Document:

Exhibit 10.52

 

EXECUTION VERSION

 

Omnibus
Amendment Agreement

 

This omnibus amendment agreement (this “Agreement”)
dated as of January 7, 2005 is made with respect to (i) each of the
ten Lease Agreements described on Schedule 1 hereto (each a “Subject
Lease”), each between INDEPENDENCE AIR, INC. (the “Lessee”)
(formerly known as Atlantic Coast Airlines) as lessee, and WACHOVIA BANK,
NATIONAL ASSOCIATION, as owner trustee (the “Owner Trustee” or “Lessor”)
under the applicable Trust Agreement described on Schedule 1 hereto, as
lessor, (ii) each of the Bombardier model CL-600-2B19 aircraft
identified on Schedule 1 hereto (the “Subject Aircraft”), each of
which is leased by the Owner Trustee to the Lessee under one of the Subject
Leases, (iii) each of the Participation Agreements (as respectively
defined in each Subject Lease) (each a “Participation Agreement” and,
together with the Subject Leases, the Subject Mortgages (as defined below) and
the other Operative Documents (as respectively defined in each of the Subject
Leases), the “Subject Operative Documents”), each among the Lessee, the
Owner Trustee, Export Development Canada (“Loan Participant”) as loan
participant, one of U.S. BANK NATIONAL ASSOCIATION as loan trustee and STATE
STREET BANK AND TRUST COMPANY as loan trustee (each a “Loan Trustee”),
and one of WINDY CITY HOLDINGS, INC., AFS INVESTMENTS XI, INC., AFS INVESTMENTS
XLI LLC and AFS INVESTMENTS XLII LLC as owner participant (each an “Owner
Participant”), (iv) each of the ten Loan and Security Agreements
described on Schedule 1 hereto (each a “Subject Mortgage”), each
between the Owner Trustee under the applicable Trust Agreement described on Schedule 1
hereto and the Loan Trustee specified as a party thereto on Schedule 1
hereto, and (v) each ACAH Guaranty (as respectively defined in each
Subject Lease) (each a “Guaranty”) by FLYi, INC. (“Guarantor”)
(formerly known as Atlantic Coast Airlines Holdings, Inc.).  Capitalized terms used and not otherwise
defined herein shall have the respective meanings set forth in the respective
Subject Leases.

 

The Lessee has indicated that the Subject
Aircraft are surplus to the Lessee’s requirements and has requested the Owner
Trustee to, among other things, agree to (i) amend the definition of
Expiration Date in each Subject Lease to provide for the earlier termination of
the leasing to the Lessee of the Subject Aircraft as provided below (the “Expiration
Date Amendments”) and (ii) reduce the Basic Rent payable under each
Subject Lease after the date of this Agreement during the remainder of the
Basic Term of such Subject Lease as provided below (the “Basic Rent
Reduction Amendments”) (and, in any such case, thereby limiting the Lessee’s
liabilities under the relevant Subject Operative Documents as provided
below).  In consideration for the Owner
Trustee

 

 

agreeing in this Agreement to, among other things, the Expiration Date
Amendments and the Basic Rent Reduction Amendments (and, in any such case,
thereby limiting the Lessee’s liabilities under the relevant Subject Operative
Documents as provided below), and for other good and valuable consideration,
each of the Lessee, the Owner Trustee (whether referred to as Owner Trustee or
Lessor), the Guarantor, the Loan Participant, the Loan Trustee and each Owner
Participant agrees as follows:

 

(1)                                  With
respect to each Subject Lease, the Lessor and the Lessee hereby agree that the
definition of “Expiration Date” in such Subject Lease is hereby amended to be
the date set forth in Schedule 2 hereto under the caption “Revised Expiration
Date” opposite the manufacturer’s serial number of the Subject Aircraft leased
under such Subject Lease (such date set forth in such Schedule, the “Revised
Expiration Date” with respect to such Subject Lease) with the effect that
such Subject Lease shall terminate on the Expiration Date as defined in such
Subject Lease as amended hereby.

