2) cause such filings to be made on the International
Registry as shall, in Lessor’s reasonable judgment, be necessary and sufficient
to register the interests of Lessor, in such Replacement Airframe or
Replacement Engine, as the case may be, under this Lease as an International
Interest, and (3) such Financing Statements and other filings, as Lessor
reasonably requests, in form and substance reasonably satisfactory to Lessor,
duly executed by Lessee and (to the extent applicable) Lessor (and Lessor shall
execute and deliver the same), to be filed in such location(s) as any such
party reasonably requests;


 


(c)                                  furnish
such evidence of compliance with the insurance provisions of § 10 with
respect to such Replacement Airframe or Replacement Engine as Owner Participant
reasonably requests;


 






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(d)                                 furnish
an opinion or opinions of Lessee’s counsel (which may be Lessee’s internal
legal department) reasonably satisfactory to Owner Participant and addressed to
Lessor and Owner Participant to the effect that (1) such full warranty
bill of sale referred to in § 9.3.1(a) constitutes an effective
instrument for the conveyance of title to the Replacement Airframe or
Replacement Engine, (2) in the case of a Replacement Airframe, Lessor will
be entitled to the benefits of Section 1110 (or any successor provision of
federal bankruptcy Law) with respect to such Replacement Airframe, (3) in
the case of a Replacement Engine, Lessor will be entitled to the benefits of Section 1110
(or any successor provision of federal bankruptcy Law) with respect to such
Replacement Engine, provided, that
the opinion referred to in this clause (3) need not be delivered with
respect to a Replacement Engine replaced as a result of an Event of Loss to the
extent that, immediately before such replacement, (i) the benefits of Section 1110
(or any successor provision of federal bankruptcy Law) were not, solely by
reason of a change in law, available to Lessor, and (ii) no engine that
would qualify as a Replacement Engine, and that would afford to Lessor the
benefits of Section 1110 (or any successor provision of federal bankruptcy
Law), is available to Lessee on commercially reasonable terms, and (4) to
such further effect as Lessor or Owner Participant may reasonably request;


 


(e)                                  furnish
an opinion of Lessee’s aviation law counsel reasonably satisfactory to Owner
Participant and addressed to Lessor and Owner Participant as to (1) the
due registration of any such Replacement Airframe, the absence of Liens of
record at the FAA and on the International Registry as to any such Replacement
Airframe and Replacement Engine(s), and (2) the due filing for recordation
of each supplement to this Lease with respect to such Replacement Airframe or
Replacement Engine under the Transportation Code, and (iii) with respect
to the full warranty bill of sale conveying to Lessor title in such Replacement
Airframe or Replacement Engine, as the case may be, the registration on the
International Registry of such bill of sale as a contract of sale and such
other documents as may be necessary to reflect such transfer of title, and (iv) the
registration on the International Registry of the interests of Lessor, in such
Replacement Airframe or Replacement Engine, as the case may be, under this
Lease as an International Interest, and (v) the due filing of any
Financing Statements or other filings reasonably requested by Lessor with
respect to such Replacement Airframe or Replacement Engine under applicable Law
and as to such other matters as Owner Participant may reasonably request;


 






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(f)                                    with
respect to any Replacement Airframe, furnish an opinion of tax counsel, selected
by Owner Participant and reasonably satisfactory to Lessee, as to the tax
consequences to Owner Participant of any such replacement;


 


(g)                                 with
respect to the replacement of any Engine, furnish a certificate of a qualified
aircraft engineer (who may be an employee of Lessee) certifying that such
Replacement Engine is an engine manufactured by Engine Manufacturer that is the
same model as the Engine to be replaced thereby, or an improved model (but, in
either event, the same model as the other Engine then subject to this Lease),
and that has the same or better modification status as the Engine to be
replaced thereby, and that is suitable for installation and use on the
Airframe, and that has performance and durability characteristics, and a value
and utility at least equal to, and a remaining useful life (determined without
regard to hours or cycles remaining to the next regular maintenance check)
substantially comparable to, the Engine so replaced (assuming that such Engine
was of the value and utility and in the condition and repair required by the
terms hereof immediately prior to the occurrence of the Event of Loss);


 


(h)                                 with
respect to the replacement of the Airframe, furnish a certified report of a
qualified independent aircraft Appraiser, reasonably satisfactory to Owner
Participant, setting forth such Appraiser’s opinion as to the fair market
value, as of the date of conveyance hereunder, of such Replacement Airframe,
and certifying that such Replacement Airframe has performance and durability
characteristics, and a value and utility (including equivalent current value
and estimated residual value at the end of the Term at least equal to, and a
remaining useful life substantially comparable to,  the Airframe so replaced (assuming that the
Airframe was of the value and utility and in the condition and repair required
by the terms hereof immediately prior to the occurrence of the Event of Loss);


 


(i)                                     assign
to Lessor the benefit of all assignable manufacturers, and vendors, warranties
with respect to such Replacement Airframe and such Replacement Engine(s),
provided that Lessor shall, on the terms set forth in  § 4.2, reassign to Lessee the benefits
of such warranties during the Term;


 


(j)                                     furnish
Lessor and Owner Participant with an Officer’s Certificate of Lessee certifying
compliance with this § 9 and, with respect to the replacement of the
Airframe, to the effect that, upon consummation of such replacement, no Special
Default will exist; and


 






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(k)                                  take
such other action and furnish such other certificates and documents as Lessor
or Owner Participant reasonably requests in order that such Replacement
Airframe and any such Replacement Engine(s) be properly titled in Lessor
free and clear of all Liens (except Permitted Liens not of record), and leased
hereunder, to the same extent as initially required under the Operative
Agreements with respect to the Airframe and any Engine(s) so replaced.


 


Lessee shall cause an airworthiness certificate, with
respect to such Replacement Airframe, to be duly issued under the
Transportation Code promptly after such substitution.


 


9.3.2                     Other
Conditions


 


Lessee shall not be entitled to replace the Airframe
under § 9.1.3 and this § 9.3, and shall be deemed to have initially
made the election set forth in § 9.1.2, if at the time of such replacement


 


(a)                                  any
Special Default exists; or


 


(b)                                 under
applicable Law and notwithstanding any actions by Lessor and Lessee under
§ 9.3.3(a), Lessor shall for any reason not be entitled to the benefits of
Section 1110 with respect to such Replacement Airframe or with respect to
any Replacement Engine which replaces an Engine installed on the Airframe at
the time of such Event of Loss.


 


9.3.3                     Other
Obligations


 


(a)                                  Lessor
and Lessee agree that, when and after any Replacement Airframe becomes the
Airframe hereunder, and when and after any Replacement Engine becomes an Engine
hereunder, this Lease shall continue to be, and shall be treated as, a lease
for U.S. federal income tax purposes of such Replacement Airframe and such
Replacement Engine. Without limiting the foregoing, Lessee and Lessor intend
that Lessor shall, in all events, be entitled to the rights and benefits of Section 1110
(or any successor provision of federal bankruptcy Law) with respect to any
Replacement Airframe or Replacement Engine (unless, with respect to a
Replacement Engine replaced as a result of an Event of Loss, immediately before
such replacement, (i) the benefits of Section 1110 (or any successor
provision of federal bankruptcy Law) shall not, solely by reason of a change in
law, be available to Lessor, and (ii) no engine that would qualify as a
Replacement Engine, and that would afford to 


 






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Lessor the benefits of Section 1110 (or any successor provision of
federal bankruptcy Law), is available to Lessee on commercially reasonable
terms), and Lessee and Lessor shall cooperate and take such action as the other
may reasonably request so as to ensure that Lessor shall be entitled to such
rights and benefits.


 


(b)                                 No
Event of Loss to an Engine, or to an Airframe, shall result in, or otherwise
allow or permit (other than as provided in § 9.1.2(b)), any reduction,
deferral, discharge, or other change in the timing or amount of any Rent
payable by Lessee hereunder or any other amount payable by Lessee under any
other Operative Agreement, and (subject to such § 9.1.2(b)) Lessee shall
pay all such Rent and other amounts as though such Event of Loss had not
occurred.


 


9.4                               Conveyance
to Lessee


 


Upon full compliance
by Lessee with the applicable terms of §§ 9.1.3, 9.2, and 9.3, Lessor will
transfer to Lessee the Airframe or Engine(s), as applicable, with respect to
which such Event of Loss occurred, in accordance with § 4.5.


 


9.5                               Application
of Payments


 


Any amounts  received at any time by Lessor, Lessee, or
any Permitted Sublessee, in respect of any Event of Loss (it being understood
that amounts received in respect of property damage or loss not constituting an
Event of Loss are provided for in § 10), from or on behalf of (i) any
Government Entity providing any insurance or indemnity required to be
maintained by Lessee pursuant to § 10.3, or (ii) any insurer
providing any insurance required to be maintained by Lessee pursuant to
§ 10, shall in each such case be paid over to and held by Lessor, to the
extent provided in § B of Annex D, and shall be applied as follows:


 


9.5.1                     Replacement
of Airframe and Engines


 


If such amounts
are received with respect to the Airframe or any Engine(s) installed
thereon at the time of such Event of Loss, upon Lessee’s compliance with the
applicable terms of § 9 with respect to the Event of Loss for which such
amounts are received, such amounts shall, subject to § 9.9, be paid over
to, or (if received by Lessee after such compliance) retained by, Lessee.


 






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9.5.2                     Loss of
Engine


 


If such amounts
are received with respect to an Engine (other than an Engine installed on the
Airframe when the Airframe suffers an Event of Loss), upon Lessee’s compliance
with the applicable terms of § 9 with respect to the Event of Loss for
which such amounts are received, such amounts shall, subject to § 9.9, be
paid over to, or (if received by Lessee after such compliance) retained by,
Lessee.


 


9.5.3                     Payment of
Loss


 


If such amounts
are received, in whole or in part, with respect to the Airframe, and Lessee
makes, has made or is deemed to have made the election set forth in
§ 9.1.2, such amounts shall be applied as follows:


 


(a)                                  first, if the sum described in § 9.1.2 has not then
been paid in full by Lessee, such amounts shall be applied by to the extent
necessary to pay in full such sum; and


 


(b)                                 second, the remainder, if any, shall, subject to § 9.9,
be paid to Lessee.


 


9.6                               Requisition
of Aircraft for Use


 


If any Government
Entity requisitions the use of the Airframe and the Engines or engines
installed thereon, and if the requisition does not constitute an Event of Loss,
Lessee shall promptly notify Lessor and Owner Participant of such requisition,
and all of Lessee’s obligations under this Lease shall continue to the same
extent as if such requisition had not occurred; provided,
that, if the Airframe and Engines or engines installed thereon are not returned
to Lessor by Lessee at the end of the Term, then the Aircraft shall be deemed
to have suffered an Event of Loss and Lessee shall be deemed to have made the
election set forth in § 9.1.2 with the effect that Lessee shall be
obligated to pay the Stipulated Loss Value and all other amounts payable
pursuant to § 9.1.2 with respect to the Aircraft on the last day of the
Term.


 


9.7                               Requisition
of an Engine for Use


 


If any Government
Entity requisitions for use any Engine but not the Airframe, Lessee will
replace such Engine by complying with § 9.2 and § 9.3 to the same
extent as if an Event of Loss with respect to that Engine had occurred, and any
payments received by Lessor or Lessee from such 


 






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Government Entity with respect to such requisition shall be paid or
retained in accordance with § 9.5.2.


 


9.8                               Application
of Requisition Payments


 


All payments
received by Lessor or Lessee, or any Permitted Sublessee, from any Government
Entity for the use of the Airframe and Engine(s) or engine(s) installed
thereon during the Term shall be paid over to, or retained by, Lessee, and all
payments received by Lessor or Lessee from any Government Entity for the use of
the Airframe and Engine(s) or engine(s) installed thereon after the
Term shall be paid over to, or retained by, Lessor; provided,
that, if such requisition constitutes an Event of Loss, then all such payments
shall be paid over to Lessor, and held and applied as provided in § 9.5.


 


9.9                               Application
of Payments During Default


 


Any amount
described in this § 9 that is payable or creditable to, or retainable by,
Lessee shall not be paid or credited to, or retained by, Lessee if a Special
Default exists when such payment, credit, or retention would otherwise occur,
but shall instead be held by or paid over to Lessor as security for Lessee’s
obligations under the Operative Agreements, and shall be invested pursuant to
§ 4.4 hereof, unless and until such amount is applied, at the option of
Lessor, from time to time during the existence of a Special Default, to Lessee’s
obligations under the Operative Agreements as and when due (any such
application shall be made to such Lessee obligations as Lessor determines in
its sole discretion).  If and when no
Special Default exists, such amount shall be paid to Lessee to the extent not
previously applied in accordance with this § 9.9.


 


10.                               INSURANCE


 


10.1                        Lessee’s
Obligation to Insure


 


Lessee shall
comply with, or cause to be complied with, each of the provisions of
Annex D, which provisions are hereby incorporated by this reference as if
set forth in full herein.


 






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10.2                        Insurance
for Own Account


 


Nothing in this
§ 10 shall limit or prohibit (a) Lessee from maintaining the policies
of insurance required under Annex D with higher limits than those specified in
Annex D, or (b) Lessor or Owner Participant from obtaining insurance for
its own account (and notwithstanding § 10.5 hereof, any proceeds payable
under such separate insurance noted in the foregoing clauses (a) and (b) shall
be payable as provided in the policy relating thereto); provided,
that no insurance may be obtained or maintained under the foregoing clause (b) that
would limit or otherwise adversely affect the coverage of or increase the cost
of any insurance required to be obtained or maintained by Lessee pursuant to
this § 10 and Annex D.


 


10.3                        Indemnification
by Government in Lieu of Insurance


 


During any period
that the Aircraft, the Airframe, or any Engine shall have been requisitioned
for use by, or possession of the Aircraft, the Airframe, or any Engine shall
have been transferred to, the U.S. Government or any other Government Entity,
Lessor and Owner Participant shall (subject to the terms of this § 10.3)
accept, in lieu of insurance against any risk with respect to the Aircraft
described in § B and § C (but, with respect to § C, as to hull
coverage only) of Annex D, indemnification from, or insurance provided by, the
U.S. Government (or upon Owner Participant’s prior written consent, other
Government Entity), against such risk in an amount that, when added to the
amount of insurance (including self-insurance otherwise permitted under the
terms of Annex D), if any, against such risk that Lessee (or any Permitted
Sublessee) may continue to maintain, in accordance with this § 10, during
the period of such requisition or transfer, shall be at least equal to the
amount of insurance against such risk otherwise required by this § 10
(assuming in all cases that the insurance so continued to be maintained would
fully cover the noted increment notwithstanding the existence of the
indemnification or insurance provided by the U.S. Government or other
Government Entity). Any such indemnification or insurance provided by the U.S.
Government shall provide protection no less favorable to the Indemnitees, after
taking into account any insurance the Lessee or any Permitted Sublessee may
continue to maintain, than the insurance coverage that would comply with the
terms of this § 10. Lessee shall provide Lessor and Owner Participant with
(1) evidence of such indemnification or insurance no later than two
Business Days before the date such indemnification or insurance takes effect,
or, if later, promptly after such information becomes available to Lessee, (2) a
certificate of a Responsible Officer of Lessee stating that such
indemnification or insurance complies with the preceding sentence, and (3) any
other information, 


 






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documentation or certificates relating to such indemnity or insurance
as Owner Participant shall reasonably request.


 


10.4                        Application
of Insurance Proceeds


 


All proceeds of
insurance or indemnities required to be maintained by Lessee, in accordance
with this § 10 and § B of Annex D, in respect of any property
damage or loss constituting an Event of Loss shall be paid, held and applied in
accordance with § 9.5. All proceeds of insurance or indemnities required
to be maintained by Lessee, in accordance with this § 10 and § B of
Annex D, in respect of any property damage or loss not constituting an
Event of Loss shall be paid over to and held by Lessor or Lessee, in the
circumstances and to the extent provided in § B of Annex D, and shall
be applied to pay (or to reimburse Lessee) for repairs or for replacement
property, effected or obtained in accordance with the terms of § 8.1 and
Annex C, as provided in said § B of Annex D; and any balance
remaining after such repairs or replacement with respect to such damage or loss
shall be paid over to, or retained by, Lessee.


 


10.5                        Application
of Payments During Special Default


 


Any amount
described in § 9.5.3 or this § 10 that is payable or creditable to,
or retainable by, Lessee shall not be paid or credited to, or retained by,
Lessee if a Special Default exists when such payment, credit, or retention
would otherwise occur, but shall instead be held by or paid over to Lessor as
security for Lessee’s obligations under this Lease, and shall be invested
pursuant to § 4.4 unless and until such amount is applied, at Lessor’s
option, from time to time during the existence of a Special Default, to Lessee’s
obligations under this Lease and the other Lessee Operative Agreements as and
when due (any such application to be made to such obligations of Lessee as
Lessor determines in its sole discretion). If and when no Special Default
exists, such amount shall be paid to Lessee to the extent not previously
applied in accordance with this § 10.5.


 


10.6                        Lessor’s
Right to Maintain Insurance


 


In the
event that Lessee shall fail to maintain, or cause to be maintained, insurance
as herein provided, Lessor or Owner Participant may at its option (but shall
not be obligated to) provide such insurance and, in such event, Lessee shall,
upon demand, reimburse such person, as Supplemental Rent, for the cost thereof;
provided, that no such action by Lessor or Owner Participant shall be deemed to
cure any Default resulting from such failure by Lessee.


 






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11.                               INSPECTION


 


(a)                                  Lessor,
Owner Participant, or their authorized representatives (the “Inspecting Parties”) may, at the times set forth below in
this paragraph (a), inspect the Aircraft, Airframe, and Engines and the
Aircraft Documents, and Lessee shall cooperate, and shall cause any Permitted
Sublessee to cooperate, with the Inspecting Parties in connection with any such
inspection, and any such Inspecting Party may make copies of the Aircraft
Documents not reasonably deemed confidential by Lessee or a Permitted
Sublessee. Lessee shall make any Permitted Sublease expressly subject to
inspection rights consistent with this § 11.  The Inspecting Parties shall have the right
to conduct such an inspection (i) at any reasonable time, as may be
mutually agreed by Lessor, Owner Participant and Lessee (such agreement not to
be unreasonably withheld by any such Person), it being understood and agreed,
however, that an inspection shall be permitted at least once every 180 days,
and (ii) at any reasonable time if and for so long as a Special Default
shall have occurred and be continuing.


 


(b)                                 Any
inspection of the Aircraft hereunder shall be a visual, walk-around inspection
that may include going on board the Aircraft and examining the contents of any
open panels, bays, or other components of the Aircraft, Airframe, and Engines,
but shall not include the opening of any unopened panels, bays, or other
components of the Aircraft, and no such inspection shall unreasonably interfere
with Lessee’s or any Permitted Sublessee’s maintenance or operation of the
Aircraft, the Airframe, or any Engine.


 


(c)                                  Neither
Lessor nor Owner Participant shall have any duty or liability to make any such
visit, inspection, or survey, or any duty or (except to the extent arising
directly out of its own acts) liability arising out of any such visit,
inspection, or survey or failure to make any such visit, inspection, or survey.


 


(d)                                 Each
Inspecting Party shall bear its own expenses in connection with any such visit,
inspection, or survey (including the cost of any copies made in accordance with
§ 11(a)), unless a Special Default exists or such Party is making such
visit, inspection, or survey to verify the correction of any material failure
by Lessee or any Permitted Sublessee to comply with the terms and provisions of
this Lease discovered in connection with the prior visit, inspection, or
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copies) shall be at
Lessee’s expense.


 


(e)                                  If
requested by Lessor, Lessee shall give, or shall cause any Permitted Sublessee
to give, reasonable prior notice (but in any event of not less than 5 days) to
Lessor of the date upon which the Aircraft, the Airframe, or any Engine
undergoes its next major check, and with respect to any Engine the next
off-the-wing maintenance, and shall notify Lessor of the name and location of
the relevant maintenance performer and shall, upon Lessor’s request at least 3
days prior to commencement of such major check or maintenance, make available
for inspection by Lessor all relevant Aircraft Documents at Lessee’s records
facility in the United States, or at such Permitted Sublessee’s records
facility, or at the premises of the maintenance performer.


 


12.                               ASSIGNMENT;
SUCCESSOR LESSOR


 


12.1                        In General


 


This Lease and the
other Lessee Operative Agreements shall bind and benefit Lessor and Lessee and
their successors and permitted assigns. Except as otherwise expressly permitted
in § 7.2 or § 7.3, or as required in the case of any requisition by
the U.S. Government referred to in § 7.1.4, or as permitted by
§ 7.1.9 of the Participation Agreement, Lessee will not, without the prior
written consent of Owner Participant, assign any of its rights under this Lease
(and any such unpermitted assignment shall be void ab
initio). Except as otherwise provided
herein (including under the provisions of § 14), Lessor shall not assign
or convey any of its right, title, and interest in and to this Lease or the
Aircraft without Lessee’s prior written consent, such consent not to be
unreasonably withheld.


 


12.2                        Successor
Lessor


 


If any successor
is appointed to serve as Owner Trustee pursuant to the terms of the
Participation Agreement and the Trust Agreement, such successor shall, upon
written notice by such successor to Lessee, succeed to all the rights, powers,
and title of Lessor hereunder, and shall be deemed to be “Lessor” and the owner
of the Aircraft and the other assets of the Trust Estate for all purposes
hereof, without the need for any consent or approval by Lessee (and Lessee
shall consent, and shall be deemed to have consented, to any 


 






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filings or registrations on the International Registry that Lessor, in
its reasonable judgment, determines to be necessary of desirable to fully
effectuate such succession) and without in any way altering the terms of this
Lease or Lessee’s obligations under the Operative Agreements. An appointment
and designation of a successor as Owner Trustee shall not exhaust the right to
appoint and designate further successors or additional trustees as Owner
Trustees pursuant to the Participation Agreement and the Trust Agreement, and
such right may be exercised repeatedly as long as this Lease shall be in
effect.


 


13.                               LEASE
EVENTS OF DEFAULT


 


The existence of
any one or more of the following circumstances, conditions, acts, or events,
for any reason whatsoever and whether any such circumstance, condition, act, or
event is voluntary or involuntary or comes about or is effected by operation of
Law or pursuant to or in compliance with any judgment, decree, order, rule, or
regulation of any Government Entity, shall constitute an Event of Default so
long as it shall not have been remedied:


 


13.1                        Payments


 


(a)                                  Lessee
fails to pay any amount of Basic Rent, Stipulated Loss Value or Make-Whole
Amount within 5 Business Days after it becomes due; or


 


(b)                                 Lessee
fails to pay any Supplemental Rent (other than Stipulated Loss Value or
Make-Whole Amount) when due and such failure continues for a period in excess
of 10 Business Days from and after the date of any written notice to Lessee of
the failure to make such payment when due.


 


13.2                        Insurance


 


Lessee fails to
carry and maintain, or cause to be carried and maintained, insurance on and in
respect of the Aircraft, Airframe, and Engines in accordance with the provisions
of § 10, or Lessee shall operate the Aircraft, Airframe, or Engines, or
permit or suffer the Aircraft, Airframe, or Engines to be operated, at any time
when such insurance shall not be in effect.


 


13.3                        Corporate
Existence and Commercial Airlines Operations


 


(a)                                  Lessee
shall fail to maintain at all times its legal existence, as 


 






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required pursuant to § 7.1.1 of the Participation Agreement, or
Lessee shall otherwise wind-up, liquidate, or dissolve, or Lessee shall take or
fail to take any action that would have the effect of any of the foregoing; or


 


(b)                                 Lessee
shall cease to be a U.S. Air Carrier, as required pursuant to § 7.1.1 of
the Participation Agreement, or Lessee shall discontinue all or substantially
all of its commercial airline operations; provided, that (i) if such
cessation or discontinuance is capable of being corrected and Lessee is
diligently proceeding to effect such correction, and (ii) such cessation
or discontinuance creates no material risk of the sale, forfeiture, or loss
(including loss of use) of, or damage to, the Aircraft, the Airframe, or any
Engine, then such cessation or discontinuance shall not be an Event of Default
unless and until such condition shall have continued unremedied for a period of
(x) 30 days, or (y) if such cessation or discontinuance is not
capable of being corrected within 30 days due to reasons beyond Lessee’s
control (but Lessee is, nonetheless, diligently proceeding to effect such
correction), 120 days.


 


13.4                        Certain
Covenants


 


Lessee shall not observe, perform or comply with, or
shall otherwise breach, any of its obligations under § 7.1 (other than
§ 7.1.2 and § 7.1.3, which shall be subject to § 13.5), or
§ 7.2.7 (in respect of a sublease of the Aircraft or Airframe), or
§ 1 of Annex E, or under § 7.1.5 or § 7.1.9 of the Participation
Agreement.


 


13.5                        Other
Covenants


 


Lessee fails to
observe or perform (or cause to be observed and performed) in any material
respect any other covenant, agreement, or obligation of Lessee in any Operative
Agreement, and such failure continues unremedied for a period of 30 days from
and after the date of written notice thereof to Lessee from Lessor or Owner
Participant unless such failure is capable of being corrected and creates no
material risk of the sale, forfeiture, or loss (including loss of use) of, or
damage to, the Aircraft, the Airframe, or any Engine, or any discernible risk
of criminal liability or any material risk of civil penalty against Lessor or
any Participant, and Lessee is diligently proceeding to correct such failure,
in which case there shall be no Event of Default unless and until such failure
continues unremedied for a period of 180 days after receipt of such
notice.


 






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13.6                        Representations
and Warranties


 


Any representation
or warranty made by Lessee in any Operative Agreement (a) proves to have
been untrue or inaccurate in any material respect as of the date made, (b) is
material at the time in question, and (c) if the effect of such
incorrectness is curable (incorrectness of a representation as to financial
condition being incurable), remains uncured for a period in excess of 30 days
from and after the date of written notice thereof from Lessor or Owner
Participant to Lessee or (if earlier) the date that a Responsible Officer of
Lessee is aware of the incorrectness.


 


13.7                        Bankruptcy
and Insolvency


 


(a)                                  Lessee
consents to the appointment of or the taking of possession by a receiver,
trustee, or liquidator of itself or of all or substantially all of its
property, or Lessee admits in writing its inability to pay its debts generally
as they come due, or does not pay its debts generally as they become due or
makes a general assignment for the benefit of creditors, or Lessee files a
voluntary petition in bankruptcy or a voluntary petition or an answer seeking
reorganization, liquidation or other relief in a case under any bankruptcy Laws
or other insolvency Laws (as in effect at such time) or an answer admitting the
material allegations of a petition filed against Lessee in any such case, or
Lessee seeks relief by voluntary petition, answer, or consent under the
provisions of any other bankruptcy or other similar Law providing for the
reorganization or winding-up of corporations (as in effect at such time); or


 


(b)                                 an
order, judgment, or decree is entered by any court of competent jurisdiction
appointing, without Lessee’s consent, a receiver, trustee, or liquidator of
Lessee or of all or substantially all of its property, or all or substantially
all of Lessee’s property is sequestered, or granting any other relief in
respect of Lessee as a debtor under any bankruptcy Laws or other insolvency
Laws (as in effect at such time), and any such order, judgment, or decree of
appointment or sequestration remains in force undismissed, unstayed, and
unvacated for a period of 60 days after the date of entry thereof; or


 


(c)                                  a
petition against Lessee in a case under any bankruptcy Laws or other insolvency
Laws (as in effect at such time) is filed and not withdrawn or dismissed within
60 days thereafter, or if, under the provisions of any Law providing for
reorganization or winding-up of corporations that applies to Lessee, any court
of competent jurisdiction assumes jurisdiction, custody, or control of Lessee or
of all or substantially all of the property of Lessee, and 


 






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such jurisdiction, custody or control remains in force unrelinquished,
unstayed, and unterminated for a period of 60 days.


 


13.8                        Other
Obligations


 


(a)                                  An
“Event of Default” exists under a Related Lease; or


 


(b)                                 Lessee
(or any of its Affiliates) fails to pay, when due, any Debt and/or any lease
obligations, involving (whether individually or in the aggregate) obligations
in excess of $5 million, and the holder or holders of such Debt or such lease
obligations (or a trustee on behalf of such holder or holders) accelerates such
Debt or such lease obligations, or takes any action to cancel or terminate the
associated lease arrangement, or otherwise initiates collection or foreclosure
remedies or proceedings to collect such Debt or such lease obligations.


 


13.9                        Judgments


 


                                                Judgment
for the payment of money in excess of $5 million (excluding any amount insured
by a solvent insurer who has admitted coverage for the underlying claim) is
rendered against Lessee (or any of its Affiliates), and the same shall remain
undischarged for a period of 30 days during which execution of such judgment
shall not be effectively stayed.


 


14.                               REMEDIES
AND WAIVERS


 


14.1                        Remedies


 


If any Event of
Default exists, Lessor may, at its option and at any time and from time to
time, exercise any one or more of the following remedies as Lessor in its sole
discretion shall elect:


 


14.1.1              Return and
Repossession


 


Lessor may cause
Lessee, upon giving written notice to Lessee, to return promptly, and Lessee
shall return promptly, all or any part of the Aircraft, Airframe, or Engines,
and any of the Returnable Records, as Lessor shall so demand, to Lessor or its
order in the manner and condition required by, and otherwise in accordance
with, all the provisions of § 5, as if the Aircraft, Airframe, Engines, or
Part, or the Returnable Records, were being returned at 


 






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the end of the Term, or Lessor, at its option, may enter upon the
premises where the Aircraft, the Airframe, any Engine, or any Part thereof,
or any of the Returnable Records, is located and take immediate possession of
and remove the same by summary proceedings or otherwise, all without liability
accruing to Lessor for or by reason of such entry or taking of possession,
whether for the restoration of damage to property caused by such taking or
otherwise, and Lessee expressly waives any right it may have under applicable
Law to a hearing prior to repossession of the Aircraft, Airframe, any Engine,
or any Part thereof, or any of the Returnable Records.


 


14.1.2              Sale and Use


 


Lessor may sell
all or any part of the Aircraft, the Airframe, or any Engine, or any of the
Returnable Records, at public or private sale, at such time(s) and
place(s), and to such Person(s) (including Owner Participant), as Lessor
determines and, without limiting the generality of the provisions of this
§ 14, Lessor may hold Lessee liable for the payment of any Basic Rent
remaining unpaid at the time of such sale and relating to any period prior to
the date of such sale; or Lessor may otherwise dispose of, hold, use, operate,
lease to others, or keep idle the Aircraft, the Airframe, or any Engine, or any
Part thereof, as Lessor, in its sole discretion, shall determine, all free
and clear of any rights of Lessee and without any duty to account to Lessee
with respect to such action or inaction or for any proceeds with respect
thereto, except as hereinafter set forth in § 14.1.3(b) or as
otherwise provided by applicable Law, and except to the extent that such
proceeds would constitute, under applicable Law, a mitigation of Lessor’s
damages suffered or incurred as a result of the subject Event of Default.  Lessor shall give to Lessee at least
15 days’ prior written notice of the date fixed for any public sale of the
Aircraft, the Airframe, or any Engine, or any Part thereof, or any of the
Returnable Records, or of the date on or after which will occur the execution
of any contract providing for any private sale, and Lessee acknowledges and
agrees that such notice shall for all purposes be deemed to be commercially
reasonable.


 


14.1.3              Certain Liquidated
Damages


 


Whether or not
Lessor shall have exercised, or shall thereafter at any time exercise, any of
its rights under § 14.1.1 or § 14.1.2 with respect to the Aircraft,
the Airframe, any Engine or any of the Returnable Records, Lessor, by written
notice to Lessee specifying a payment date (which shall be the first SLV Date
occurring not less than 10 days after the date of such notice), may demand that
Lessee pay to Lessor, and Lessee shall pay to Lessor, on the 


 






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payment date so specified and in the manner and in funds of the type
specified in § 3.3, as liquidated damages for loss of a bargain and not as
a penalty (in lieu of the Basic Rent (as applicable) for the Aircraft in respect
of all periods commencing on or after the date specified for payment in such
notice), the following amounts:


 


(a)                                  all
unpaid Basic Rent due at any time before the SLV Date specified in such notice;
plus


 


(b)                                 whichever
of the following amounts Lessor, in its sole discretion specifies in such
notice:


 


(1)                                  an
amount equal to the excess (if any) of the present value, computed as of the
SLV Date specified in such notice, discounted to such date at a rate per annum
equal to 180-day LIBOR, compounded semiannually, of all unpaid Basic Rent
payable during the then-remaining portion of the Term over the Fair Market
Rental Value of the Aircraft for the remainder of the Term, after discounting
such Fair Market Rental Value to present value (at a rate per annum equal to
180-day LIBOR, compounded semiannually) as of the SLV Date specified in such
notice, or


 


(2)                                  an
amount equal to the excess (if any) of the Stipulated Loss Value for the
Aircraft, computed as of the SLV Date specified in such notice, over the Fair
Market Sales Value of the Aircraft, as of the SLV Date specified in such
notice; plus


 


(c)                                  interest
on the amounts specified in the foregoing clause (a) at the Past-Due Rate
from and including the date on which any such amount was due to the date of
payment of such amount; plus


 


(d)                                 interest
on the amount specified in the foregoing clause (b)(1) or (b)(2),
according to Lessor’s election, at the Past-Due Rate from and including the SLV
Date specified in such notice to the date of payment of such amount; plus


 


(e)                                  any
Make-Whole Amount; plus


 


(f)                                    all
other amounts due pursuant to § 14.1.6.


 






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14.1.4              Liquidated Damages
Upon Sale


 


If, pursuant to
§ 14.1.2 or applicable Law, Lessor has sold the Aircraft, the Airframe or
any Engine, then, in lieu of exercising its rights under § 14.1.3 with
respect to the Aircraft, the Airframe or any Engine, Lessor may, if Lessor so
elects, upon giving written notice to Lessee, demand that Lessee to pay to
Lessor, and Lessee shall pay to Lessor, on the date of such sale and in the
manner and in funds of the type specified in § 3.3, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Basic Rent payable
for the Aircraft in respect of all periods commencing on or after the date of
such sale), the following amounts:


 


(a)                                  all
unpaid Basic Rent due and payable at any time before the SLV Date that occurs
on or immediately preceding the date of such sale; plus


 


(b)                                 an
amount equal to the excess, if any, of (1) the Stipulated Loss Value of
the Aircraft, the Airframe or the Engine, as the case may be, computed as of
the SLV Date used in the foregoing clause (a) for the computation of
unpaid Rent, over (2) the net proceeds of such sale (minus all reasonable
costs actually incurred by Lessor and Owner Participant in connection with the
sale) or if such sale is a private sale and is made to Owner Participant or any
Affiliate thereof, the Fair Market Sales Value of the Aircraft, Airframe or
Engine, as the case may be, determined as of the date of such sale; plus


 


(c)                                  interest
on the amounts specified in the foregoing clause (a) at the Past-Due Rate
from and including the date on which any such amount was due to the date of
payment of such amount; plus


 


(d)                                 interest
on the sum of the amounts specified in the foregoing clause (b) at the
Past-Due Rate from and including the date of such sale to the date of payment
of such amounts; plus


 


(e)                                  any
Make-Whole Amount; plus


 


(f)                                    all
other amounts due pursuant to § 14.1.6.


 


14.1.5              Rescission


 


Lessor may (a) at
its option, rescind or terminate this Lease as to the Aircraft, the Airframe,
or any Engine, or any Part thereof, or (b) exercise any other right
or remedy that may be available to it under applicable Law or proceed by
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damages for the breach hereof, including Lessee’s agreement to lease
the Aircraft for the Term and to pay Rent.


 


14.1.6              Other Remedies


 


In addition to the
foregoing remedies (but without duplication of amounts otherwise paid under
this § 14), Lessee shall be liable for any and all unpaid Rent due
hereunder before, during, or after (except as otherwise provided herein) the
exercise of any of the foregoing remedies and for all reasonable attorneys’
fees and other costs and expenses of Lessor and Owner Participant, including
interest on overdue Rent at the rate as herein provided, incurred by reason of
the existence of any Event of Default or the exercise of Lessor’s remedies with
respect thereto, including all costs and expenses incurred in connection with
the return of the Aircraft, the Airframe, any Engine, or any Part thereof,
in accordance with the terms of § 5, or in placing the Aircraft, Airframe,
Engine, or Part in the condition and airworthiness required by
§ 5.  Without limiting, and
notwithstanding, any other provision of this Lease or any other Operative
Agreement, Lessor shall be entitled to use and apply all or any portion of the
Security Deposit for the purposes, and in the manner, set forth in Section 3.2.3(b) hereof.


 


14.2                        Limitations
Under CRAF


 


Notwithstanding
the provisions of § 14.1, during any period that the Aircraft, the
Airframe, or any Engine is subject to CRAF in accordance with the provisions of
§ 7.2.3 and in the possession of the U.S. Government, Lessor shall not, as
a result of any Event of Default, exercise its remedies hereunder in such
manner as to limit Lessee’s control under this Lease (or any Permitted
Sublessee’s control under any Permitted Sublease) of the Aircraft, the
Airframe, or such Engine, unless Lessor gives at least 30 days’ (or such other
period as may then apply under CRAF) written notice of default hereunder by
registered or certified mail to Lessee (and any Permitted Sublessee) with a
copy to the Contracting Officer Representative or Representatives for the
Military Airlift Command of the United States Air Force, most-recently
identified by notice from Lessee to Lessor pursuant § 7.2.3, to whom
notices must be given under the contract governing Lessee’s (or any Permitted
Sublessee’s) participation in CRAF with respect to the Aircraft, the Airframe,
or any Engine.


 






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14.3                        Right to
Perform for Lessee


 


If Lessee (a) fails
to make any payment of Rent required to be made by it hereunder or (b) fails
to perform or comply with any of its agreements contained herein, then, after
giving reasonable advance notice (if reasonably practicable (and Lessee agrees
that no more than two day’s advance notice shall be required in any event)) to
Lessee of its intent to do so (with the understanding that, in certain
circumstances, the absence of any advance notice may be reasonable), Lessor or
Owner Participant may (but shall not be obligated to) make such payment or
perform or comply with such agreement, and the amount of such payment and the
amount of the expenses of Lessor or Owner Participant incurred in connection
with such payment or the performance of or compliance with such agreement (as
applicable), together with interest thereon at the Past-Due Rate, shall be
deemed Supplemental Rent, payable by Lessee upon demand by Lessor or Owner Participant,
whichever is entitled thereto.  No such
payment, performance or compliance shall be deemed to waive any Default or
otherwise relieve Lessee of its obligations with respect thereto.


 


14.4                        Determination
of Fair Market Rental Value and Fair Market Sales Value


 


For the purpose of
this § 14, the Fair Market Rental Value or the Fair Market Sales Value of
the Aircraft, the Airframe, or any Engine shall be determined on an “as is,
where is” basis and shall take into account customary brokerage and other out-of-pocket
fees and expenses which typically would be incurred in connection with a
re-lease or sale of such an aircraft, airframe, or engine.  Any such determination shall be made by an
Appraiser selected by Lessor, and the costs and expenses associated therewith
shall be borne by Lessee; provided, that,
if Lessor does not obtain possession of the Aircraft pursuant to this § 14
within a commercially reasonable period, an Appraiser shall not be appointed,
and Fair Market Rental Value and Fair Market Sales Value for purposes of this
§ 14 shall be zero.


 


14.5                        Lessor
Appointed Attorney-in-Fact


 


Lessee hereby appoints Lessor as the attorney-in-fact
of Lessee, with full authority in the place and stead of Lessee and in the name
of Lessee or otherwise, for the purpose of carrying out the provisions of this
and any other Operative Agreement and taking any action and executing any
instrument that Lessor may deem necessary or advisable to accomplish the
purposes hereof;


 






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provided, that
Lessor may only take action or execute instruments under this § 14.5 after
this Lease has been cancelled or terminated because of an Event of
Default.  Lessee hereby declares that the
foregoing powers are granted for valuable consideration, constitute powers
granted as security for the performance of the obligations of Lessee hereunder,
are coupled with an interest, and shall be irrevocable.  Without limiting the generality of the
foregoing or any other rights of Lessor under the Operative Agreements, Lessor
shall (if this Lease has been cancelled or terminated because of an Event of
Default) have the sole and exclusive right and power to (i) settle,
compromise, compound, adjust or defend any actions, suits or proceedings
relating to or pertaining to the Aircraft, the Airframe, or any Engine, or this
Lease and (ii) make proof of loss, appear in and prosecute any action
arising from any policy or policies of insurance maintained pursuant to this
Lease, and settle, adjust, or compromise any claims for loss, damage, or
destruction under, or take any other action in respect of, any such policy or
policies.


 


14.6                        Remedies
Cumulative


 


Nothing contained
in this Lease shall be construed to limit in any way any right, power, remedy,
or privilege of Lessor hereunder or under any other Operative Agreement or now
or hereafter existing at law or in equity. 
Each and every right, power, remedy, and privilege hereby given to, or
retained by, Lessor in this Lease shall be in addition to and not in limitation
of every other right, power, remedy, and privilege given under the Operative
Agreements or now or hereafter existing at law or in equity.  Each and every right, power, remedy, and
privilege of Lessor under this Lease and any other Operative Agreement may be exercised
from time to time or simultaneously and as often and in such order as may be
deemed expedient by Lessor.  All such
rights, powers, remedies, and privileges shall be cumulative and not mutually
exclusive, and the exercise of one shall not be deemed a waiver of the right to
exercise any other. Lessee hereby waives to the extent permitted by applicable
Law any right which it may have to require Lessor to choose or elect remedies.


 


15.                               LESSEE’S
OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC.


 


(a)                                  This
Lease is a net lease, and (except as otherwise provided in the Operative
Agreements) it is intended that Lessee shall pay all costs and expenses of
every character, whether foreseen or unforeseen, ordinary or extraordinary or
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operation, maintenance, repair, and reconstruction of the Airframe and
each Engine.  Lessee’s obligation to pay
all Rent payable hereunder and to perform all its other obligations hereunder
shall be absolute and unconditional, and shall be construed as covenants
separate and independent from the agreements or undertakings of any other
Person, including Lessor or Owner Participant, and shall not be affected by any
event or circumstance, including: (1) any setoff, counterclaim,
recoupment, defense, or other right that Lessee may have against Lessor, Owner
Participant, Airframe Manufacturer, Engine Manufacturer, any Indemnitee, or any
other Person for any reason whatsoever; (2) any defect in the title,
airworthiness, condition, design, operation, or fitness for use of, or any
damage to or loss or destruction of, the Aircraft, the Airframe, or any Engine,
or any interruption or cessation in the use or possession thereof by Lessee for
any reason whatsoever; (3) any insolvency, bankruptcy, reorganization, or
similar proceedings by or against Lessee or any other Person; (4) any
restriction, prevention or curtailment of or interference with any use of the
Aircraft, the Airframe, any Engine, or any part thereof; (5) any claim
that Lessee has or might have against any Person; (6) any failure on the
part of Lessor or Owner Participant to perform or comply with any of the terms
of this Lease or any other Operative Agreement, or any breach of any
representation or warranty by Lessor or Owner Participant; (7) any
invalidity or unenforceability or disaffirmance of this Lease or any provision
hereof or any of the other Operative Agreements or any provision thereof, in
each case whether against or by Lessee or otherwise; or (8) any other
circumstance, happening, or event whatsoever, whether or not similar to any of
the foregoing.


 


(b)                                 If
for any reason whatsoever this Lease shall be terminated in whole or in part by
operation of law or otherwise except as specifically provided herein, Lessee
nonetheless agrees to pay an amount equal to each Rent payment at the time such
payment would have become due and payable in accordance with the terms hereof
had this Lease not been terminated in whole or in part.  All Rent payable by Lessee shall be paid
without notice or demand (except as otherwise expressly provided) and without
abatement, suspension, deferment, deduction, diminution, or proration by reason
of any circumstance or occurrence whatsoever. 
Lessee hereby waives, to the extent permitted by applicable law, any and
all rights that it may now have or that at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, cancel, quit, or surrender this
Lease or any part hereof, or to any abatement, suppression, deferment,
diminution, reduction or proration of Rent, except in accordance with the
express terms hereof.  Each payment of
Rent made by Lessee shall be final as to Lessor, Owner Participant and Lessee
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any computational error, Lessee will not seek to recover all or any
part of any such payment of Rent for any reason whatsoever.


 


(c)                                  All
obligations, liabilities, covenants, and undertakings of Lessee in this
Agreement or in any other Operative Agreement shall be performed, observed, and
complied with at Lessee’s sole cost and expense, whether or not so expressed,
unless otherwise expressly provided.


 


(d)                                 Nothing
set forth in this § 15 shall be construed to prohibit Lessee from
separately pursuing any claim that it may have from time to time against
Lessor, Owner Participant or any other Person with respect to any matter (other
than the absolute and unconditional nature of Lessee’s obligations hereunder to
pay Rent, and other than the matters specified in paragraphs (a) and (b) above).


 


(e)                                  Nothing
set forth in this § 15 shall be construed to require Lessee to pay for or
reimburse any costs or expenses incurred with respect to the deregistration of
the Aircraft prior to or on the Delivery Date.


 


16.                               ADDITIONAL
RIGHTS AND OBLIGATIONS


 


 In addition to the other terms and provisions
of this Lease, Lessee and Lessor shall have the rights and obligations set
forth in Annex E (both Parts 1 and 2 thereof), the provisions of which are
hereby incorporated by this reference as if set forth in full herein.


 


17.                               MISCELLANEOUS


 


17.1                        Amendments


 


No provision of
this Lease may be amended, supplemented, waived, modified, discharged,
terminated, or otherwise varied orally, but only by an instrument in writing
that specifically identifies the provision of this Lease that it purports to
amend, supplement, waive, modify, discharge, terminate, or otherwise vary and
is signed by Lessor and Lessee.  Each
such amendment, supplement, waiver, modification, discharge, termination, or
variance shall be effective only in the specific instance and for the specific
purpose for which it is given.  No
provision of this Lease shall be varied or contradicted by oral 


 






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communication, course of dealing or performance, or other manner not
set forth in an agreement, document, or instrument in writing and signed by Lessor
and Lessee.


 


17.2                        Severability


 


If any provision
hereof shall be held invalid, illegal, or unenforceable in any respect in any
jurisdiction, then, to the extent permitted by Law, (a) all other
provisions hereof shall remain in full force and effect in such jurisdiction,
and (b) such invalidity, illegality, or unenforceability shall not affect
the validity, legality, or enforceability of such provision in any other
jurisdiction.  If, however, any Law
pursuant to which such provisions are held invalid, illegal, or unenforceable
may be waived, Lessor and Lessee hereby waive such Law to the full extent
permitted, to the end that this Lease shall be deemed to be a valid and binding
agreement in all respects, enforceable in accordance with its terms.


 


17.3                        Third-Party
Beneficiary


 


This Lease is not
intended to provide, and shall not provide, any Person not a party hereto
(other than the Benefitted Persons) with any rights of any nature whatsoever
against either of the parties hereto, and, except as expressly provided in the
Participation Agreement or any other Operative Agreement, no Person not a party
hereto (other than the Benefitted Persons) shall have any right, power, or
privilege in respect of this Lease, or have any benefit or interest arising out
of this Lease. For purposes of this § 17.3, the term “Benefitted Persons”
shall mean Owner Participant, any Permitted Sublessee (but only to the extent
provided in § 4.3), the Persons referred to in § 7.5, and any
Indemnitee or Tax Indemnitee under § 9 of the Participation Agreement.


 


17.4                        Reproduction
of Documents


 


This Lease
(including all annexes, schedules, and exhibits hereto) and all agreements,
instruments, and documents relating hereto, including (a) consents,
waivers, and modifications that may hereafter be executed, and (b) financial
statements, certificates, and other information previously or hereafter
furnished to any party hereto, may be reproduced by such party by any
photographic, photostatic, microfilm, micro-card, miniature photographic, or
other similar process, and such party may destroy any original documents so
reproduced. Any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not
the 


 






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original is in existence and whether or not such reproduction was made
by such party in the regular course of business), and any enlargement,
facsimile, or further reproduction of such reproduction likewise is admissible
in evidence.


 


17.5                        Counterparts


 


This Lease and any
amendments, waivers, consents, or supplements hereto may be executed in any
number of counterparts (or upon separate signature pages bound together
into one or more counterparts), each fully-executed set of which when so
executed shall be deemed to be an original, and all of which counterparts,
taken together, shall constitute one and the same instrument. The single
fully-executed original of this Lease marked “Original” on the signature page hereof
is the original for chattel paper purposes, and all other counterparts are
duplicates for chattel paper purposes and are marked “duplicate” on the
signature page hereof. No security interest in this Lease may be perfected
by the possession of any counterpart other than the “Original”.


 


17.6                        Notices


 


Unless otherwise
expressly permitted by the terms hereof, all notices, requests, demands,
authorizations, directions, consents, waivers, and other communications
required or permitted to be made, given, furnished, or filed hereunder shall be
made, given, furnished, or filed, and shall become effective, in the manner
prescribed in § 14.7 of the Participation Agreement.


 


17.7                        Governing
Law; Jurisdiction and Venue; No Jury Trial


 


(a)                                  This
Lease shall in all respects be governed by the laws of the State of New York,
including all matters of construction, validity, and performance, without
reference to any rules relating to conflicts of laws (other than Sections
5-1401 and 5-1402 of the New York General Obligations Law); provided that, all
matters in any way relating to, or arising in connection with, the CTC, the CTC
Registrations, or the International Interests of Lessor relating to the
Airframe and the Engines and constituted under and pursuant to this Lease,
shall be construed and interpreted in conformity with the “Official Commentary
on the Convention on International Interests in Mobile Equipment and the
Protocol thereto on Matters Specific to Aircraft Equipment”, Revised Edition
2008, written by Professor Sir Roy Goode and published by the International
Institute for the Unification of Pricate Law (Unidroit).


 






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(b)                                  Each
party hereto hereby irrevocably agrees, accepts, and submits itself to the
non-exclusive jurisdiction of the courts of the State of New York in the City
and County of New York and of the United States for the Southern District of
New York, in connection with any legal action, suit, or proceeding with respect
to any matter relating to or arising out of or in connection with the Operative
Agreements.


 


(c)                                  Each
party hereto hereby irrevocably consents and agrees to the service of any and
all legal process, summons, notices, and documents of any of the aforementioned
courts in any such suit, action, or proceeding may be made by delivering copies
thereof by registered or certified mail, postage prepaid, at the address set
forth pursuant to § 17.6.  Each
party hereto hereby agrees that service upon it, or any of its agents, in each
case in accordance with this § 17.7(c), shall constitute valid and effective
personal service upon such party, and each party hereto hereby agrees that the
failure of any of its agents to give any notice of such service to any such
party shall not impair or affect in any way the validity of such service on
such party or any judgment rendered in any action or proceeding based thereon.


 


(d)                                  Each
party hereto hereby irrevocably waives, to the extent permitted by applicable
law, and agrees not to assert, by way of motion, as a defense, or otherwise, in
any legal action or proceeding brought hereunder in any of the above-named
courts, that such action or proceeding is brought in an inconvenient forum,
that venue for the action or proceeding is improper, or that any Operative
Agreement may not be enforced in or by such courts.


 


(e)                                  Each
party hereto hereby waives its right to a jury trial of any claim or cause of
action in any court in any jurisdiction based upon or arising out of or
relating to the Operative Agreements.


 


(f)                                    Each
party hereto irrevocably and unconditionally agrees that final judgment against
it in any of the aforesaid actions, suits, or proceedings shall be conclusive
(subject to permitted appeals) and may be enforced in any other jurisdiction,
within or outside the United States of America, by suit on the judgment, a
certified or exemplified copy of which shall be conclusive evidence of the fact
and amount of its obligations and liabilities.


 


(g)                                 Each
party hereto represents and warrants that it has reviewed this § 17.7 with
its legal counsel, and that it knowingly and voluntarily accepts and agrees to
this § 17.7 following consultation with 


 






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such legal
counsel.  This § 17.7 is irrevocable
and unconditional, and shall apply to all amendments, supplements, and
modifications to the Operative Agreements.


 


17.8                        No Waiver


 


No failure on the
part of Lessor to exercise, and no delay by Lessor in exercising, any of its
rights, powers, remedies, or privileges under this Lease or provided at Law, in
equity or otherwise shall impair, prejudice, or constitute a waiver of any such
right, power, remedy, or privilege or be construed as a waiver of any breach
hereof or default hereunder or as an acquiescence therein, nor shall any single
or partial exercise of any such right, power, remedy, or privilege preclude any
other or further exercise thereof by Lessor or the exercise of any other right,
power, remedy, or privilege by Lessor. No notice to or demand on Lessee in any
case shall, unless otherwise required under this Lease, entitle Lessee to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of Lessor to any other or further action in
any circumstances without notice or demand.


 


17.9                        Survival


 


The
representations, warranties, indemnities, and covenants set forth herein shall,
as to events occurring and circumstances arising or existing at or before the
end of the Term, survive the delivery or return of the Aircraft, the Transfer
of any interest of Owner Participant in this Agreement, the other Operative
Agreements, the Trust Estate, and the Trust Agreement, and the expiration or
other termination of this Lease or any other Operative Agreement, except to the
extent otherwise expressly provided herein or therein.


 


17.10                 Further
Assurances


 


(a)                                  Each
party hereto shall execute, acknowledge, and deliver (or cause to be executed,
acknowledged, and delivered) all such further agreements, instruments,
certificates, or other documents, and shall do and cause to be done such
further things, as the other party hereto reasonably requests in connection
with the administration of, or to carry out more effectively the purposes of
this Lease.


 


(b)                                 Without limiting the foregoing, Lessee shall do or
cause to be done any and all further acts and things which may, in the
reasonable judgment of Lessor, be required under the terms of the CTC (or any
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convention, pact or by any practice, custom, or
understanding recognized as having wide application or control involving any
jurisdiction in which Lessee or any Permitted Sublessee may operate the
Aircraft or any Engine) to perfect and preserve Lessor’s interests in and to
the Airframe, each Engine and this Lease, and to establish and protect the
rights and remedies created or intended to be created or provided for in favor
of Lessor hereunder and under the other Operative Documents, including without
limitation, promptly and duly executing and delivering to Lessor such further
documents, assurances and consents, and taking such further action as Lessor
may from time to time reasonably request.


 


17.11                 Entire Agreement


 


This Lease,
together with the other Operative Agreements and together with Appendix 1 to
the Letter Agreement, on and as of the date hereof constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof, and all prior understandings or agreements, whether written or oral,
between the parties hereto with respect to such subject matter are hereby superseded
in their entirety.


 


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IN WITNESS WHEREOF,
Lessor and Lessee have executed this Lease Agreement N483HA.


 


 


	
   

  	
  WELLS FARGO BANK
  NORTHWEST, NATIONAL ASSOCIATION, not in its individual
  capacity, except as expressly provided herein, but solely as trustee under
  the Trust Agreement, as Lessor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HAWAIIAN AIRLINES,
  INC., as Lessee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


 


This is the Original
executed counterpart of the Lease for chattel paper purposes.


 






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treatment and filed separately with the SEC


 


59

















 


EXHIBIT
A — LEASE SUPPLEMENT


 


LEASE
SUPPLEMENT N0.    


 


LEASE N      HA
SUPPLEMENT NO.     , dated
                         ,
20     (this “Lease Supplement”), between WELLS FARGO BANK
NORTHWEST, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, but solely as Owner Trustee under the Trust
Agreement N      HA, dated as of
                            ,
200 , with Owner Participant named therein (such Owner Trustee, in its
capacity as such Owner Trustee being herein called “Lessor”), and HAWAIIAN
AIRLINES, INC., a Hawaii corporation, as Lessee (“Lessee”).


 


Lessor and Lessee have heretofore entered into that
certain Lease Agreement N      HA, dated as
of
                        ,
200 , relating to one Boeing Model 717-200 aircraft (herein called
the “Lease” and the defined terms therein being hereinafter used with the same
meanings).  The Lease provides for the
execution and delivery of this Lease Supplement for the purpose of leasing the
Airframe and Engines under the Lease as and when delivered by Lessor to Lessee
in accordance with the terms thereof.


 


The Lease relates to the Airframe and Engines
described below, and a counterpart of the Lease to which this Lease Supplement
is attached and of which this Lease Supplement is a part is being filed for
recordation on the date hereof with the FAA as one document.


 


NOW, THEREFORE, in consideration of the premises and
other good and sufficient consideration, Lessor and Lessee hereby agree as
follows:


 


1.                                       [RESERVED]


 


2.                                       Lessor
hereby delivers and leases to Lessee under the Lease and Lessee hereby accepts
and leases from Lessor under the Lease the following described Boeing
Model 717-200 aircraft (the “Aircraft”), which Aircraft as of the date
hereof consists of the following components:


 


(i)                                     Airframe:
One used 717-200 Model (Generic Model 717-200) airframe bearing U.S.
Registration Mark N      HA and manufacturer’s
serial no.           ,
and that is type-certified by the Aviation Authority to transport (1) at
least eight (8) persons (including crew) or (2) goods in excess of
2750 kilograms (6050 pounds); and


 


(ii)                                  Engines:  two Rolls-Royce Deutschland Ltd & Co
KG Model BR 700-715 C1-30 engines bearing, respectively,


 






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1














 


manufacturer’s
serial nos.           
and            (each of which
engines is turbine-powered and has 550 or more rated takeoff horsepower or the
equivalent of such horsepower).


 


3.                                       The
Delivery Date of the Aircraft is the date of this Lease Supplement set forth in
the opening paragraph hereof, and the location of such delivery is
                                          .


 


4.                                       Lessee
hereby confirms its agreement to pay Lessor Rent for the Aircraft in accordance
with Section 3, and the other provisions, of the Lease.


 


5.                                       Lessee
hereby confirms to Lessor that Lessee has duly and irrevocably accepted the
Aircraft under and for all purposes hereof, of the Lease and of the other
Lessee Operative Agreements.


 


6.                                       All
the terms and provisions of this Lease Supplement are hereby incorporated by
reference in the Lease to the same extent as if fully set forth therein.


 


7.                                       This
Lease Supplement may be executed in any number of counterparts (or upon
separate signature pages bound together into one or more counterparts),
each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same instrument.


 


8.                                       To
the extent, if any, that this Lease Supplement constitutes chattel paper (as
such term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction), no security interest in this Lease Supplement may be
created through the transfer or possession of any counterpart other than the
original executed counterpart, which shall be identified as the counterpart
indicating it to be the original counterpart of this Lease Supplement for
chattel paper purposes, on the signature page thereof.


 


[Intentionally left blank.  Signature page follows.]


 






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2

















 


IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Supplement to be duly executed as of the day and year first above written.


 


 


	
   

  	
  WELLS FARGO BANK NORTHWEST,
  NATIONAL ASSOCIATION,

  
	
   

  	
   

  	
  not in its individual
  capacity, except as expressly provided herein, but solely as trustee under
  the Trust Agreement, as Lessor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HAWAIIAN AIRLINES, INC.,
  

  
	
   

  	
   

  	
  Lessee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


 


[This is the Original
counterpart of the Lease Supplement for chattel paper purposes.]


 


[or]


 


[This is a duplicate
executed counterpart, and is not the
original counterpart, of the Lease Supplement, for chattel paper purposes.]


 






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EXHIBIT B — AIRCRAFT
DESCRIPTION


 


AIRCRAFT
DESCRIPTION


 


The Aircraft is a Boeing model 717-200 aircraft, consisting of (1) an
airframe bearing FAA registration no. N604AT (to be changed to N483HA) and
manufacturer’s serial no. 55128, (2) two Rolls-Royce Deutschland Ltd &
Co KG Model BR 700-715 C1-30 engines (each of which is turbine-powered and has
550 or more rated takeoff horsepower or its equivalent), bearing manufacturer’s
serial nos. 13392 and 13189 and (3) all appliances, parts, instruments,
appurtenances, accessories, furnishings, and other equipment or property
incorporated in such airframe and engines.


 






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B-1

















 


EXHIBIT C - RETURN
ACCEPTANCE SUPPLEMENT


 


RETURN ACCEPTANCE
SUPPLEMENT N      HA


 


This Supplement,
dated
                    ,
20    , is entered into between Wells Fargo Bank Northwest,
National Association,  a national banking
association, not in its individual capacity but solely as Owner Trustee under
Trust Agreement N      HA, dated as of
          , 200 , with
BCC Equipment Leasing Corporation (such Owner Trustee, in its capacity as
trustee, being referred to as “Lessor”), and
Hawaiian Airlines, Inc. (“Lessee”), a
Hawaii corporation.


 


Lessor and Lessee
have entered into Lease Agreement N      HA (the “Lease”), dated as of
          , 200 ,
relating to the Boeing model 717-200 aircraft described below. Terms defined in
the Lease have the same meanings when used in this Supplement.


 


Lessor and Lessee
hereby agree as follows:


 


1.                                       Lessor
and Lessee are executing this Return Acceptance Supplement to confirm that, on
the date hereof, Lessee returned the following Airframe and Engines to Lessor:


 


Airframe:  U.S. registration no.
N      HA; manufacturer’s serial no.     ;
and


 


Engines:  two Rolls-Royce
Deutschland Ltd & Co KG engines, bearing manufacturer’s serial nos.
           and


 


2.                                       This
Return Acceptance Supplement is being delivered in
                                          .


 


3.                                       Lessor
and Lessee agree that the return of the Aircraft complies with § 5 and
Annex B of the Lease, except as set forth below:


 






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C-1

















 


4.                                       Lessor
and Lessee agree that the Lease is terminated, except for the provisions
thereof that expressly survive termination.


 






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C-2

















 


IN WITNESS WHEREOF,
Lessor and Lessee have executed this Return Acceptance Supplement
N      HA.


 


 


	
   

  	
  WELLS FARGO BANK
  NORTHWEST, NATIONAL ASSOCIATION, not in its individual
  capacity, except as expressly provided herein, but solely as trustee under
  the Trust Agreement, as Lessor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HAWAIIAN AIRLINES,
  INC., as Lessee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 






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C-3

















 


SCHEDULE 1-PART A


 


CERTAIN TERMS


 


	
  Defined Term

  	
   

  	
  Definition

  
	
   

  	
   

  	
   

  
	
  Scheduled Delivery Date

  	
   

  	
  August 29, 2008

  
	
   

  	
   

  	
   

  
	
  Delivery Date

  	
   

  	
  August 29, 2008

  
	
   

  	
   

  	
   

  
	
  Delivery Location

  	
   

  	
  Miami, Florida

  
	
   

  	
   

  	
   

  
	
  Document Date

  	
   

  	
  August 29, 2008

  
	
   

  	
   

  	
   

  
	
  Minimum Liability Insurance Amount

  	
   

  	
  [...***...]

  
	
   

  	
   

  	
   

  
	
  Minimum Amount

  	
   

  	
  [...***...]

  
	
   

  	
   

  	
   

  
	
  Past-Due Rate

  	
   

  	
  [...***...]

  
	
   

  	
   

  	
   

  
	
  Payment Date

  	
   

  	
  (1) the Delivery Date, and (2) thereafter,
  the first day of each calendar month, commencing September 1, 2008 and
  continuing up to and including December 1, 2019[, as set forth on
  Schedule 2 to the Lease].

  
	
   

  	
   

  	
   

  
	
  Purchase Date

  	
   

  	
  [...***...]

  
	
   

  	
   

  	
   

  
	
  Scheduled Expiration Date

  	
   

  	
  December 20, 2019

  
	
   

  	
   

  	
   

  
	
  Security Deposit

  	
   

  	
  [...***...]

  
	
   

  	
   

  	
   

  
	
  Threshold Amount

  	
   

  	
  [...***...]

  



 






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SCHEDULE 1-PART B


 


CTC REGISTRATIONS


 


1.                                       International
Interest in respect of the lease of the Airframe from Lessor to Lessee under
the Lease.


 


2.                                       International
Interest in respect of the lease of the Engine bearing manufacturer’s serial
number 13392 from Lessor to Lessee under the Lease.


 


3.                                       International
Interest in respect of the lease of the Engine bearing manufacturer’s serial
number 13189 from Lessor to Lessee under the Lease.


 






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SCHEDULE 2


 


BASIC RENT


 


[...***...]


 






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treatment and filed separately with the SEC


 

















 


SCHEDULE 3


 


STIPULATED LOSS VALUES


 


[...***...]


 






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treatment and filed separately with the SEC


 














 


SCHEDULE 4-PART A


 


[RESERVED]


 






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treatment and filed separately with the SEC


 

















 


SCHEDULE 4-PART B


 


[RESERVED]


 






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treatment and filed separately with the SEC


 

















 


SCHEDULE 5


 


NOTIONAL DEBT AMORTIZATION


 


[...***...]


 






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treatment and filed separately with the SEC


 

















 


SCHEDULE 6


 


PERMITTED COUNTRIES


 


[...***...]


 






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treatment and filed separately with the SEC


 

















 


SCHEDULE 7


 


PLACARDS


 


Owned by and Leased from

Wells Fargo Bank Northwest, National Association,

as trustee


 






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ANNEX A


 


PART 1


 


DEFINITIONS


 


GENERAL PROVISIONS


 


(a)                                  In
each Operative Agreement, unless otherwise expressly provided, a reference to:


 


(1)                                  each
of “Lessee”, “Lessor”, “Owner Trustee”, “Owner Participant”, and any other
Person includes any successor in interest to it and any permitted transferee,
permitted purchaser, or permitted assignee of it;


 


(2)                                  any
agreement or other document (including any annex, schedule, or exhibit thereto,
or any other part thereof) includes that agreement or other document as
amended, supplemented, or otherwise modified from time to time in accordance
with its terms and in accordance with the Operative Agreements, and any
agreement or other document entered into in substitution or replacement
therefor;


 


(3)                                  any
provision of any Law includes any such provision as amended, modified,
supplemented, substituted, reissued, or reenacted before the Delivery Date, and
thereafter from time to time;


 


(4)                                  “Agreement”,
“this Agreement”, “hereby”, “herein”, “hereto”, “hereof”, “hereunder”, and
words of similar import, when used in any Operative Agreement, refer to such
Operative Agreement as a whole and not to any particular provision of such
Operative Agreement;


 


(5)                                  “including”,
“include”, and terms or phrases of similar import means “including [etc.],
without limitation”; and


 


(6)                                  a
reference to a “section” or “§”, an “Exhibit”, an “Annex”, or a “Schedule” in
any Operative Agreement, or in any annex 


 






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1

















 


thereto,
is a reference to a section of, or an exhibit, an annex, or a schedule to, such
Operative Agreement or such annex, respectively.


 


(b)                                 Each
exhibit, annex, and schedule to each Operative Agreement is incorporated in,
and is a part of, such Operative Agreement.


 


(c)                                  Unless
otherwise defined or specified in any Operative Agreement, all accounting terms
therein shall be construed and all accounting determinations thereunder shall
be made in accordance with GAAP.


 


(d)                                 Headings
used in any Operative Agreement are for convenience only, and shall not in any
way affect the construction of, or be taken into consideration in interpreting,
such Operative Agreement.


 


(e)                                  Unless otherwise indicated, references in
this Lease to Articles, Chapters and the Preamble of the CTC are references to
the English language version of the Consolidated Text and any reference herein
to a provision of the Consolidated Text is a reference to the English language
version of the provision of the Convention or the Aircraft Protocol from which
it is derived, the Convention and the Aircraft Protocol being read and
interpreted together as a single instrument as required by Article 6(1) of
the Convention.


 


(f)                                    CTC-related provisions of any Operative
Agreement will prevail in the case of a conflict with non-CTC-related
provisions.


 


DEFINED TERMS


 


Actual
Knowledge: (a) as it applies to Owner Trustee, actual
knowledge of a Responsible Officer in the Corporate Trust Department, and (b) as
it applies to Owner Participant or Lessee, actual knowledge of a Vice President
or more-senior officer of Owner Participant or Lessee (respectively), or any
Responsible Officer of Owner Participant or Lessee (respectively); provided, that each of Lessee, Owner Participant, and Owner
Trustee shall be deemed to have “Actual Knowledge” of any matter as to which it
has received notice from Lessee, Owner Participant, or Owner Trustee, given
pursuant to § 14.7 of the Participation Agreement.


 






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Additional
Insured: defined in § D of Annex D to the Lease.


 


Affiliate
of any Person: any other Person directly or indirectly controlling, controlled
by, or under common control with such Person. 
For purposes of this definition, “control” means the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract,
or otherwise, and “controlling”, “controlled by”, and “under common control
with” have correlative meanings.


 


After-Tax
Basis: a basis such that any payment to be received or
receivable by any Person is supplemented by a further payment to that Person so
that the sum of the two payments, after deducting all Taxes (taking into
account any related deduction, credit, reduction in income or other Tax benefit
recognized and actually utilized by such Person or any of its Affiliates in
reducing its Taxes), is equal to the payment due to such Person.


 


Aircraft:
the Airframe and the two Engines.


 


Aircraft
Description Exhibit: Exhibit B to the Lease.


 


Aircraft
Documents: all technical data, manuals, and log books, and
all inspection, modification, and overhaul records and other service, repair,
maintenance, and technical records that are required by the FAA, the Lease or
the Maintenance Program to be maintained with respect to the Aircraft,
Airframe, Engines, or Parts, or that are of a type required to be delivered by
Lessee upon return of the Aircraft, Airframe, or Engines under § 5 of the
Lease; and such term shall include all additions, renewals, revisions, and
replacements of any such materials from time to time made, or required to be
made, in accordance with the Lease, the Maintenance Program, or such FAA
regulations, in each case in whatever form and by whatever means or medium
(including microfiche, microfilm, paper, or computer disk or other electronic
medium) such materials are maintained or retained by or on behalf of Lessee (provided,  that all such
materials shall be maintained in the English language), and shall include all
Returnable Documents.


 


Aircraft Protocol: the Protocol to the Convention on International Interests in
Mobile Equipment on Matters Specific to
Aircraft Equipment which was adopted on November 16, 2001 at a diplomatic
conference held in Cape Town, 


 






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South Africa (as amended, supplemented or modified from time to time)
and from and after the effective date of the Convention in the relevant
Contracting State shall mean when referring to the Aircraft Protocol with
respect to such Contracting State, the Aircraft Protocol, as in effect in such
Contracting State unless otherwise indicated.


 


Airframe:
(1) the aircraft (excluding Engines or engines from time to time installed
thereon) manufactured by Airframe Manufacturer and identified by Airframe
Manufacturer’s model number, United States registration number, and Airframe
Manufacturer’s serial number set forth in the Aircraft Description Exhibit, or (2) any
Replacement Airframe, including in either case any and all Parts incorporated
or installed in or attached or appurtenant to such airframe, and any and all
Parts removed from such airframe, unless title to such Parts does not vest in
Lessor in accordance with § 8.1 and Annex C of the Lease.  Upon substitution of a Replacement Airframe
under and in accordance with the Lease, such Replacement Airframe shall become
subject to the Lease and shall be the “Airframe” for all purposes of the
Operative Agreements, and the replaced Airframe shall cease to be subject to
the Lease and shall cease to be the “Airframe”.


 


Airframe
Manufacturer: McDonnell Douglas Corporation, a Maryland
corporation.


 


Appraiser:
a firm of independent aircraft appraisers internationally
recognized as having experience and expertise in appraising large commercial
jet passenger aircraft.


 


APU:
the auxiliary power unit installed on the Aircraft on the Delivery Date,
whether or not installed on the Aircraft from time to time thereafter, unless
title to such auxiliary power unit shall not be vested in Lessor in accordance
with § 8.1 of the Lease, and any replacement or substituted auxiliary
power unit installed on the Aircraft in accordance with the Lease as to which
title is required to be vested in Lessor in accordance with § 8.1 of the
Lease.


 


Associated Rights: is defined in the CTC.


 


Aviation
Authority: the FAA.


 






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Bankruptcy
Code: the United States Bankruptcy Code, 11 U.S.C. § 101
et seq.


 


Basic
Rent: the rent payable for the Aircraft pursuant to
§ 3.2.1 of the Lease.


 


Business
Day: any day other than a Saturday, Sunday, or other day on
which commercial banks are authorized or required by law to close in New York,
NY, Honolulu, Hawaii, Salt Lake City, UT, or Seattle, WA (solely with respect
to a payment by Owner Participant).


 


Cash
Equivalents: the following securities (which shall mature
within 90 days of the date of purchase thereof): (1) direct obligations of
the U.S. Government; (2) obligations fully guaranteed by the U.S.
Government; (3) certificates of deposit issued by, or bankers’ acceptances
of, or time deposits or a deposit account with, WFB or any bank, trust company,
or national banking association incorporated or doing business under the laws
of the United States or any state thereof having a combined capital and surplus
and retained earnings of at least $1 billion and having a rating of “A” or
better from Fitch Ratings, Ltd.; or (4) commercial paper of any issuer
doing business under the laws of the United States or one of the states thereof
and in each case having a rating assigned to such commercial paper by Standard &
Poor’s or Moody’s equal to or higher than A1 or P1, respectively.


 


Citizen
of the United States: defined in § 40102(a)(15) of the
Transportation Code and in the FARs.


 


Closing:
the closing of the transactions contemplated by the Participation Agreement on
the Delivery Date.


 


Code:
the Internal Revenue Code of 1986.


 


Consolidated Text: the Consolidated Text of the CTC which was adopted on November 16,
2001 at a diplomatic conference held in Cape Town, South Africa (as amended,
supplemented or modified from time to time).


 


Convention: the Convention on
International Interests in Mobile Equipment which was adopted on November 16, 2001 at a diplomatic conference
held in Cape Town, South Africa (as amended, supplemented or modified from time
to time) and from and after the effective date of the


 






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Convention in the
relevant Contracting State shall mean when referring to the Convention with
respect to such Contracting State, the Convention, as in effect in such
Contracting State unless otherwise indicate.


 


Contracting State:
a country that has ratified, accepted, approved or acceded to the CTC in accordance with its terms and
any denunciation by such Contracting
State of the CTC which in
accordance with the terms of the CTC
has not yet taken effect.


 


CTC: the Convention and the Aircraft Protocol together
and, from and after the effective date of the CTC in the relevant Contracting
State, shall mean when referring to the CTC with respect to such Contracting
State, the CTC, as in
effect in such Contracting State
unless otherwise indicated.


 


CTC Registrations: the registrations set forth in Schedule 1 - Part B to the Lease.


 


Corporate
Trust Department or Trust Office:
Owner Trustee’s principal corporate trust office, located from time to time at
Owner Trustee’s address for notices under the Participation Agreement, or such
other office at which Owner Trustee’s corporate trust business shall be
administered and which Owner Trustee specifies by notice in writing to Lessee
and Owner Participant.


 


CRAF:
the Civil Reserve Air Fleet Program established pursuant to 10 U.S.C.
§ 9511 - 13, or any similar substitute program.


 


Debt:
any liability for borrowed money, or any liability for the payment of money in
connection with any letter of credit transaction, or any other liabilities
evidenced or to be evidenced by bonds, debentures, notes, or other similar
instruments.


 


Default:
any condition, circumstance, act, or event that, with the giving of notice or
the lapse of time, or both, would constitute an Event of Default.


 


Delivery
Date: defined in Schedule 1 — Part A to the Lease, such
date being the date, which shall be a Business Day, when the Aircraft is
delivered to and accepted by Lessee under the Lease and when the Closing
occurs.


 






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Delivery
Deadline: 5:00 p.m., local time at the Delivery
Location, on the date that is the last day of the second month following the
month of the Scheduled Delivery Date.


 


Delivery
Location: defined in Schedule 1 — Part A to the Lease.


 


Document
Date: defined in Schedule 1 — Part A to the Lease.


 


Dollars,
United States Dollars, or $: the lawful currency of the United States.


 


Engine:
(1) each of the engines manufactured by Engine Manufacturer and identified
by Engine Manufacturer’s model number and Engine Manufacturer’s serial number
in the Aircraft Description Exhibit and originally installed on the
Airframe on delivery thereof pursuant to the Lease, or (2) any Replacement
Engine, in any case whether or not from time to time installed on the Airframe
or installed on any other airframe or aircraft, including (for both clauses (1) and
(2)) any and all Parts incorporated or installed in or attached or appurtenant
to such engine, and any and all Parts removed from such engine, unless title to
such Parts does not vest in Lessor in accordance with § 8.1 and Annex C of
the Lease.  Upon substitution of a
Replacement Engine under and in accordance with the Lease, such Replacement Engine
shall become subject to the Lease and shall be an “Engine” for all purposes of
the Operative Agreements, and the replaced Engine shall cease to be subject to
the Lease and shall cease to be an “Engine”.


 


Engine
Manufacturer: Rolls-Royce Deutschland Ltd. and Co. KG.


 


ERISA:
the Employee Retirement Income Security Act of 1974.


 


Event of
Default: any one or more of the conditions, circumstances,
acts, or events set forth in § 13 of the Lease.


 


Event of
Loss with respect to the Aircraft, the Airframe, or any
Engine: any of the following circumstances, conditions, or events with respect
to such property, for any reason whatsoever:


 


(1)                                  the
destruction of such property, damage to such property beyond practical or
economic repair, or rendition of such property permanently unfit for normal use
by Lessee;


 






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(2)                                  the
actual or constructive total loss of such property, or any damage to such
property, or requisition of title or use of such property, which results in an
insurance settlement with respect to such property on the basis of a total loss
or constructive or compromised total loss;


 


(3)                                  any
loss of such property or loss of use of such property that continues until the
earlier of (aa) the last day of the Term, and (bb) the date that is 90 days
after the commencement of such loss, as a consequence of any theft, hijacking,
or disappearance of such property;


 


(4)                                  any
taking of title to such property by any Government Entity or purported
Government Entity (whether by seizure, condemnation, confiscation, requisition,
or otherwise);


 


(5)                                  any
seizure, condemnation, confiscation, taking, or requisition of use of such
property that continues until the earliest of (aa) the last day of the
Term, (bb) the date upon which the Aircraft is modified, altered, or
adapted in such a manner as would render conversion of such property for use in
normal commercial passenger service impractical or uneconomical, (cc) the
date on which the restrictions set forth in § 7.1.5 are violated (because
such property is operated or located in any area excluded from coverage by any
insurance policy or indemnity required to be maintained in respect of such
property), or (dd) the date that is 90 days following the commencement of
such loss of use (unless such loss of use results from action by the U.S.
Government, in which case this clause (dd) shall not apply to such loss of
use;


 


(6)                                  as
a result of any law, rule, regulation, order, or other action by the Aviation
Authority or by any Government Entity otherwise having jurisdiction over the
operation or use of the Aircraft, the use of such property in the normal course
of Lessee’s business of passenger air transportation is prohibited for a period
expiring on the earlier to occur of (aa) the last day of the Term, and
(bb) the date that is 180 days following commencement of such prohibition,
unless, before the expiration of such 180-day period, Lessee undertakes and is
diligently carrying forward such steps as are necessary or desirable to permit
the 


 






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8

















 


normal use of such
property by Lessee, then the date that is 360 days following commencement of
such prohibition; and


 


(7)                                  the
basing of the Aircraft, while under requisition for use by any Government
Entity, in any area excluded from coverage by any required insurance policy
(unless the required U.S. governmental indemnity in lieu of such insurance,
provided for in § 10.3 of the Lease, is in place).


 


The date of such Event of Loss shall be the date of such loss, damage,
insurance settlement, seizure, condemnation, confiscation, taking or
requisition of title or use, or prohibition, except that for purposes of
clauses (3), (5), and (6) above, no Event of Loss shall be deemed to
have occurred until the date of expiration of the applicable period referred to
therein.


 


Exchange Act: 
the Securities Exchange Act of 1934, as amended and
supplemented from time to time.


 


Expenses:
any and all liabilities, obligations, losses, damages, settlements, penalties,
claims (including claims or liabilities based or asserted upon (a) negligence,
(b) strict or absolute liability, (c) liability in tort, (d) infringement
of patent, trademark, or other property or other right, and (e) liabilities
arising out of violation of any Law), actions, suits, costs, expenses, and
disbursements (including reasonable fees and disbursements of legal counsel,
accountants, appraisers, inspectors, or other professionals, and costs of
investigation), including all such costs, expenses, and disbursements incurred
by any person in asserting, or in defending any claims arising out of its
assertion of, any rights it may have under, or its cooperation in connection
with any Expenses indemnified pursuant to, § 9 of the Participation
Agreement; provided, however, that Expenses shall not include any costs or
expenses with respect to the deregistration of the Aircraft incurred on or
prior to the Delivery Date.


 


FAA:
the Federal Aviation Administration of the United States, or any Government
Entity succeeding to the functions of such Federal Aviation Administration.


 


FAA
Counsel: McAfee & Taft. P.C..


 






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FAA-Filed
Documents: the Lease, the Lease Supplement No. 1, the
Trust Agreement, an application for registration of the Aircraft with the FAA
in Owner Trustee’s name, and the related affidavits of U.S. citizenship.


 


FARs:
the Federal Aviation Regulations issued or promulgated pursuant to the
Transportation Code from time to time.


 


Fair
Market Rental Value: the fair market rental value in Dollars
for the Aircraft that would apply in an arm’s-length transaction between an
informed and willing lessee under no compulsion to lease, and an informed and
willing lessor under no compulsion to lease, for the applicable period,
assuming that (1) rent would be paid monthly, in advance, and (2) the
Aircraft would be leased during any such applicable period on the same terms
and conditions (except for Basic Rent amount) as during the Term.


 


Fair
Market Sales Value: the fair market sales value in Dollars
for the Aircraft that would apply in an arm’s-length all cash transaction
between an informed and willing buyer under no compulsion to buy, and an
informed and willing seller under no compulsion to sell, in a transaction that
would close on or about the relevant time of determination.


 


Financing
Statements: UCC-1 financing statements covering the Aircraft,
as a precautionary matter, by Lessee, as lessee, showing Owner Trustee as
lessor, for filing in Delaware, and each other jurisdiction where (in Owner
Trustee’s opinion) filing is reasonably desirable.


 


Force
Majeure:  any delay or
nonperformance due to or arising out of acts of God or public enemy, civil war,
insurrection or riot, fire, flood, explosion, earthquake, accident, epidemic,
quarantine restriction, any act of government, governmental priority,
allocation, regulation or order affecting, directly or indirectly, the
Aircraft, Lessor, Owner Participant or any other Person, or any materials or
facilities, strike or labor dispute causing cessation, slowdown or interruption
of work, inability after due and timely diligence to procure equipment, data or
materials from suppliers in a timely manner, or any other cause to the extent
that such cause is beyond the control of Lessor or Owner Participant whether
above mentioned or not and whether or not similar to the foregoing


 






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GAAP:
generally accepted accounting principles as set forth in the statements of
financial accounting standards issued by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants, as varied by
any applicable financial accounting rules or regulations issued by the
SEC, and applied on a basis consistent with prior periods except as disclosed
in the pertinent Person’s financial statements.


 


Government
Entity: (1) any federal, state, provincial, or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency, or other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative, or regulatory
functions of such government, or (2) any other government entity
(including, without limitation, the Supervisory Authority and the Registrar, as
defined in Article 1(yy) and Article 1(qq), respectively, of the CTC)
having jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.


 


Indemnitee:
(1) WFB  and Owner Trustee; (2) each
separate or additional trustee appointed pursuant to the Trust Agreement; (3) Owner
Participant; (4) the Trust Estate; (5) each Affiliate of the Persons
described in clauses (1), (2), and (3), (6) the directors, officers,
employees, and agents of each of the Persons described in clauses (1) through
(3) and in clause (5); and (7) the successors and permitted assigns
of the Persons described in clauses (1) through (3), and in clauses (5) and
(6).  If any Indemnitee is Airframe
Manufacturer or Engine Manufacturer, such Person shall be an Indemnitee only in
its capacity as Owner Participant.


 


Inspection
Location:  the
facilities of AirTran Airways, Inc in or around the city of Atlanta, Georgia,
the facilities of AAR Corp. in or around Miami International Airport, Miami,
Florida and/or such other place as the parties shall agree.


 


International Interest: is defined in the Convention.


 


International Registry: the international registration
facilities established for the
purposes of and pursuant to the CTC by
Aviareto in Dublin, Ireland.


 


International Registry Regulations:
the regulations issued pursuant to 


 






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Article 17(2) of the Convention and Article XVIII of the
Aircraft Protocol.


 


Law:
(1) any constitution, statute, law, decree, regulation, order, rule, or
directive of any Government Entity, (2) any multinational or international
treaties, conventions or accords to which any Government Entity is signatory or
party (including, without limitation, the CTC and all International Registry
Regulations), and (3) any judicial or administrative interpretation or
application of, or decision under, any of the foregoing.


 


Lease
or Lease Agreement: Lease Agreement N483HA,
dated as of the Document Date, between Owner Trustee and Lessee.


 


Lease
Supplement:  a
supplement to the Lease, in the form of Exhibit A to the Lease.


 


Lease
Supplement No. 1:  the
initial Lease Supplement, dated the Delivery Date.


 


Lessee:
Hawaiian Airlines, Inc., a Delaware corporation.


 


Lessee
Operative Agreements: the Participation Agreement, the Lease,
the Lease Supplement No. 1, and each other agreement between Lessee and
any other party to the Participation Agreement, relating to the Transactions,
delivered on the Delivery Date or otherwise designated by Lessee and such other
party as a “Lessee Operative Agreement”.


 


Lessor:
Owner Trustee in its capacity as lessor under the Lease.


 


Lessor
Lien: with respect to any Person, on any property (including
the Trust Estate, the Aircraft, Airframe, Engines, Parts, or Aircraft
Documents) or any payments, any Lien on such property or payments that results
from (1) claims against such Person (if such Person is a trustee, whether
in its individual capacity or in its capacity as a trustee) not related to any
of the Transactions, (2) acts or omissions of such Person (if such Person
is a trustee, whether in its individual capacity or in its capacity as a trustee)
in violation of its obligations under any of the terms of the Operative
Agreements, or not related to the Transactions, (3) Taxes against such
Person (if such Person is a trustee, whether in its individual capacity or in
its capacity as a trustee) or any of its Affiliates that Lessee is not required
to indemnify under the Participation Agreement or any other Operative
Agreement, or (4) from claims against such 


 






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Person arising out of its transfer of all or part of its interest in
the Aircraft, the Trust Estate, or the Operative Agreements, other than a
Transfer required by the terms of the Operative Agreements or occurring
pursuant to the exercise of remedies set forth in § 14 of the Lease.


 


Letter
Agreement: that certain Letter Agreement, dated June 4,
2008, between Lessee and BCC Capital Corporation.


 


LIBOR:
a rate per annum (calculated on the basis of a 360-day year and actual days
elapsed) equal to the offered rate quoted for Dollars on Telerate Page 3750
as of 11:00 a.m. (London time), on the day two London Business Days prior
to the determination date, for a 180-day period.


 


Lien:
any mortgage, pledge, lien, charge, claim, encumbrance, lease, or security
interest affecting the title to or any interest in property, including without
limitation any International Interest or Associated Right.


 


Maintenance
Program: defined in Annex C to the Lease.


 


Maintenance
Reserves:  defined in Section F
of Annex C to the Lease.


 


Make-Whole
Amount: an amount equal to the greater of (a) zero and (b) (1) the
present value, discounted on a semiannually compounded basis utilizing an
interest factor equal to the Reinvestment Yield, of the principal payments
(including the payment at final maturity), and the interest payments, shown in
the notional debt amortization set forth on Schedule 5 to the Lease, from the
respective dates on which, but for the occurrence of the event or circumstance
(as provided for in the Lease) giving rise to the requirement to calculate a
Make-Whole Amount, such notional principal payments and interest payments would
have been payable pursuant to such Schedule 5 to the Lease, minus (2) the
notional debt balance (as shown on such Schedule 5 to the Lease and determined
as of the date specified in the applicable provisions of the Lease, and in any
event determined as of the same date as the amount described in the foregoing
clause (1)) plus accrued but unpaid interest thereon.  For purposes of this definition, “Reinvestment
Yield” shall mean the sum of one-half of one percent (.50%) plus the arithmetic
mean of the two most recent weekly average yields to maturity for actively
traded marketable U.S. Treasury fixed interest rate securities (adjusted to
constant maturities equal to the remaining weighted average life to maturity of
such 


 






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notional debt, and determined as of the same date as the amounts
described in the foregoing clauses (1) and (2)), as published by the
Federal Reserve Board in its Statistical Release H.15(519) or any successor
publication for the two calendar weeks ending on the Saturday next preceding
such date or, if such average is not published for such period, of such
reasonably comparable index as may be designated in good faith by Lessor.  If no possible maturity exactly corresponds
to such weighted average life to maturity, yields for the two most closely
corresponding published maturities shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Yield shall be interpolated
from such yields on a straight-line basis, rounding each of such relevant
periods to the nearest month.


 


Materially
Adverse Change with respect to any Person: any event,
condition, or circumstance that materially adversely affects (i) such
Person’s business, business prospects or consolidated financial condition, or (ii) such
Person’s ability to observe and perform its obligations, liabilities, and
agreements under the Operative Agreements; provided that, with respect to
Lessee, and solely for purposes of any determination under § 5.1.10 of the
Participation Agreement, (x) the elements described in the preceding
clause (i) shall not be considered applicable, and (y) there shall be
excluded from the operation and effect of the preceding clause (ii) any
material adverse change in the national regulatory regime covering the
operations of U.S. Air Carriers, generally, and any material adverse change in
the financial condition or business prospects of the United States airline
industry generally.


 


Minimum
Liability Insurance Amount: defined in Schedule 1 — Part A
to the Lease.


 


Moody’s:
Moody’s Investors Service, Inc. and its successors and assigns, and, if
Moody’s Investors Service, Inc. and its successors and assigns no longer
issues securities ratings, the term “Moody’s” shall
include at the option of the Lessee, any other Person that issues
internationally accepted securities ratings designated by the Lessee in a
written notice to the Owner Participant and reasonably acceptable to the Owner
Participant, and, upon the inclusion in this definition of such other Person,
each reference in the Operative Documents to a rating issued by Moody’s shall
be deemed automatically replaced with a reference to the comparable rating
issued by such Person.


 






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Net Worth
for any Person: the excess of its total tangible assets over its total
liabilities.


 


Non-U.S.
Person: any Person, other than a United States person as
defined in Code § 7701(a)(30).


 


Officer’s
Certificate of any party to the Participation Agreement: a
certificate signed by the Chairman, the President, any Vice President
(including those with varying ranks such as Executive, Senior, Assistant, or
Staff Vice President), the Treasurer, or the Secretary of such party.


 


Operative
Agreements: the Participation Agreement, the Trust Agreement,
the Lease, the Lease Supplement No. 1 and each other Lessee Operative
Agreement.


 


Owner
Participant: BCC Equipment Leasing Corporation and its
permitted transferees; except that, after an Owner Participant Transfers its
interest to a successor Owner Participant, such transferor shall not be an “Owner
Participant”.


 


Owner Participant
Agreements: the Participation Agreement, the Trust Agreement,
and each other agreement between Owner Participant and any other party to the
Participation Agreement relating to the Transactions, delivered on the Delivery
Date or otherwise designated by Owner Participant and such other party as an “Owner
Participant Agreement”.


 


Owner
Trustee: Wells Fargo Bank Northwest, National Association, a
national banking association, not in its individual capacity, except as
expressly provided in any Operative Agreement, but solely as Owner Trustee
under the Trust Agreement.


 


Owner
Trustee Agreements: the Participation Agreement, the Lease,
the Lease Supplement No. 1, the Trust Agreement, and each other agreement
between Owner Trustee and any other party to the Participation Agreement,
relating to the Transactions, delivered on the Delivery Date or otherwise
designated by Owner Trustee and such other party as an “Owner Trustee Agreement”.


 


Participation
Agreement: Participation Agreement N483HA, dated as of the
Document Date, among Lessee, Owner Participant, Owner Trustee.


 






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Parts:
all appliances, parts, components, instruments, appurtenances, accessories,
furnishings, seats, and other equipment of whatever nature (including avionics
and the APU, but excluding Engines or engines) from time to time installed or
incorporated in or attached or appurtenant to the Airframe or any Engine, and
as such term may be further defined in Annex C to the Lease.


 


Past-Due
Rate: defined in Schedule 1 — Part A to the Lease.


 


Payment
Date: defined in Schedule 1 — Part A to the Lease.


 


Payment
Period: each of the periods during any two consecutive
Payment Dates, in each case beginning on a Payment Date, the first such period
commencing on and including the Delivery Date.


 


Permitted
Air Carrier: any Permitted Foreign Air Carrier or U.S. Air
Carrier.


 


Permitted
Country: any country listed on Schedule 6 to the Lease or
otherwise agreed to in writing by Lessor, Owner Participant and Lessee, as
provided for on such Schedule 6, except any such country that, when the
pertinent sublease or other transfer begins, (1) does not maintain normal
diplomatic relations with the United States, or (2) is involved in civil
or internal war or military conflict, or (3) is involved in external war
or military conflict that involves, or materially threatens, domestic military
operations or such country’s civil order, or (4) is a country with which
it would constitute a breach of Law for Lessor or Owner Participant to engage
directly or indirectly in business.


 


Permitted
Foreign Air Carrier: any air carrier that (1) is domiciled
and has its principal executive offices in, and a substantial part of its
commercial operations in, a Permitted Country, (2) possesses all licenses,
approvals, and other authorizations necessary to conduct commercial airline
operations and to operate the Aircraft under the applicable Laws of such
Permitted Country and each other country or territory having any jurisdiction
over or with respect to its business or operations and in which the Aircraft
will be operated, and (3) at the time that the sublease or other pertinent
Transfer is entered into, has not declared or effected, or announced its
intention to declare or effect, any suspension or moratorium of payments or the
performance of other material 


 






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obligations, or otherwise materially delayed or failed to make or
perform any payment or other material obligation, in the conduct of its
business, and is not subject (as debtor) to any bankruptcy, insolvency,
liquidation, reorganization, dissolution, or similar proceeding, and does not
have substantially all of its property in the possession of any liquidator,
trustee, receiver, or similar Person.


 


Permitted
Institution: (a) any bank, trust company, insurance
company, financial institution, or any other corporation, limited liability
company or other legally cognizable entity, in each case with a combined
capital and surplus or Net Worth of at least $50,000,000, or (b) any
Affiliate of any Person described in clause (a) in respect of which
such person has provided a written guarantee of the obligations assumed by such
Affiliate under the Owner Participant Agreements in form and substance
reasonably satisfactory to Lessee and Lessor, or (c) any trustee or other
disclosed agent acting on behalf of any Person described in clause (a) or
(b); provided that “Permitted Institution” shall not, without Lessee’s consent,
include any person who, at the time of the subject such transaction, is (1) a
commercial air carrier with flight operations that directly compete with the
then-existing commercial air carrier flight operations of Lessee, or (2) is
an Affiliate of a person described in the foregoing clause (1), or (3) a
party then adverse to Lessee or an Affiliate of Lessee in any material
litigation, arbitration or other similar proceeding, or (4) is an
Affiliate of a person described in the foregoing clause (3) if, but only
if, the Net Worth of such adverse party constitutes more than half of the
aggregate Net Worth of all Persons within such adverse party’s group of
Affiliates.


 


Permitted
Lien: any Lien described in clauses (a) through (h) of
§ 6 of the Lease.


 


Permitted
Manufacturer: Airframe Manufacturer, Engine Manufacturer, or
any wholly-owned subsidiary of any of the foregoing; provided, that such
Person, at the time that the sublease or other pertinent Transfer is entered
into, has not declared or effected, or announced its intention to declare or
effect, any suspension or moratorium of payments or the performance of other
material obligations, or otherwise materially delayed or failed to make or
perform any payment or other material obligation, in the conduct of its
business, and is not subject (as debtor) to any bankruptcy, insolvency,
liquidation, reorganization, dissolution, or similar proceeding, and does not 


 






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have substantially all of its property in the possession of any
liquidator, trustee, receiver, or similar Person.


 


Permitted
Sublease: a sublease or sub-sublease permitted under
§ 7.2.7 of the Lease.


 


Permitted
Sublessee: any Permitted Air Carrier or Permitted
Manufacturer eligible to be the sublessee under a Permitted Sublease, as
determined in accordance with § 7.2.7 of the Lease.


 


Person
or person: an individual, firm,
partnership, joint venture, trust, trustee, Government Entity, organization,
association, corporation, limited liability company, government agency,
committee, department, authority, and other body, corporate or incorporate,
whether having distinct legal status or not, or any member of any of the same.


 


Plan:
any employee benefit plan within the meaning of ERISA § 3(3), or any plan
within the meaning of Code § 4975(e)(1).


 


Prime
Rate: the prime, base, or equivalent rate as from time to
time announced by JPMorgan Chase, National Association (or its successor).


 


Prospective International
Interest: is defined
in the Convention.


 


PUE: a “professional
user entity” as defined in the International Registry Regulations.


 


Related
Lease: each other lease agreement (if any) between the Lessee
and Owner Participant (or an Affiliate thereof), or a trustee acting on its or
its Affiliate’s behalf, and each covering a Boeing 717-200 aircraft, if but
only if, at the time that the Event of Default first existed that made the
existence of this term relevant, the lessor or owner participant under that
lease agreement is the Owner Participant (or an Affiliate thereof).


 


Removable
Parts: defined in § D of Annex C to the Lease.


 


Rent:
Basic Rent and Supplemental Rent.


 


Reorganization:
defined in § 7.1.9 of the Participation Agreement.


 






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Replacement
Airframe: an airframe substituted for the Airframe pursuant
to § 9 of the Lease.


 


Replacement
Engine: an engine substituted for an Engine pursuant to
§ 5.3, § 7.2, § 9, or Annex B of the Lease.


 


Responsible
Officer of a Person: (1) the President or Chief
Financial Officer of such Person, (2) any other officer of such Person customarily
bearing responsibility for matters relating to the transactions contemplated by
the Operative Agreements, or (3) any officer of such Person specifically
authorized to take responsibility for any matter relating to the transactions
contemplated by the Operative Agreements.


 


Return
Acceptance Supplement: a Return Acceptance Supplement, dated
as of the date the Aircraft is returned to Lessor pursuant to § 5 of the
Lease, entered into by Lessor and Lessee, substantially in the form of Exhibit C  to the Lease.


 


Returnable
Records: defined in § 3 of Annex B to the Lease.


 


Scheduled
Delivery Date: defined in Schedule 1 — Part A to the
Lease.


 


Scheduled
Expiration Date: defined in Schedule 1 — Part A to the
Lease.


 


SEC:
the Securities and Exchange Commission of the United States, or any Government
Entity succeeding to the functions of the Securities and Exchange Commission.


 


Section 1110:
11 U.S.C. § 1110 of the Bankruptcy Code, or any successor section of the
federal bankruptcy Law in effect from time to time.


 


Securities
Act: the Securities Act of 1933.


 


Security:
a “security” as defined in § 2(1) of the Securities Act.


 


Security
Deposit:  defined in Section 3.2.3
of the Lease.


 


SLV Date:
each or any of the dates specified in Schedule 3 to the Lease.


 


SLV Payment
Date: defined in § 9.1.2(a) of the Lease.


 






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Special
Default: (1) Lessee’s failure to pay any amount of Rent,
or any amount of rent under a Related Lease, in each such case when due, (2) any
Default referred to in § 13.7 of the Lease, or any similar default set
forth in any Related Lease, or (3) any Event of Default.


 


Standard &
Poor’s or S&P:
Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc., and its successor and assigns and, if Standard &
Poor’s Ratings Group and its successors and assigns no longer issues securities
ratings, the term “Standard & Poor’s”
shall include, at the option of the Lessee, any other Person that issues
internationally accepted securities ratings designated by the Lessee in a
written notice to the Owner Participant and reasonably acceptable to the Owner
Participant and, upon the inclusion in this definition of such other Person,
each reference in the Operative Documents to a rating issued by Standard &
Poor’s shall be deemed automatically replaced with a reference to the
comparable rating issued by such Person.


 


Stipulated
Loss Value for the Aircraft: during the Term, the amount set
forth in the column for SLV in Schedule 3 to the Lease for the pertinent
SLV Date.


 


Successor:
defined in § 7.1.9 of the Participation Agreement.


 


Supplemental
Rent: without duplication, all amounts, liabilities,
indemnities, and obligations (other than Basic Rent) that Lessee assumes or
becomes obligated to pay or agrees to pay under any Operative Agreement to or
on behalf of Lessor or any other Person, including the Security Deposit and the
Maintenance Reserves, and any Stipulated Loss Value, and, if applicable,
Make-Whole Amount, and any indemnity payments under § 9 of the
Participation Agreement.


 


Tax
Indemnitee: (1) WFB and Owner Trustee, (2) each
separate or additional trustee appointed pursuant to the Trust Agreement, (3) Owner
Participant, (4) the Trust Estate, and (5) the successors, assigns,
and agents of the foregoing.  For
purposes of this definition, the term “Owner Participant” shall include any
member of an affiliated group (within the meaning of Code § 1504) of which
Owner Participant is a member at the pertinent time, if consolidated, joint, or
combined returns are filed for such affiliated group for federal, state, or
local income tax purposes.  If any Tax
Indemnitee is Airframe 


 






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Manufacturer or Engine Manufacturer, such Person shall be a Tax
Indemnitee only in its capacity as Owner Participant.


 


Taxes:
all taxes, levies, imposts, duties, fees, charges, assessments, or withholdings
of any nature whatsoever imposed by any Taxing Authority, and any penalties,
additions to tax, fines, or interest thereon or additions thereto.


 


Taxing
Authority: any federal, state, or local government or other
taxing authority in the United States, any foreign government or political
subdivision or taxing authority thereof, any international taxing authority, or
any territory or possession of the United States or taxing authority thereof.


 


Term:
the period for which the Aircraft is leased pursuant to § 3 of the Lease,
commencing on and including the Delivery Date and ending on the Scheduled
Expiration Date, or such earlier date on which the Term terminates in
accordance with the provisions of the Lease.


 


Threshold
Amount: defined in Schedule 1 — Part A to the Lease.


 


Transaction
Expenses: all costs and expenses, and all fees and other
charges, payable or incurred by Lessor, Owner Trustee or WFB, or by Owner
Participant or Lessee, in connection with (a) the negotiation,
preparation, execution, and delivery of the Operative Agreements, the Owner
Trustee Agreements, and the Owner Participant Agreements, including the
reasonable fees and disbursements of (1) Ray, Quinney & Nebeker
(special counsel for Owner Trustee and WFB), (2) FAA Counsel, (3) McDermott,
Will & Emery LLP (special counsel to Lessee), and (4) Perkins
Coie LLP (special counsel to Owner Participant), (b) the recording or
filing of any documents, certificates, or instruments in connection with any of
the Transactions or in accordance with any Operative Agreement, Owner Trustee
Agreement, or any Owner Participant Agreement, including the FAA Filed
Documents, the CTC Registrations, the Financing Statements and any documents,
certificates or instruments filed in connection with any deregistration (other
than any deregistration occurring on or prior to the Delivery Date) or
reregistration of the Aircraft, or any termination of the Lease or any sublease,
(c) any proposed or consummated sublease or other Transfer of the
Aircraft, Airframe or any Engine, or any proposed or consummated termination or
cancellation of the Lease or any sublease (including the cost of any appraisal
conducted in connection with any such sublease, Transfer or termination), or
any Event of Loss with respect to 


 






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the Aircraft, Airframe or any Engine or Part, or any payment of
Stipulated Loss Value or Make-Whole Amount, and any replacement of the Airframe
or any Engine or Part pursuant to the Lease, (d) all consents,
waivers, amendments or other agreements in connection with the Operative
Agreements, the Owner Trustee Agreements or the Owner Participant Agreements or
the Transactions contemplated thereby, in each case (except during the
continuation of a Default) only to the extent requested by Lessee or required
by or made pursuant to the terms of the Operative Agreements, the Owner Trustee
Agreements or the Owner Participant Agreements (unless such requirement results
from the actions of the party incurring such costs or expenses not required by
or made pursuant to the Operative Agreements, the Owner Trustee Agreements or
the Owner Participant Agreements), whether or not any of the same are also
indemnified against by any other Person, and (e) with respect to Owner
Trustee, all initial and ongoing fees, disbursements and expenses of Owner
Trustee or otherwise in connection with the Trust Estate or the administration
of the transactions contemplated by the Operative Agreements, the Owner Trustee
Agreements and the Owner Participant Agreements, including, without limitation, the
reasonable fees and disbursements of counsel for Owner Trustee.


 


Transactions:
the transactions contemplated by the Operative Agreements, the Owner Trustee
Agreements, and the Owner Participant Agreements.


 


Transfer:
the transfer, sale, assignment, or other conveyance of all or any interest in
any property, right, or interest.


 


Transferee:
a Person to whom Owner Participant or Owner Trustee, purports or intends to
Transfer any or all of its right, title, or interest in the Trust Estate, as
described in § 10.1 of the Participation Agreement.


 


Transportation
Code: subtitle VII of title 49, United States Code, as
amended and supplemented from time to time.


 


Trust:
the trust created by the Trust Agreement.


 


Trust
Agreement: Trust Agreement N483HA, consisting of that certain
Amended and Restated Trust Agreement N604AT, dated as of February 2, 2004,
between Owner Participant and WFB, and that certain Amendment No. 1 


 






*** Material has been omitted pursuant to a request for confidential
treatment and filed separately with the SEC


 


22

















 


to Amended and Restated Trust Agreement N604AT to be known hereafter as
Trust Agreement N483HA, dated as of the Document Date, between Owner
Participant and WFB.


 


Trust
Estate: all Owner Trustee’s estate, right, title, and
interest in and to the Aircraft and the Lease, including all Basic Rent and
Supplemental Rent (including insurance proceeds and requisition, indemnity, or
other payments of any kind for of with respect to the Aircraft).


 


TUE: a “transaction
user entity” as defined in the International Registry Regulations.


 


UCC:
the Uniform Commercial Code as in effect in any applicable jurisdiction.


 


United
States or U.S.: the
United States of America; provided, that
for geographic purposes, “United States” means the 50 states and the District
of Columbia of the United States of America.


 


U.S. Air
Carrier: any United States air carrier who is a Citizen of
the United States holding an air carrier operating certificate issued by the Secretary
of Transportation pursuant to chapter 447 of the Transportation Code for
aircraft capable of carrying 10 or more individuals or 6000 pounds or more of
cargo, and as to whom there is in force an air carrier operating certificate
issued pursuant to Section 41101 of the Federal Aviation Act, or who may
operate as an air carrier by certification or otherwise under any successor or
substitute provisions therefor or in the absence thereof, and, at the time that
the sublease or other pertinent Transfer is entered into, has not declared or
effected, or announced its intention to declare or effect, any suspension or
moratorium of payments or the performance of other material obligations, or
otherwise materially delayed or failed to make or perform any payment or other
material obligation, in the conduct of its business, and is not subject (as
debtor) to any bankruptcy, insolvency, liquidation, reorganization,
dissolution, or similar proceeding, and does not have substantially all of its
property in the possession of any liquidator, trustee, receiver, or similar
Person.


 


U.S.
Government: the federal government of the United States, or
any instrumentality or agency thereof the obligations of which are guaranteed
by the full faith and credit of the federal government of the United States.


 






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23

















 


U.S.
Person: any Person described in Code § 7701(a)(30).


 


Wet
Lease: any arrangement whereby Lessee or a Permitted
Sublessee agrees to furnish an aircraft to a third party under arrangements
pursuant to which the aircraft (a) shall at all times be in the sole
possession and control of Lessee or such Permitted Sublessee, (b) shall be
operated in all respects solely by regular employees of Lessee or such
Permitted Sublessee, and (c) shall in all events be maintained, insured,
and otherwise used and operated in compliance with the terms and provisions of
the Lease and, to the extent not inconsistent with the Lease, the subject
Permitted Sublease; provided, that (i) Lessee’s
obligations under this Lease (and such Permitted Sublessee’s under the subject
Permitted Sublease) shall continue in full force and effect notwithstanding any
such arrangement, (ii) such third party shall not have any possessory
interest whatsoever in or with respect to the Aircraft, Airframe and Engines,
and the rights of such third party with respect to the Aircraft, Airframe and
Engines are subject and subordinate in all respects to the rights, title and
interests of Lessor and Owner Participant under and in connection with the
Operative Agreements, and of Lessee under and in connection with the Lease, and
(iii) the term of such Wet Lease shall not extend beyond the Term of the
Lease.


 


WFB:
Wells Fargo Bank Northwest, National Association, a national banking
association, not in its capacity as trustee under the Trust Agreement, but in
its individual capacity.


 






*** Material has been omitted pursuant to a request for confidential
treatment and filed separately with the SEC


 


24

















 


ANNEX A


 


PART 2


 


ADDITIONAL DEFINITIONS


 


1.                                       New Definitions


 


Annex A- Part 1 is hereby deemed to be amended by
adding to the “Defined Terms” set forth therein the following additional
defined terms:


 


[...***...]


 


JAA:  the European Joint Aviation
Authority, or any Government Entity succeeding to the functions of such Joint
Aviation Authority.


 


Minimum
Amount: defined in Schedule 1 — Part A to the
Lease.


 


Purchase
Date: defined in Schedule 1 — Part A to the Lease.


 


Purchase
Notice: defined in § 3.1 of Annex E — Part 1 to the
Lease.


 


2.                                       Amended Definitions


 


The “Defined Terms” set forth in Annex A-1 are hereby
deemed to be further amended by deleting, in their respective entireties, the
definitions for the terms “Aircraft Documents”, “Aviation
Authority”, “Event of Loss”, “Fair Market Sales Value”, and “Replacement Engine”, and by replacing the same with the
definitions set forth below:


 


Aircraft
Documents: all technical data, manuals, and log books, and
all inspection, modification, and overhaul records and other service, repair,
maintenance, and technical records that are required by the FAA (or the
relevant Aviation Authority), the Lease or the Maintenance Program to be
maintained with respect to the Aircraft, Airframe, Engines, or Parts, or that
are of a type required to be delivered by Lessee upon return of the Aircraft,
Airframe, or Engines under § 5 of the Lease; and such term shall include
all additions, renewals, revisions, and replacements of any such materials from
time to time made, or required to be made, in accordance with the Lease, the


 






*** Material has been omitted pursuant to a request for confidential
treatment and filed separately with the SEC


 


25














 


Maintenance Program, or
such FAA (or other Aviation Authority) regulations, in each case in whatever
form and by whatever means or medium (including microfiche, microfilm, paper,
or computer disk or other electronic medium) such materials are maintained or
retained by or on behalf of Lessee (provided,  that all such materials shall be maintained
in the English language), and shall include all Returnable Documents.


 


Aviation
Authority: the FAA or, if the Aircraft is registered with any
other Government Entity under and in accordance with § 1 of Annex E — Part 1
to the Lease, such other Government Entity.


 


Event of
Loss with respect to the Aircraft, the Airframe, or any
Engine: any of the following circumstances, conditions, or events with respect
to such property, for any reason whatsoever:


 


(1)                                  the
destruction of such property, damage to such property beyond practical or
economic repair, or rendition of such property permanently unfit for normal use
by Lessee;


 


(2)                                  the
actual or constructive total loss of such property, or any damage to such
property, or requisition of title or use of such property, which results in an
insurance settlement with respect to such property on the basis of a total loss
or constructive or compromised total loss;


 


(3)                                  any
loss of such property or loss of use of such property that continues until the
earlier of (aa) the last day of the Term, and (bb) the date that is 90 days
after the commencement of such loss, as a consequence of any theft, hijacking,
or disappearance of such property;


 


(4)                                  any
taking of title to such property by any Government Entity or purported
Government Entity (whether by seizure, condemnation, confiscation, requisition,
or otherwise);


 


(5)                                  any
seizure, condemnation, confiscation, taking, or requisition of use of such
property that continues until the earliest of (aa) the last day of the
Term, (bb) the date upon which the Aircraft is modified, altered, or
adapted in such a manner as would render conversion of such property for use in
normal commercial passenger 


 






*** Material has been omitted pursuant to a request for confidential
treatment and filed separately with the SEC


 


26

















 


service
impractical or uneconomical, (cc) the date on which the restrictions set
forth in § 7.1.5 are violated (because such property is operated or
located in any area excluded from coverage by any insurance policy or indemnity
required to be maintained in respect of such property), or (dd) the date
that is 90 days following the commencement of such loss of use (unless such
loss of use results from action by the U.S. Government, in which case this
clause (dd) shall not apply to such loss of use;


 


(6)                                  as
a result of any law, rule, regulation, order, or other action by the Aviation
Authority or by any Government Entity of the government of registry of the
Aircraft or by any Government Entity otherwise having jurisdiction over the
operation or use of the Aircraft, the use of such property in the normal course
of Lessee’s business of passenger air transportation is prohibited for a period
expiring on the earlier to occur of (aa) the last day of the Term, and
(bb) the date that is 180 days following commencement of such prohibition,
unless, before the expiration of such 180-day period, Lessee undertakes and is
diligently carrying forward such steps as are necessary or desirable to permit
the normal use of such property by Lessee, then the date that is 2 years
following commencement of such prohibition; and


 


(7)                                  the
basing of the Aircraft, while under requisition for use by any Government
Entity, in any area excluded from coverage by any required insurance policy
(unless the required U.S. governmental indemnity in lieu of such insurance,
provided for in § 10.3 of the Lease, is in place).


 


The date of such Event of Loss shall be the date of such loss, damage,
insurance settlement, seizure, condemnation, confiscation, taking or
requisition of title or use, or prohibition, except that for purposes of
clauses (3), (5), and (6) above, no Event of Loss shall be deemed to
have occurred until the date of expiration of the applicable period referred to
therein.


 


Fair
Market Sales Value: the fair market sales value in Dollars
for the Aircraft that would apply in an arm’s-length all cash transaction
between an informed and willing buyer under no compulsion to buy, and an
informed and willing seller under no compulsion to sell, in a transaction that
would close on or about the relevant time of determination, assuming that (1) the
Aircraft has 


 






*** Material has been omitted pursuant to a request for confidential
treatment and filed separately with the SEC


 


27

















 


been maintained in accordance with the Lease, and is in the condition
required by the Lease, and (2) the Aircraft will be delivered to such
informed and willing buyer in the return condition required by the Lease; provided, that any determination under § 14 of the
Lease shall be made on the basis of the actual condition of the Aircraft at
that time, and without the assumptions in clause (1) or (2) of this
definition.


 


Replacement
Engine: an engine substituted for an Engine pursuant to
§ 5.3, § 7.2, § 9, Annex B or § 4 of Annex E — Part 1,
of the Lease.


 






*** Material has been omitted pursuant to a request for confidential
treatment and filed separately with the SEC


 


28

















 


ANNEX A


 


PART 3


 


OTHER DEFINITIONS


 


1.                                       [RESERVED]


 






*** Material has been omitted pursuant to a request for confidential
treatment and filed separately with the SEC


 


29

















 


ANNEX B


 


RETURN CONDITIONS


 


                                                The
terms defined in Annex A to Lease Agreement N483HA, when capitalized as in
Annex A, have the same meanings when used in this Annex B. Annex A
also contains rules of usage that control construction in this Annex B.
Unless otherwise noted, section references refer to sections in this Annex B.


 


[...***...]


 






*** Material has been omitted pursuant to a request for confidential
treatment and filed separately with the SEC


 


B-1

















 


RETURN ACCEPTANCE
SUPPLEMENT


 


dated
                              ,
20


 


to Lease No.


 


relating to Boeing model 717-200 Aircraft


 


between


 


Wells Fargo Bank Northwest, National Association, not in its individual capacity but solely as trustee

(Lessor)


 


and


 


Hawaiian Airlines, Inc.

(Lessee)


 


This Return Acceptance Supplement is executed by the parties hereto to
confirm that on the date of this Return Acceptance Supplement at
    :      .m.
[                    
time] the following described aircraft (the Aircraft):


 


	
  Manufacturer

  	
  Boeing

  
	
   

  	
   

  
	
  Model

  	
  717-200

  
	
   

  	
   

  
	
  Manufacturer’s Serial
  No.

  	
   

  
	
   

  	
   

  
	
  Aircraft Hours and
  Cycles

  	
  (See Attachment 1)

  



 


including the following described engines installed thereon:


 


	
  Manufacturer

  	
   

  	
  Make
  and Model

  	
   

  	
  Manufacturer’s
  

  Serial No.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 






*** Material has been omitted pursuant to a request for confidential
treatment and filed separately with the SEC


 


B-2

















 


was delivered by Lessee to Lessor.


 


This Return Acceptance Supplement is intended to be delivered by Lessor
to Lessee in
                                            .


 


IN WITNESS WHEREOF, the parties hereto have caused this Return
Acceptance Supplement to be executed by their duly authorized representatives
as of the day and year first above written.


 


 


	
  HAWAIIAN
  AIRLINES, INC.

  (Lessee)

  	
   

  	
  WELLS FARGO BANK
  NORTHWEST, NATIONAL ASSOCIATION, not in its individual
  capacity but solely as trustee  

  (Lessor)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its

  	
   

  	
   

  	
  Its

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its

  	
   

  	
   

  	
   

  



 


 


ATTACHMENT “Aircraft
Hours and Cycles”


 






*** Material has been omitted pursuant to a request for confidential
treatment and filed separately with the SEC


 


B-3

















 


AIRCRAFT HOURS AND CYCLES


 


as of
                              ,
20


 


Boeing model 717-200 aircraft


 


	
  REGISTRATION MARKINGS

  	
  SERIAL NUMBER

  



 


A.                                   AIRFRAME:


 


Aircraft Total Time (Hours)


 


Aircraft Total Landings (Cycles)


 


Aircraft (and Engine) A Check - Hours to next check


 


Aircraft (and Engine) B Check - Hours to next check 


 


Aircraft (and Engine) C Check - Hours to next check


 


Aircraft (and Engine) D Check - Hours to next check


 


Aircraft Special Checks Hours/Cycles/Months to next task


 


B.                                     ENGINES
- MODEL:


 


	
  Position

  	
   

  	
  Serial

  Number

  	
   

  	
  Total

  Engine

  Cycles

  	
   

  	
  Total Time

  	
   

  	
  Time Since

  Last Shop

  Visit

  	
   

  	
  Hours/Cycles

  to Next

  Replacement

  of Lowest Life

  Limited Part

  	
   

  
	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 






*** Material has been omitted pursuant to a request for confidential
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B-4

















 


C.                                     APU
- MODEL:


 


	
  Serial

  Number

  	
   

  	
  Total

  Hours/Cycles

  	
   

  	
  Hours Since

  Overhaul

  	
   

  	
  Hours Since

  Last Shop

  Visit

  	
   

  	
  Hours/Cycles

  to Next

  Replacement of

  Lowest Life

  Limited Part

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


D.                                    LANDING
GEAR:


 


	
   

  	
   

  	
  Serial

  Number

  	
   

  	
  Hours/Cycles

  	
   

  	
  Total

  Hours/Cycles

  Since Last

  Overhaul

  	
   

  	
  Hours/Cycles

  to Next

  Overhaul

  	
   

  
	
  Nose Landing
  Gear

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Left Main Gear

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Right Main Gear

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


E.                                      MAINTENANCE
PROGRAM:


 


A
Check


 


B
Check


 


C
Check


 


D
Check


 






*** Material has been omitted pursuant to a request for confidential
treatment and filed separately with the SEC


 


B-5

















 


Accomplish
Engine HSI


 


Accomplish
Engine Heavy Maintenance


 


Accomplish
APU HSI


 


Accomplish
APU Heavy Maintenance


 


	
  NOTE:

  	
  Lessee’s
  Maintenance Program as it applies to the Aircraft will be shown above at the
  time of return of the Aircraft to Lessor

  



 






*** Material has been omitted pursuant to a request for confidential
treatment and filed separately with the SEC


 


B-6














 


AIRCRAFT CONFIGURATION DESCRIPTION


 


The Aircraft will be
delivered to Lessor in the configuration defined by Detail Specification
CS7172E, dated February 15, 1999, as amended and supplemented by various
Specification Change Notices, and as such Aircraft has been modified, as
permitted under the terms of the Lease, from the date of its initial delivery
to Lessee, including all Parts.


 






*** Material has been
omitted pursuant to a request for confidential treatment and filed separately
with the SEC


 


B-7

















 


AIRCRAFT DOCUMENTS


 


1.                                       Current,
or last U.S. Airworthiness Certificate.


 


2.                                       Current,
or last registration.


 


3.                                       Current,
or last Export Airworthiness Certificate, if applicable.


 


4.                                       Certificate
of Sanitary Construction for galleys and lavatories, as applicable.


 


5.                                       Aircraft
specification sheet and status summary for the Airframe, each Engine, each
landing gear and the APU, hours and cycles.


 


6.                                       All
historical records for airframe and engines.


 


7.                                       APU
historical records and schedule of overhaul or last shop visit.


 


8.                                       Current
status of APU inspection and operating times.


 


9.                                       List
and status of time- and cycle-controlled components — airframe, engines, APU,
landing gear, and accessories.


 


10.                                 List
and status of time- and cycle-controlled Life Limited Parts — airframe,
engines, APU, and landing gear.


 


11.                                 List
of all installed components (LRUs) showing Lessee’s available data, as required
by Lessee’s Maintenance Program, regarding part number, serial number, manufacturer,
avionics computers software programs modification levels, and accumulated time
and cycles.


 


12.                                 Summary
and control status of FAA Airworthiness Directives — including engines,
auxiliary power unit and equipment, and the method of incorporation (i.e.,
repetitive inspections, interim fix, or terminating action).


 


13.                                 List
of manufacturer’s Service Bulletins incorporated and method of incorporation (i.e., repetitive inspections, interim fix, or terminating
action) for airframe, engines, and equipment. Where only a portion of a service
bulletin is accomplished, Lessee will so identify which portion 


 






*** Material has been
omitted pursuant to a request for confidential treatment and filed separately
with the SEC


 


B-8

















 


was accomplished.


 


14.                                 List of
modifications or alterations (excluding manufacturer’s Service Bulletins if
accomplished pursuant to the manufacturer’s instructions) accomplished on the
aircraft, engines, and equipment, together with one copy of each modification,
alteration, engineering order, FAA Form 8110-3 approval, and associated
drawings, manuals, or data.


 


15.                                 List
of incorporated FAA Supplemental Type Certificates (STCs), together with a copy
of each certificate, list of drawings, manuals, or associated data.


 


16.                                 List
of maintenance watch items (including any system or structural defects and
special condition repetitive inspection requirements).


 


17.                                 List
of special, non-SRM, or non-MM repairs accomplished to the airframe, engines,
APU, and landing gear, together with on copy of each such repair, engineering
order, FAA Form 8110-3 approval, and associated drawings or data.


 


18.                                 Inventory
list of aircraft loose equipment (to include all galley equipment, flight deck
and passenger cabin emergency equipment, cargo compartment removable cargo
stops, and restraint nets).


 


19.                                 Current
interior arrangement diagram (LOPA).


 


20.                                 Current
emergency equipment installation drawing /diagram.


 


21.                                 FAA
8130-3 Forms or Airline Part tags, and shop overhaul reports for all time-
and cycle-controlled components — airframe, engines, APU, landing gear, and
accessories — changed since original Aircraft delivery from Airframe
Manufacturer.


 


22.                                 FAA 8130-3
Forms or Airline Part tags for all time- and cycle-controlled Life Limited
Parts — airframe, engines, APU, and landing gear — changed since original
Aircraft delivery from Airframe Manufacturer.


 


23.                                 Burn
Certification Test Data or FAA 8130-3 forms for cabin interior materials
replaced since original Aircraft delivery from Airframe Manufacturer (to
include materials used for all interior seating, curtains, partitions,
sidewalls, and carpets).


 






*** Material has been
omitted pursuant to a request for confidential treatment and filed separately
with the SEC


 


B-9

















 


24.                                 Record
of last compass swing.


 


25.                                 List
of oils and fluids used for aircraft engines, APU, and airframe systems.


 


26.                                 Aircraft
flight log books.


 


27.                                 Aircraft
maintenance/readiness log books.


 


28.                                 Aircraft
cabin log books.


 


29.                                 All
FAA Form 337s, Major repair and alterations.


 


30.                                 All
repair records, Major and Class 1, 2, 3.


 


31.                                 Corrosion
Prevention Control Program (CPCP) summary, and compliance documents.


 


32.                                 Aging
Aircraft program summary, and compliance documents.


 


33.                                 Last
aircraft weight and balance report.


 


34.                                 Last
aircraft flight control surfaces weight and balance reports.


 


35.                                 All
engines’ trend monitoring program documents.


 


36.                                 Last
accomplished Digital Flight Data Recorder (DFDR) calibration and algorithms
report.


 


37.                                 Acceptance
flight test reports — last flight accomplished prior to re-delivery.


 


38.                                 Scheduled
maintenance check status.


 


39.                                 Quality
Control Department Statements:


 


(a)                                  Maintenance
Program Certification or Approval.


 


(b)                                 Letter
detailing any major incidents or accidents involving the aircraft (if none, the
letter should so state).


 


(c)                                  Letter
detailing any leased or loaned parts that are installed on the aircraft (if
none, the letter should so state).


 






*** Material has been
omitted pursuant to a request for confidential treatment and filed separately
with the SEC


 


B-10

















 


(d)                                 Letter
certifying time/cycles on airframe, engines, life-limited parts,
time-controlled items, hard-time items, landing gear, APU, etc.


 


40.                                 [RESERVED].


 


41.                                 List
of equipment to be removed prior to Lease return delivery.


 


42.                                 Significant
Service Item summary.


 


43.                                 Operator’s
maintenance program tasks-to-Maintenance Review Board (MRB) tasks
cross-reference list.


 


44.                                 Scheduled
maintenance program requirements summary.


 


45.                                 [RESERVED].


 


46.                                 Original
aircraft manufacturer’s packing list, if available.


 


47.                                 FAA-approved
Airplane Flight Manual (AFM).


 


48.                                 Dispatch
Deviation Procedures Guide.


 


49.                                 Minimum
Equipment List (MEL), Master Minimum Equipment List (MMEL), Configuration
Destination List (CDL).


 


50.                                 MEL
Procedures Manual.


 


51.                                 Fault
Isolation Manuals.


 


52.                                 Fault
Reporting Manual.


 


53.                                 Ramp
Maintenance Manuals.


 


54.                                 Manufacturer’s
Maintenance Manuals — airframe and engines.


 


55.                                 Manufacturer’s
Illustrated Parts Catalogs (IPC) — airframe and engines.


 


56.                                 Manufacturer’s
Structural Repair Manuals (SRM).


 


57.                                 Manufacturer’s
Component Maintenance Manuals (CMM) — airframe and engines.


 


58.                                 Manufacturer’s
Overhaul Manuals (OHM) — airframe and engines.


 






*** Material has been
omitted pursuant to a request for confidential treatment and filed separately
with the SEC


 


B-11

















 


59.                                 Powerplant
Build-up Manuals.


 


60.                                 Non-Destructive
Testing Manuals (NDTM).


 


61.                                 Corrosion
Prevention Manual (CPM).


 


62.                                 Wiring
Diagram Manual, including wiring diagram equipment lists.


 


63.                                 System
Schematic Manuals.


 


64.                                 Aircraft
Weight and Balance Manual.


 


65.                                 Aircraft
Weight and Balance Supplement — Equipment list.


 


66.                                 [Reserved].


 


67.                                 Service
Bulletin Index and Service Bulletins.


 


68.                                 Airplane
Recovery Document.


 


69.                                 Fuel
Measuring Stick Calibration Document.


 


70.                                 Non-proprietary
Vendor Maintenance Manuals, and Component Maintenance Manuals for specialized
equipment (galleys, lavatories, flight crew seating, passenger seating, video
systems, passenger entertainment, etc.).


 


71.                                 Special
Tool and Ground Handling Equipment Index, if available.


 


72.                                 Illustrated
Tool and Equipment Catalog.


 


73.                                 Flight
Crew Operating Manual (FCOM).


 


74.                                 Pilot’s
Quick Reference Handbook (QRH).


 


75.                                 Dent
and Buckle Report.


 






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AIRCRAFT DOCUMENTATION
RETURN RECEIPT


 


Hawaiian Airlines, Inc. (“Lessee”), a
Hawaiian corporation, and Wells Fargo Bank Northwest, National Association, not
in its individual capacity but solely as trustee (“Lessor”),
hereby confirm the return delivery by Lessee and receipt by Lessor of the
Aircraft Documentation listed on the Attachment I hereto and made a part
hereof, on
                                ,
20    , in
                                              ,
at
                            
local time. Lessor is executing this return receipt pursuant to the
instructions of BCC Equipment Leasing Corporation (“Owner
Participant”), a Delaware corporation, such instructions attached
hereto as Attachment II.


 


 


	
  HAWAIIAN
  AIRLINES, INC.

  (Lessee)

  	
   

  	
  WELLS FARGO BANK
  NORTHWEST, NATIONAL ASSOCIATION, not in its individual
  capacity but solely as trustee

  (Lessor)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its

  	
   

  	
   

  	
  Its

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its

  	
   

  	
   

  	
   

  



 


 


ATTACHMENTS (2)


 






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AIRCRAFT DOCUMENTATION


 


	
  Title

  	
   

  	
  Identification

  Number

  	
   

  	
  Quantity

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 






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ANNEX C


 


MAINTENANCE


 


The terms defined
in Annex A to Lease Agreement N483HA, when capitalized as in Annex A,
have the same meanings when used in this Annex C. Annex A also contains rules of
usage that control construction in this Annex C. Unless otherwise noted,
section references refer to sections in this Annex C.


 


A.                                    Maintenance


 


At its own cost and expense, Lessee shall maintain,
inspect, service, repair, test, and overhaul the Aircraft (or cause the
Aircraft to be maintained, inspected, serviced, repaired, tested, and
overhauled) in accordance with a written, continuous airworthiness maintenance
and inspection program that (1) so long as the Aircraft is registered in
the United States, meets FAA requirements for U.S. commercial passenger airline
operations by U.S. Air Carriers, and that is authorized and approved by the
FAA, and (2) so long as the Aircraft is registered in a jurisdiction other
than the United States, is substantially as stringent as such requirements by
the FAA or the JAA for the Aircraft, and that, in either such case, otherwise
meets the requirements of this Annex C (the “Maintenance Program”).
The Maintenance Program shall include a corrosion prevention and control
program which meets the requirements set forth in the applicable FAA
Airworthiness Directive(s), as the same may be amended, superseded, or replaced
from time to time. The Maintenance Program requirements shall also include, but
shall not be limited to, compliance with all service, inspection, maintenance,
modification, repair, and overhaul regulations, directives, and instructions
which are made mandatory by the FAA upon United States operators of Boeing
Model 717 aircraft and Rolls-Royce Deutschland Ltd & Co KG
model BR 700-715 C1-30 engines.


 


Lessee shall perform or cause to be performed the
requirements of the Maintenance Program, so as (aa) to keep the Aircraft,
Airframe, and Engines in as good operating condition as originally delivered
hereunder, ordinary wear and tear excepted; (bb) to keep the Aircraft in
such operating condition as may be necessary to enable the applicable
airworthiness certificate for the Aircraft to be maintained under the regulations
of the FAA or other Aviation Authority then having jurisdiction over the
operation of the Aircraft (but in any event in 


 






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C-1

















 


accordance with the Maintenance Program), other than during (i) temporary
periods of storage in accordance with applicable regulations and the
Maintenance Program; (ii) maintenance and modifications permitted
hereunder; and (iii) periods when the FAA or such other Aviation Authority
has revoked or suspended the airworthiness certificates for all similar
aircraft; and (cc) to keep in full force and effect all applicable insurance.
In the event that the Maintenance Program does not address all matters
necessary to the performance of the undertakings set forth in the clauses (aa),
(bb), and (cc) above, then such additional matters shall be addressed in
accordance with applicable service, inspection, maintenance, modification, repair,
and overhaul manuals published by the manufacturers of the Airframe, Engines,
or Parts, as the case may be. All service, inspection, maintenance,
modification, repair, and alteration of the Aircraft, Airframe, Engines, or
Parts shall be performed by persons authorized or qualified, in compliance with
the FARs (or equivalent rules of the other Aviation Authority then having
jurisdiction over the operation of the Aircraft), to do such work.


 


In maintaining the Aircraft, Airframe, and Engines,
Lessee shall use and observe the same maintenance standards and practices as
Lessee employs with respect to similar aircraft operated by Lessee and, during
any period in which a Permitted Sublease is in effect, Lessee shall cause the
Permitted Sublessee to use and observe the same maintenance standards and
practices as such Permitted Sublessee employs with respect to similar aircraft
operated by such Permitted Sublessee; provided, that
in either such case, such maintenance shall at all times be performed in
compliance with the Maintenance Program.


 


Lessee further agrees that the Aircraft will be
maintained, inspected, used, serviced, repaired, tested, overhauled, or
inspected in compliance with applicable Laws with respect to the maintenance of
the Aircraft and in compliance with each applicable airworthiness certificate,
license, and registration relating to the Aircraft issued by the Aviation
Authority, other than minor and nonrecurring violations with respect to which
corrective measures are taken upon discovery thereof and except to the extent
Lessee or Permitted Sublessee is contesting in good faith the validity or
application of any such Law or requirement relating to any such certificate,
license, or registration in any reasonable manner which does not create any
material risk of sale, loss (including loss of use), or forfeiture of the
Aircraft, the Airframe, or any Engine, or any of the Returnable Records, or any
interest therein or any discernible risk of criminal liability or any material
risk of civil penalty against Lessor or Owner Participant; provided,
that no contest shall excuse the failure to maintain the


 






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airworthiness
certification for the Aircraft in good standing without Lessor’s written
consent, nor shall the pendency of any contest prevent a prohibition of use
from becoming an Event of Loss.  Lessee
shall cause the Aircraft Documents to be maintained in English.


 


If Lessee desires to have a third party accomplish
some or all of the maintenance requirements (including engine maintenance)
under the Maintenance Program, such third party shall be an FAA-certified
repair station, a U.S. Air Carrier or (x) a foreign air carrier or (y) a
foreign repair station which, in the case of (x) or (y), issues JAA-1 or
8130 tags or the equivalent thereof, and such maintenance by such third party
must be accomplished in accordance with the provisions of this
Annex C.  Any such arrangement shall
ensure that Lessor shall have access, and all of the other rights specified in
the Lease and in this Annex C and in any other applicable agreements
between Lessor and Lessee, to inspect the Aircraft, Airframe, Engines, and Parts
during the performance of such maintenance.


 


B.                                    Replacement of
Parts


 


Except as
otherwise provided herein, Lessee, at its own cost and expense, will promptly
replace (or cause to be replaced) all Parts that are from time to time
incorporated or installed in or attached to the Airframe or any Engine, and
that become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair, or permanently rendered unfit for use for any reason whatsoever;
provided, that, except as otherwise
provided herein, Lessee will replace or cause the replacement of such Parts as
promptly as practicable.  All replacement
Parts shall be serviceable and approved under the Maintenance Program for use
on the Airframe or Engines and shall be free and clear of all Liens, except for
Permitted Liens and pooling arrangements to the extent permitted by § C
below, and shall be in good operating condition and (except in the case of
replacement property installed on the basis of temporary operational
exigencies) have a value and utility not less than the value and utility of the
Parts replaced (assuming such replaced Parts were in the condition required
under this Lease).


 


Except as
otherwise provided herein, all Parts at any time removed from the Airframe or
any Engine shall remain the property of Lessor, no matter where located, until
they are replaced by Parts that have been incorporated or installed in or
attached to the Airframe or Engine, as the case may be, and that meet the
requirements for replacement Parts specified above.  As soon as a replacement Part is
incorporated or installed in or attached to the Airframe or 


 






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Engine as above provided, without further act, (1) title to the
replaced Part shall vest in Lessee (or if a Permitted Sublease is then in
effect, in the Permitted Sublessee), in “as-is, where-is” condition, free and
clear of all Lessor Liens attributable to Lessor or Owner Participant, and all
rights of Lessor, and the replaced Part shall no longer be deemed a Part hereunder,
(2) title to such replacement Part shall vest in Lessor, subject only
to Permitted Liens and pooling arrangements to the extent permitted by § C
below, and except in the case of replacement property temporarily installed on
an emergency basis, and (3) such replacement Part shall become
subject to this Lease and be deemed part of the Aircraft for all purposes
hereof and thereof to the same extent as the Parts originally incorporated or
installed in or attached to the Aircraft.


 


C.                                    Pooling of Parts


 


Any Part removed
from the Airframe or any Engine may be subjected by Lessee to a normal pooling
arrangement customary in the airline industry of the United States (or by a
Permitted Sublessee to a normal pooling arrangement with other air carriers
customary in the airline industry of the country of registry under the subject
sublease) and entered into in the ordinary course of business of Lessee (or
such Permitted Sublessee), so long as there are no U.S. government restrictions
on transactions with such air carrier, and so long as a Part replacing
such removed Part shall be incorporated or installed in or attached to the
Airframe or Engine, as the case may be, in accordance with § B of this
Annex C as promptly as practicable after the removal of such removed Part.  In addition, any replacement Part when
incorporated or installed in or attached to the Airframe or Engine, as the case
may be, may be owned by any third party subject to such a normal pooling
arrangement, so long as Lessee or Permitted Sublessee, as promptly thereafter
as reasonably possible, either (1) causes title to such replacement Part to
vest in Lessor in accordance with § B of this Annex C, free and clear of
all Liens (except Permitted Liens), or (2) replaces (or causes to be
replaced) such replacement Part by incorporating or installing in or
attaching to the Airframe or Engine, as the case may be, a further replacement Part owned
by Lessee or a Permitted Sublessee free and clear of all Liens (except
Permitted Liens) and by causing title to such further replacement Part to
vest in Lessor in accordance with § B of this Annex C.


 


D.                                    Alterations,
Modifications, and Additions


 


Lessee, at its own
cost and expense, shall make (or cause to be made) such alterations and
modifications in and additions to the Aircraft as may be 


 






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C-4

















 


necessary in order to comply with the mandatory directives and other
requirements of the FAA and, if the Aviation Authority is not then the FAA, the
requirements of the Aviation Authority in respect of the Aircraft, or in order
to maintain or cause to be maintained the standard certificate of airworthiness
issued by the FAA or the Aviation Authority for the Aircraft (a “Mandatory Modification”); provided,
that Lessee or any Permitted Sublessee may, in good faith and by appropriate
procedure, contest the validity or application of any law, rule, regulation, or
order in any reasonable manner which does not materially adversely affect
Lessor’s interest in the Aircraft and does not involve any material risk of
sale, forfeiture, or loss (including loss of use) of the Aircraft, the
Airframe, any Engine, or any of the Returnable Records, or any interest
therein, or any discernible risk of criminal liability or any material risk of
civil penalty against Lessor or any Participant.


 


In addition,
Lessee may make or permit to be made, at its own cost and expense, such
alterations and modifications in and additions to the Aircraft (each an “Optional Modification”) as Lessee or any Permitted
Sublessee deems desirable in the proper conduct of its business, including
removal of Parts which Lessee deems are obsolete or no longer suitable or
appropriate for use in the Aircraft (except that the aggregate value of Parts
that have been so removed and not replaced shall not, over the Term, exceed
[...***...]); provided, that such Optional
Modification (i) shall be performed pursuant to (A) an FAA-approved
service bulletin or (B) Lessee’s or a Permitted Sublessee’s engineering
orders, the design and installation of which must be in accordance with the
Maintenance Program, (ii) shall not diminish the value, utility,
condition, or remaining useful life of the Aircraft, Airframe, or any Engine
below its value, utility, condition, or remaining useful life immediately
before such Optional Modification (assuming the Aircraft, Airframe, or Engine,
as the case may be, was in the condition required by the Lease immediately
before such Optional Modification), (iii) shall not change the basic
configuration of the Aircraft, or adversely affect the capability of the
Aircraft, Airframe, or such Engine to be used in commercial scheduled passenger
service in the United States, and (iv) shall not cause the type
certificate or the standard certificate of airworthiness of the Aircraft issued
by the FAA or the Aviation Authority to become invalid.


 


Except as
otherwise provided herein, title to all Parts other than Removable Parts (as
defined below) incorporated or installed in or attached to the Aircraft as the
result of such Optional Modification shall, without further act, vest in Lessor
and become subject to this Lease. Notwithstanding anything 


 






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C-5

















 


to the contrary in this § D, Lessee or a Permitted Sublessee may,
if no Event of Default exists, at any time during the Term, remove any Part (such
Part being referred to herein as a “Removable Part”)
if (aa) such Part is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed in or
attached to the Aircraft, the Airframe, or any Engine at the time of delivery
thereof to Lessee, or any Part in replacement of, or substitution for, any
such Part, (bb) such Part is not required to be incorporated or
installed in or attached to the Aircraft, the Airframe, or any Engine pursuant
to the terms of this Lease, and (cc) such Part can be removed from
the Aircraft, Airframe, or Engine without resulting in unrepaired damage
thereto and without diminishing the value, utility, or remaining useful life
that the Aircraft, Airframe, or Engine would have had at the time of removal
had such removal not occurred, assuming that such Aircraft, Airframe, or Engine
was in the condition and repair required to be maintained by the terms of this
Lease, and such Removable Part had not been incorporated or installed in
or attached to the Aircraft, Airframe, or Engine. Removable Parts may be leased
from or financed by third parties other than Lessor.


 


Title to Removable
Parts shall not vest in Lessor, except as provided in the next succeeding
paragraph.  Upon removal of a Removable Part by
Lessee or a Permitted Sublessee, title thereto shall, without further act,
remain in Lessee or such Permitted Sublessee (or, if applicable, a third-party
owner) free and clear of Lessor Liens attributable to Lessor or Owner
Participant, and such Part shall no longer be deemed part of the Aircraft,
Airframe, or such Engine and shall no longer be deemed a “Part”.  Lessee shall promptly repair any damage to
the Aircraft or Airframe, or any Engine, which results from such removal of any
Removable Part.


 


Any Removable Part not removed as above provided
prior to the return or repossession of the Aircraft, the Airframe, or such
Engine under the Lease shall become the property of Lessor free and clear of
all Liens; provided, that Lessor may require
Lessee, in connection with the return or repossession of the Aircraft, the
Airframe, or any Engine to remove any such Part and to repair and restore
the Aircraft, the Airframe, or such Engine, as the case may be, as provided
above.


 


E.                                      Records


 


Lessee shall maintain (or cause to be maintained) all
Aircraft Documents.  All Returnable
Records shall be the property of Lessor, but shall become the property of
Lessee upon Lessee’s purchase of the Aircraft pursuant to the terms 


 






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C-6

















 


of this Lease or upon the occurrence of an Event of Loss and Lessee’s
compliance with § 9.


 


F.                                      Maintenance
Reserves


 


1.                                       [...***...]


 






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ANNEX D


 


INSURANCE


 


The terms defined
in Annex A to Lease Agreement N483HA, when capitalized as in Annex A,
have the same meanings when used in this Annex D. Annex A also contains rules of
usage that control construction in this Annex D. Unless otherwise noted,
section references refer to sections in this Annex D.


 


A.                                    Liability
Insurance


 


1.                                       Except
as provided in § A2 below, Lessee will carry, or cause to be carried, at
all times throughout the Term and for a period of two years following the
termination or expiration of the Lease, at no expense to Lessor or Owner
Participant, airline legal liability (including third-party and passenger
liability, personal injury liability, liability war risk and property damage,
including baggage (checked and unchecked), cargo and mail, premises,
products/completed operations liability and contractual liability insurance
(which insurance shall, among other matters, include coverage of the indemnification
agreements of Lessee set forth in § 9.1 of the Participation Agreement, to
the extent of coverage under the policies)) with respect to the Aircraft which
is (a) in an amount not less than the greater of (x) the amount of
airline legal liability insurance from time to time applicable to aircraft
operated by Lessee of the same type and operating on similar routes as the
Aircraft, and (y) the Minimum Liability Insurance Amount per occurrence
and aggregate as applicable; (b) of the same type and covering the same
risks as from time to time applicable to similar aircraft operated by U.S. Air
Carriers engaged in the same or similar business as Lessee, similarly situated
as Lessee, and owning or operating similar aircraft and engines; and (c) maintained
in effect with insurers of nationally or internationally recognized
responsibility and substantial financial capacity which are disclosed to Lessor
(such insurers being referred to herein as “Approved Insurers”).


 


2.                                       During
any period that the Aircraft is grounded and not in operation, Lessee may carry
or cause to be carried, in lieu of the insurance required by § A1 above,
insurance otherwise conforming with the provisions of § A1 except
that the type of insurance, the amounts of coverage and the scope of the
risks covered shall not be less than (i) the same as from time to time, in



 






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each case, customary in the United States for U.S. Air Carriers
similarly situated with Lessee in respect of similar aircraft which are
grounded and not in operation, or (ii) the same as from time to time,
applicable to aircraft operated by Lessee of the same type which are grounded
and not in operation.


 


3.                                       The
insurance carried in accordance with this § A shall not be subject to any
deductible or self-insurance other than deductibles that are standard in the
market with respect to major U.S. airlines.


 


B.                                    Hull
Insurance


 


1.                                       Except
as provided in § B2 below, Lessee will carry, or cause to be carried, at
all times throughout the Term, at no expense to Lessor or Owner Participant,
with Approved Insurers:


 


(i)                                     ground
and flight aircraft hull insurance, covering the Aircraft (including the
Engines when they are installed on the Airframe or any other airframe), which
is of the same type and covering the same risks as is from time to time
customarily obtained for aircraft operated by U.S. Air Carriers engaged in the
same or similar business as Lessee, similarly situated as Lessee and owning or
operating similar aircraft and engines, for an amount denominated in United
States Dollars not less than the Stipulated Loss Value of the Aircraft; and


 


(ii)                                  physical
loss or damage (including while in transit and including the risks of fire,
flood, and earthquake, and including the risks of war and confiscation while in
international transit) insurance, covering Engines and Parts while removed from
the Aircraft (to the extent such Engines and Parts are not covered by aircraft
hull insurance), which is of the same type and covering the same risks as is
from time to time customarily obtained for engines and parts (while removed
from aircraft) owned or operated by, or otherwise in the possession of, U.S.
Air Carriers engaged in the same or similar business as Lessee, similarly
situated as Lessee, for an amount denominated in United States Dollars not less
than the replacement cost of such Engines and Parts.


 


Any policies of
insurance carried in accordance with this § B1 covering the Aircraft and
any policies taken out in substitution or replacement for any such policies (a) shall
name Lessor as sole loss payee for any proceeds to be paid under such policies
up to an amount equal to the Stipulated Loss Value, and (b) shall provide
that (aa) all proceeds payable in respect of any Event of Loss shall be
paid in full to Lessor, up to an amount equal to the Stipulated 


 






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Loss Value, and Lessor agrees that any proceeds payable in excess of
such Stipulated Loss Value shall be paid to Lessee or its order, (bb) in the
event of a loss, not constituting an Event of Loss, involving proceeds in
excess of the Threshold Amount, the entire amount of the proceeds in excess of
the Threshold Amount in respect of such loss up to an amount equal to the
Stipulated Loss Value for the Aircraft shall be payable to Lessor (except in
the case of a loss with respect to an Engine installed on an airframe other
than the Airframe, in which case Lessee (or any Permitted Sublessee) shall
endeavor to arrange for any payment of insurance proceeds in respect of such
loss to be held for the account of Lessor, whether such payment is made to
Lessee (or any Permitted Sublessee) or any third party) and, upon receipt of
evidence reasonably satisfactory to Lessor that the damage giving rise to such
payment has been repaired or that such payment is then required to pay for
repairs then being made, Lessor shall, unless a Special Default exists, pay the
amount of such payment (i) to Lessee or its order against presentment of
the receipts or other reasonably satisfactory evidence of the repairers
evidencing payment of their invoices, or (ii) to the repairers against
presentment of their invoices, or (iii) in the case of the loss or
destruction of any Engine where the Airframe has not suffered an Event of Loss,
to the transferor of a Replacement Engine, and (cc) in the event of a
loss, not constituting an Event of Loss, involving proceeds less than the
Threshold Amount, the entire amount of the proceeds in respect of such loss up
to an amount equal to the Threshold Amount shall be paid to Lessee or its order
unless a Special Default exists and the insurers have been notified thereof by
Lessor or Owner Participant.  In the case
of a loss with respect to an engine (other than an Engine) installed on the
Airframe, Lessor shall hold any payment to it of any insurance proceeds for
that loss for the account of Lessee or any other third party who is entitled to
receive such proceeds.


 


2.                                       During
any period that the Aircraft is grounded and not in operation, Lessee may omit
from the insurance required by § B1 above, all flight insurance, except
that the type of insurance, the amounts of coverage and the scope of risks
covered shall not be less than (i) the same as from time to time, in each
case, customary in the United States for U.S. Air Carriers similarly situated
with Lessee in respect of similar aircraft which are grounded and not in
operation, or (ii) the same as from time to time applicable to aircraft
operated by Lessee of the same type similarly on the ground and not in
operation, provided, that Lessee shall maintain
insurance against risk of loss or damage to the Aircraft in an amount equal to
the Stipulated Loss Value of the 


 






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Aircraft during such period that the Aircraft is on the ground and not
in operation.


 


3.                                       The
insurance carried in accordance with this § B shall not be subject to any
deductible or self-insurance other than a deductible that is standard (which
shall not be applicable in the case of a total loss) with respect to the ground
and flight aircraft hull insurance which shall be disclosed to Lessor, and
which shall be no greater than the lesser of (x) [...***...], and (y) such
deductible that is covered by Lessee with respect to other aircraft similar to
the Aircraft and operated on similar routes.


 


C.                                    War-Risk,
Hijacking, and Allied Perils Insurance


 


Lessee (or any Permitted Sublessee) shall maintain or
cause to be maintained war-risk, hijacking, and allied perils insurance (and
with respect to hull war risk such insurance shall be in accordance with Lloyd’s
Aviation Underwriters Association Standard Policy Form, LSW 555B (or its
equivalent or successor wording)), of substantially the same type carried by
prudent, major U.S. Air Carriers operating the same or comparable models of
aircraft on similar routes or in such areas, and in no event in an amount less
than (x) the amount set forth in § A with respect to liability
coverage and (y) the values stated in § B (i) and (ii) with
respect to hull coverage, and such insurance shall, to the extent generally
maintained by major U.S. Air Carriers, cover the perils of (i) war,
invasion, acts of foreign enemies, hostilities (whether war be declared or
not), civil war, rebellion, revolution, insurrection, martial law, military or
usurped power or attempts at usurpation of power; (ii) strikes, riots,
civil commotion or labor disturbances; (iii) any act of one or more Persons,
whether or not agents of a sovereign power, for political or terrorist purposes
and whether the loss or damage 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 (excluding confiscation by the United
States government); 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 of 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 Lessee. The insurance carried in accordance
with this § C shall not be subject to any deductible or self-insurance
other than as provided above in § A3 and § B3.


 






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D.                                    General
Provisions


 


Any policies of
insurance carried in accordance with §§ A, B, and C, including any
policies taken out in substitution or replacement for such policies:


 


(1)                                  with
respect to liability insurance under § A, and with respect to war risk
insurance (insofar as it covers liability risks) under § C, shall name
each Indemnitee as an additional insured (the “Additional
Insureds”); and with respect to hull insurance under § B, and
with respect to war risk insurance (insofar as it covers hull risks) under
§ C, shall name Lessor as sole loss payee for any proceeds to be paid
under such policies up to an amount equal to the Stipulated Loss Value;


 


(2)                                  shall
apply worldwide and have no territorial restrictions or limitations (except
only in the case of war, hijacking, and allied perils insurance required under
§ C, which shall apply to all territories over or to which the Aircraft
will be operated);


 


(3)                                  shall
provide that, in respect of the interests of the Additional Insureds in such
policies, the insurance shall not be invalidated or impaired by any act or
omission (including misrepresentation and nondisclosure) by Lessee (or any Permitted
Sublessee) or any other Person (including use for illegal purposes of the
Aircraft or any Engine), and shall insure the Additional Insureds regardless of
any breach or violation of any representation, warranty, declaration, term, or
condition contained in such policies by Lessee (or any Permitted Sublessee) or
any other Person (provided that such Additional Insured shall not have
knowingly caused or contributed to such act or omission);


 


(4)                                  shall
provide that, if the insurers cancel such insurance for any reason whatsoever,
or if it is cancelled for nonpayment of premium, or if any material change is
made in the insurance which adversely affects the interest of any of the
Additional Insureds, such cancellation or change shall not be effective as to the
Additional Insureds for 30 days (seven days, or such shorter period as may be
customary, in the case of war risk, hijacking, and allied perils insurance)
after issuance to the Additional Insureds of written notice by such insurers of
such cancellation or change;


 






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(5)                                  shall
waive any rights of recourse, subrogation, setoff (including for unpaid
premiums), recoupment, counterclaim, or other deduction, whether by attachment
or otherwise, against each Additional Insured;


 


(6)                                  with
respect to liability insurance under § A, and with respect to war risk
insurance (insofar as it covers liability risks) under § C, shall be
primary without right of contribution from any other insurance that may be
available to any Additional Insured;


 


(7)                                  shall
provide that all of the liability insurance provisions thereof, except the
limits of liability, shall operate in all respects as if a separate policy had
been issued covering each party insured thereunder;


 


(8)                                  shall
provide that none of the Additional Insureds shall be liable for any insurance
premium;


 


(9)                                  with
respect to hull insurance under § B, and with respect to war risk
insurance (insofar as it covers hull risks) under § C, shall contain a
50/50 Clause per Lloyd’s Aviation Underwriters’ Association Standard Policy Form AVS
103 or its equivalent;


 


(10)                            shall
be payable in Dollars;


 


(11)                            with
respect to liability insurance under § A, and with respect to war risk
insurance (insofar as it covers liability risks) under § C, and only to
the extent of coverage provided by the policies, shall specifically refer to
the Lease and this Annex D and shall acknowledge, and (to the extent reasonably
available at no additional material cost) cover, the indemnification agreements
of Lessee set forth in Section 9 of the Participation Agreement;


 


(12)                            shall
provide that all losses shall be adjusted by Lessee, unless and until Lessor or
Owner Participant shall have notified the underwriters that an Event of Default
exists, in which event all losses shall be adjusted by Lessor, Owner
Participant or the designee of either such party; and


 


(13)                            shall
provide coverages in accordance with Lloyd’s Aviation Underwriters’ Association
Standard Policy Form AVN.67B (Airline Finance/Lease Contract Endorsement),
Lloyd’s Aviation Underwriters’ 


 






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Association Standard Policy Form AVN.67B (Airline
Finance/Lease Contract Endorsement (Hull War)), and Lloyd’s Aviation
Underwriters’ Association Standard Policy Form AVN.99 (Airline
Finance/Lease Contract — Continuing Liability Endorsement); or if such
endorsements are not used, shall otherwise provide coverages that are, in scope
and substance, at least as extensive as, and no more restrictive than (with
respect to additional insureds or loss payees), such Standard Policy Forms;


 


provided, that any such
endorsements may be subject to any limitations on endorsements that are in
keeping with general market standards in the airline insurance marketplace at
the time.


 


E.                                      Reports
and Certificates; Other Information


 


On or before the Delivery Date and on or before each
renewal date of the insurance policies required hereunder, Lessee will furnish
or cause to be furnished to Lessor and Owner Participant insurance
certificates, or other equivalent documentation reasonably satisfactory to
Lessor and Owner Participant, describing in reasonable detail the insurance
maintained hereunder and a report, signed by Lessee’s or a Permitted Sublessee’s
regular independent insurance broker (the “Insurance Broker”),
stating the opinion of such Insurance Broker that (1) all premiums for the
insurance then due have been paid, and (2) such insurance complies with
the terms of this Annex D.  At any time,
but not more than once a year, Lessor may request, and Lessee will cause its
Insurance Broker to render, a report stating that in the opinion of such broker
Lessee’s insurance coverages comply with this Annex D and confirming that all premiums
in respect thereof have been paid. 
Lessee will also cause the Insurance Broker to agree to notify Lessor
and Owner Participant in writing of any default in the payment of any premium
and to notify Lessor and Owner Participant in writing at least 30 days (seven
days for war-risk and allied perils coverage, or such shorter period therefor
as is the longest notice period then obtainable in the international insurance
market, as applicable) before the cancellation or Materially Adverse Change of
any insurance maintained pursuant to this Annex D.  Lessor and Owner Participant shall also be
entitled to such other information as they may reasonably request of Lessee,
the Approved Insurers or the Insurance Broker from time to time with respect to
the insurances to be provided hereunder.


 






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F.                                      Right
to Pay Premiums


 


Each Additional
Insured shall have the rights but not the obligations of an additional
insured.  No Additional Insured shall
have any obligation to pay any premium, commission, assessment, or call due on
any such insurance (including reinsurance). 
Notwithstanding the foregoing, in the event of cancellation of any
required insurance due to the nonpayment of premium, each of Lessor and Owner
Participant shall have the option, in its sole discretion, to pay any such
premium and to maintain such coverage, as Lessor or Owner Participant may
require, until the scheduled expiry date of such insurance and, in such event,
Lessee shall, upon demand, reimburse Lessor and Owner Participant for amounts
that they so pay.


 


G.                                    No
Discrimination


 


In all events,
Lessee will carry liability and property insurance with respect to the Aircraft
and Engines at least as favorable to Lessor and each Additional Insured as
insurance maintained by Lessee for comparable aircraft and engines operated by
Lessee.


 






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ANNEX E


 


PART 1


 


CERTAIN RIGHTS AND
OBLIGATIONS


 


The terms defined
in Annex A to Lease Agreement N483HA, when capitalized as in Annex A, have
the same meanings when used in this Annex E — Part 1.  Annex A also contains rules of
usage that control construction in this Annex E.  Unless otherwise noted, section references
refer to sections in this Annex E — Part 1.


 


1.                                      FOREIGN
REGISTRATION


 


1.1                               Right
to Reregister


 


(a)                                  Subject
to all the provisions of this § 1, Lessee shall be entitled to register
the Aircraft, or cause the Aircraft to be registered, in a country other than
the United States, if Lessee furnishes to Lessor and Owner Participant at least
45 days’ prior written notice of such proposed re-registration, and if Lessor
and Owner Participant are reasonably satisfied that:


 


(1)                                  [RESERVED];


 


(2)                                  no
unindemnifiable Tax could reasonably be expected to result in any way from any
such change in registration;


 


(3)                                  no
Special Default exists at the time of Lessee’s notice or will exist at the time
of, or as a result of, such re-registration;


 


(4)                                  such
proposed change of registration will be made in connection with a Permitted
Sublease to a Permitted Foreign Air Carrier (or in connection with a
sub-sublease to a Permitted Foreign Air Carrier by a Permitted Manufacturer who
is a Permitted Sublessee);


 


(5)                                  such
country is a Permitted Country;


 


(6)                                  any
and all import permits and certificates of registration, and (to the extent
customarily obtained or reasonably obtainable in connection with leases or
subleases into such Permitted Country from any other country) any and all
export permits and certificates of deregistration, and other licenses,
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into and out of, and to operate the Aircraft under the laws of, such
Permitted Country, and any exchange permits necessary to allow the expatriation
of money constituting Rent and other payments provided for under the Permitted
Sublease, shall each be in full force and effect at all relevant times;


 


(7)                                  after
giving effect to such change in registration, Lessor’s right, title, and
interest in and to the Aircraft and the Lease will continue as valid and
duly-perfected ownership and security interests, respectively, and all filing,
recording, or other action (including, without limitation, any filings on the
International Registry that Lessor, in its reasonable judgment, specifies)
necessary to protect the same have been accomplished (or, if such assurance
cannot be given at the time of such proposed change in registration because
such change in registration is not yet effective, Lessor and Owner Participant
shall receive a certificate from Lessee that all possible preparations to
accomplish such filing, recording, and other actions are done, and such filing,
recording, and other action are accomplished, and a supplemental certificate to
that effect shall be delivered by Lessee to Lessor and Owner Participant
promptly after the effective date of such change in registration);


 


(8)                                  all
action has been or will be taken as Owner Participant reasonably deems
necessary (including any increase in or changes or additions to types of
insurance coverage to take into account differences in applicable Laws) to
ensure that all insurance provided for in the Operative Agreements shall be in
full force and effect before, at the time of, and after such change in
registration, and the Lessee shall otherwise be in full compliance with the
provisions of § 10 of the Lease after giving effect to such change of registration;
and Owner Participant and Lessor shall receive, from Lessee’s or the Permitted
Sublessee’s insurance broker, (aa) not less than five days before the date of
such change in registration, a draft of the insurance certificate(s) to
such effect, and (bb) not later than the date of such change in registration,
one or more certificate(s) to such effect;


 


(9)                                  all
action has been or will be taken as Owner Participant reasonably deems
necessary (including any increase in or changes or additions to indemnities to
take into account differences in applicable Laws) to ensure that the tax and
other indemnities provided for in, and in favor of each Person named as an
indemnitee under, any Operative 


 






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Agreement shall be in full force and effect at the time of and after
such change in registration, and afford to each such Person the same protection
as provided before such change of registration;


 


(10)                            the
Laws and the courts of such Permitted Country (aa) will recognize the rights
and interests of Lessor (including Lessor’s title to the Aircraft), and of
Owner Participant, as such rights and interests are described in, and are
intended to be created under, the Operative Agreements, and (bb) will provide
that there are no possessory rights in favor of Lessee, any Permitted
Sublessee, or any third party (including any Government Entity) which would,
upon bankruptcy or other default by Lessee or any Permitted Sublessee, prevent
or delay the return of the Aircraft, Airframe, Engines, Parts, or Returnable
Documents to Lessor in accordance with and when required or permitted by the
terms of the Lease, or, if such possessory rights exist, they are not
materially greater than those available to lessees of newly manufactured large
passenger aircraft (assuming such lessees to be U.S. Air Carriers) under then
current United States Law (including Section 1110), and there are no
procedural or other impediments to the return of the Aircraft to Lessor
materially greater than under United States Law (including Section 1110),
and upon termination of any Permitted Sublease, registration shall be
terminable without material burden or delay and there is no material impediment
under the Laws of such country of registration to the enforceability (other
than immaterial differences in procedures of enforcement) of the rights and
remedies of Lessor provided for in and under the Operative Agreements;


 


(11)                            the
Laws of such Permitted Country impose, or Lessee agrees to cause the Aircraft
to be maintained in accordance with, a maintenance program substantially
similar to the Maintenance Program as required by, and on the terms set forth
in, Annex C to the Lease;


 


(12)                            no
Liens (except Permitted Liens) on the Aircraft, Airframe, Engines, Parts, or
any Aircraft Documents, or on the Trust Estate, shall arise in any way by
reason of such re-registration;


 


(13)                            any
export licenses, certificates of deregistration, and powers of attorney
required in connection with any repossession or return of the Aircraft will be
able to be obtained in the normal course without material delay, and without
material burden on Lessor (however, Lessee shall be responsible for the cost
thereof);


 






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(14)                            the
Aircraft has been duly certificated as to type and airworthiness by the
appropriate aviation authority of such Permitted Country, it being understood
and agreed, however, that such certification of airworthiness may be effected,
at the inception of any such reregistration, by a temporary certificate of
airworthiness duly authorized and issued by the appropriate aviation authority
of such Permitted Country, if (i) such temporary certificate shall, under
the Laws of such Permitted Country, remain in full force and effect (and is
legally sufficient under such Laws to establish and maintain the airworthiness
certification of the Aircraft) until a permanent certificate is duly authorized
and issued, and (ii) the issuance of such permanent certificate is not
subject to any conditions, consents or approvals, or other act or event, other
than those obtained, taken or occurring in connection with the temporary
certificate;


 


(15)                            Lessee
shall have paid or caused to be paid, to the Person entitled thereto (which may
be Lessor or Owner Participant) any and all value-added taxes, tariffs, customs
or import fees or duties, all filing, recording, license, or franchise fees,
and all other governmental charges or Taxes of any nature whatsoever arising in
any way, directly or indirectly, in connection with the change in registration
and then due; and


 


(16)                            Lessee
shall have paid all Expenses (including reasonable fees and disbursements of
counsel) of Lessor and Owner Participant, arising in any way in connection with
such change of registration, as incurred or accrued up to the date of such
change in registration and invoiced to Lessee at least five days before such
date.


 


(b)                                 In
addition, as a condition precedent to any change in registration, Lessor and
Owner Participant shall have received an opinion of counsel reasonably
satisfactory to Owner Participant, addressed to each such party, to the effect
that:


 


(1)                                  such
country recognizes Lessor’s title to, and ownership interest in, the Aircraft,
Airframe and Engines;


 


(2)                                  Lessee’s
obligations, and Lessor’s rights and remedies, under the Lease and under any
assignment to Lessor by Lessee of Lessee’s rights and remedies under the
Permitted Sublease (including (aa) the right to terminate the Permitted
Sublease, and to repossess and export the Aircraft, based solely upon the
occurrence of an Event of Default 


 






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under the Lease, (bb) the limitations on the Permitted Sublessee’s
rights under the Permitted Sublease arising as a result of such rights of the
Permitted Sublease being subject and subordinate to the rights of Lessor under
the Lease, and (cc) the right to require that, upon the giving of notice to the
Permitted Sublessee, all payments of rent under the Permitted Sublease be made
directly to Lessor), are in each such case valid, binding, and enforceable
under the Laws of such jurisdiction (or the Laws of the jurisdiction to which
the Laws of such jurisdiction would refer as the applicable governing law);


 


(3)                                  after
giving effect to such change in registration, Lessor’s right, title, and
interest in and to the Aircraft and under the Lease will continue as valid and
enforceable ownership and contractual interests, respectively, and all filing,
recording, or other action (including, without limitation, any filings on the
International Registry that Lessor, in its reasonable judgment, specifies)
necessary to protect the same have been accomplished (or, if such opinion
cannot be given at the time of such proposed change in registration because
such change in registration is not yet effective, the opinion shall detail what
filing, recording, or other action is necessary, and shall state that all
possible preparations to accomplish such filing, recording, and other action
are done, and at such time as such filing, recording, and other action are
accomplished, a supplemental opinion to that effect shall be delivered to
Lessor and Owner Participant);


 


(4)                                  it
is not necessary, as a consequence of such change in registration and the
presence or operation of such Aircraft in such Permitted Country (but without
giving effect to any other activity of Lessor or Owner Participant (or any
Affiliate thereof) in such Permitted Country), for Lessor or Owner Participant
to qualify to do business in, or to obtain any other license, consent,
approval, or authorization from any Government Entity in, such jurisdiction in
order for Lessor to exercise, through the courts or other juridical bodies of
such jurisdiction, any rights or remedies under the Lease or the Permitted
Sublease (as the assignee of Lessee) or with respect to the Aircraft, Airframe,
Engines, Parts, or Aircraft Documents;


 


(5)                                  there
is no tort liability of, or imputed to, the owner or lessor of an aircraft or
engines, having no operational interest therein, under the laws of such
jurisdiction (or, if such opinion cannot be given in a 


 






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form satisfactory to Owner Participant, insurance reasonably
satisfactory to Owner Participant is provided, at no expense to Lessor or Owner
Participant, and not later than the date of such change in registration, to
cover such risk);


 


(6)                                  unless
Lessee provides, at no expense to Lessor or Owner Participant and not later
than the date of such change in registration, insurance reasonably satisfactory
to Owner Participant covering the risk of requisition of title or use of the
Aircraft by the government of such Permitted Country (so long as the Aircraft
is registered under the laws of such country), the laws of such Permitted Country
require fair compensation by the government of such country, for the taking or
requisition by such government of such title or use, payable in currency freely
convertible into Dollars and freely removable from such country (without
license or permit, unless Lessee before such proposed change in registration
has obtained such license or permit, and such license or permit is, as a matter
of applicable Law, wholly sufficient to effect such conversion and removal);


 


(7)                                  such
Permitted Country maintains normal diplomatic relations with the United States,
and no executive, legislative or judicial act by any Government Entity in such
country has been taken that could reasonably be expected to adversely affect
the maintenance of such normal diplomatic relations; and


 


(8)                                  to
the effect set forth in clauses (2), (5), (6), (7), (8), (9), (10), (12) (as to
Liens arising by operation of the Laws of such Permitted Country), (13), (14),
and (15), of paragraph (a) of this § 1.1 (and Lessee covenants to
deliver to Lessor and Owner Participant, with respect to clause (7), an annual
filing opinion), and to such further effect and with respect to such other
matters as Owner Participant may reasonably request; provided that (aa) the
opinion with respect to clause (8) need only identify any additional
uninsured risks attributable to such re-registration, (bb) the opinion with
respect to clause (9) need only identify any additional unindemnified tax
risks attributable to such re-registration, (cc) the opinion with respect to clause
(15) need only identify any such governmental charges or taxes then due and
payable as a result of such re-registration.


 


(c)                                  In
addition, as a condition precedent to any change in registration, and to the
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Permitted Country, Lessee or any Permitted Sublessee shall, if
requested by Owner Participant, and for purposes of enforcement of the rights
and remedies provided for in § 14 of the Lease, execute an irrevocable
power of attorney in form and substance reasonably satisfactory to Owner
Participant (and, if appropriate, in Lessor’s reasonable judgment, shall also
execute a “De-registration and Export Request Authorization” as provided for
in, and in the form specified by, Article XIII of the Protocol (Article 25
of the CTC)) providing for, after the cancellation of the Lease because of the
existence of an Event of Default, (1) the deregistration of the Aircraft, (2) the
reregistration of the Aircraft in the United States by Lessor, including the
ability to obtain export licenses and take any other action necessary or advisable
for the repossession, export, and redelivery to Lessor of the Aircraft,
Airframe, Engines and Returnable Records, and (3) all other things
reasonably necessary to accomplish the results described in the foregoing
clauses (1) and (2) of this paragraph (c).


 


(d)                                 The
parties hereto acknowledge to each other that none of such parties has
conducted a review of the Permitted Countries to determine whether, on the date
hereof, any of the criteria set forth in this § 1 are currently met.


 


1.2                               Annual Opinion


 


If the Aircraft is registered in a country other than
the United States pursuant to this § 1, Lessee will furnish to Lessor and
Owner Participant annually while the Aircraft is not U.S.-registered (starting
with the calendar year after such registration is effected) an opinion of
special counsel reasonably satisfactory to Owner Participant stating that, in
the opinion of such counsel, either (a) such action has been taken with
respect to the recording, filing, re-recording, and re-filing of the Operative
Agreements and any supplements and amendments thereto, and with respect to
filings and registrations on the International Registry, as is necessary to
establish, perfect, and protect Lessor’s right, title and interest in and to
the Aircraft and the Operative Agreements, reciting the details of such
actions, or (b) no such action is necessary to maintain the perfection of
such right, title, and interest.


 


1.3                               Expenses


 


All matters relating to any such change in
registration, including all legal opinions and any consents or approvals of, or
filings with, any Government Entity, shall be at the sole expense of Lessee,
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be paid, all Expenses of Lessor and Owner Participant (including the
reasonable fees and disbursements of legal counsel) arising in any way in
connection with any request to change (and the evaluation thereof), and any
actual change, of registration of the Aircraft (including, without limitation,
all such Expenses arising in any way in connection with the later
de-registration, and re-registration in the United States, of the Aircraft).


 


1.4                               Related Matters


 


(a)                                  For
purposes of this Annex E — Part 1, § 7.1.1 of the Lease is hereby
deemed to be amended (1) by inserting, immediately after the words “. . .
with the FAA under the Transportation Code”, the words “or with such other
country of registry as shall be permitted under § 1 of Annex E — Part 1”,
and (2) by inserting, immediately after the words “. . . effecting and
continuing such registration”, the words “; provided, that
the review, negotiation, execution, and delivery of such documents shall be at
the sole cost and expense of Lessee in instances where any such document
relates to the registration or deregistration of the Aircraft in a country of
registry other than the United States”.


 


(b)                                 For
purposes of this Annex E — Part 1, § 7.2.7(f)(6) of the Lease is
hereby deemed to be amended (1) by inserting, immediately after the words “.
.. . materially greater than under United States Law (including Section 1110”,
the words “, and upon termination of any Permitted Sublease, registration shall
be terminable without material burden or delay”, and (2) by inserting,
immediately after the words “. . . the Laws of such jurisdiction”, the words “,
or the jurisdiction of registration (if other than the United States),”.


 


(c)                                  For
purposes of this Annex E — Part 1, § 7.3(c) of the Lease is
hereby deemed to be amended by inserting, immediately after the words “. . .
United States registration of the Aircraft”, the words “, unless any
reregistration is effected in accordance with § 1 of Annex E — Part 1”.


 


(d)                                 For
purposes of this Annex E — Part 1, § 9.3.1(a) of the Lease is
hereby deemed to be amended by inserting, immediately after the words “. . .
pursuant to the Transportation Code”, the words “(or such other applicable Law
of the jurisdiction other than the United States where the related aircraft is
registered in accordance with § 1 of Annex E — Part 1)”.


 


(e)                                  For
purposes of this Annex E — Part 1, § 9.3.1(e) of the Lease is
hereby deemed to be amended (1) by inserting, immediately after the words “.
.. . Liens of record at the FAA”, the words “(or such other Aviation Authority
or 


 






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appropriate Government Entity where the related aircraft is registered
in accordance with § 1 of Annex E — Part 1)”, and (2) by
inserting, immediately after the words “. . . under the Transportation Code”,
the words “(or such other applicable Law referred to in clause (a))”.


 


(f)                                    For
purposes of this Annex E — Part 1, § 9.3.1 of the Lease is hereby
deemed to be amended by inserting, at the end thereof, a new paragraph reading
as follows:


 


“If, at the time of any
replacement of the Airframe or any Engine(s) as contemplated in this
§ 9, the Airframe was registered in a jurisdiction other than the United
States, then the requirements set forth above in this § 9.3.1 relating to
compliance with the requirements of the Transportation Code or the FAA shall be
deemed to refer to the comparable applicable Law of, and the Aviation Authority
of, such other jurisdiction.”


 


2.                                      [RESERVED]


 


[...***...]


 


4.                                      SUBSTITUTION
OF ENGINES


 


Notwithstanding
the limitations set forth in § 7.2 of the Lease with respect to transfers of
Engines, Lessee may, upon not less than 30 days prior written notice to Lessor
and Owner Participant, replace any Engine then leased under and pursuant to the
Lease with another engine meeting all of the requirements of § 9.2.2 of the
Lease; provided that (i) no such replacement shall be permitted unless,
based upon the typical operation and utilization of similar engines by Lessee
in its commercial airline business, such Replacement Engine can reasonably be
expected to be fully in compliance with § 5 and Annex B of the Lease upon the
expiration of the Term, (ii) no such replacement shall be permitted if and
for so long as there shall have occurred and be continuing any Special Default,
and (iii) any such replacement must be effected, if at all, in full
compliance with § 9.3 of the Lease.  Any
such engine 


 






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meeting the foregoing requirements of this § 4 shall be deemed to
be a “Replacement Engine”.


 






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ANNEX E


 


PART 2


 


ADDITIONAL RIGHTS AND OBLIGATIONS


 


The terms defined
in Annex A to Lease Agreement N483HA, when capitalized as in Annex A, have
the same meanings when used in this Annex E — Part 2.  Annex A also contains rules of
usage that control construction in this Annex E.  Unless otherwise noted, section references
refer to sections in this Annex E — Part 2.


 


1.                                      [RESERVED]


 


2.                                      OTHER
MATTERS


 


2.1.                            Liens.


 


Clause (a) of
§ 6 of the Lease is hereby deemed to be amended by inserting, immediately
after the words “. . . the Operative Agreements”, the words “, or of any third
party pursuant to Annex B of the Participation Agreement”.


 


2.2.                            Defaults.


 


(a)                                  [...***...]


 






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