 

(2)                                  With
respect to each Subject Lease, the Lessor and the Lessee hereby agree that,
notwithstanding the terms of §3(b) of such Subject Lease:

 

(a)                                  the
Basic Rent for the Aircraft payable by the Lessee under such Subject Lease
after the date hereof during the remainder of the Basic Term of such Subject
Lease shall be payable on each of (i) the Payment Date during January 2005,
(ii) the day in each calendar month thereafter which is numerically
corresponding to the Payment Date in January 2005 (or, if there is no such
numerically corresponding day in such month, on the last day of such month) and
(iii) the Expiration Date (as defined in such Subject Lease as amended hereby)
(each a “Monthly Payment Date”), in the amount for such Monthly Payment
Date set forth in Schedule 3 hereto, and the Lessee hereby agrees to pay
such Basic Rent in such amount on each such Monthly Payment Date;

 

(b)                                 in
addition to the allocations set forth in paragraph (2)(c)(i) below, the “Prepaid
Basic Rent Amount” on the Payment Date in January 2005 (before
giving effect to the originally scheduled payment of Basic Rent on such Payment
Date) under this Lease as originally in effect shall be rent for which the Lessee is liable for the use of
the Aircraft and shall be allocated to the period beginning on January 1,
2005 and ending on the date hereof within the meaning of Treasury Regulations Section 1.467-1(c)(2)(ii);

 

(c)                                  the Basic Rent due and payable
by the Lessee pursuant to paragraph (2)(a) above shall represent and be
the amount of rent for which the Lessee becomes liable on account of the use of
the Aircraft for the following periods, and shall therefore constitute the rent
allocated to such periods within the meaning of Treasury Regulations Section 1.467-1(c)(2)(ii):

 

2

 

(i)                                     in the case of such Basic
Rent due and payable on the first Monthly Payment Date, the period beginning on
January 1, 2005 and ending on the date hereof;

 

(ii)                                  in the case of such Basic
Rent due and payable on the second Monthly Payment Date, the period beginning
on the day following the date hereof and ending on such second Monthly Payment
Date; and

 

(iii)                               in the case of each other
Monthly Payment Date, the period beginning on the day following the Monthly
Payment Date immediately preceding such other Monthly Payment Date and ending
on such other Monthly Payment Date; and

 

(d)                                 the Lease is hereby amended
to provide as set forth in paragraphs (2)(a), (2)(b) and (2)(c) above.

 

(3)                                  With
respect to each Subject Lease and the Aircraft and the Return Provisions (each
as defined in such Subject Lease):

 

(a)                                  the
Lessee agrees that on the Expiration Date (as defined in such Subject Lease as
amended hereby) or upon the earlier termination of such Subject Lease pursuant
to the terms thereof, (i) the Lessee will return such Aircraft to the
Lessor by delivering the same to the Lessor at Dulles International Airport in
fully serviceable condition (as determined through an inspection including,
without limitation, a borescope inspection of the engines to the extent set
forth in paragraph (3)(b)(v) hereof), and otherwise in compliance with
such Return Provisions and §5 (Return of Aircraft) of such Subject Lease, and (ii) the
Lessee will return such Aircraft with the two engines owned by the Lessor or,
if any such engine fails such borescope, with a replacement engine therefor in
accordance with §17 of such Return Conditions;

 

(b)                                 the
Lessor and the Lessee agree that:

 

(i)                                     §5
of such Subject Lease and §1 of such Return Conditions are hereby amended to
require such Aircraft to be returned at Dulles International Airport;

 

(ii)                                  §1
of such Return Conditions is hereby amended by inserting “and the Lien of the
Mortgage” after “Lessor Liens” in the third sentence thereof;

 

(iii)                               §12
(Discrepancies; Corrections) of such Return Conditions is hereby amended by
deleting “or during the test flight referred to in §11” in the first sentence
thereof and by deleting “and for

 

3

 

acceptance
test flights in the manner provided in §11” in the second sentence thereof;

 

(iv)                              §6
(Scheduled Maintenance - Airframe), the first sentence of §7 (Scheduled
Maintenance – Engines),  §8 (Auxiliary
Power Unit), §11 (Acceptance Flight), §16 (Equivalency Charge) and §19 (Special
Markings) of such Return Conditions are hereby deleted; and

 

(v)                                 A
borescope inspection shall not be required if the engine has more than 20
degrees of ITT margin as demonstrated by the most recent engine trend data and
has had a satisfactory scheduled borescope inspection within 180 days prior to
the date of redelivery.  If the ITT
margin is less than 20 degrees or if the performance data and or historical
records reflect any “On Watch” items, or Engine Condition Monitoring (ECM)
trend data reflects a trend outside of the norm for engines of similar age and
use or if the last borescope inspection was accomplished more than 180 days
prior to the date of redelivery, then at the Lessor’s option, a borescope
inspection shall be performed at the Lessee’s expense and the borescope
inspection test will be considered to have been passed if no defect is found
which is outside of the engine manufacturer’s maintenance manual limits.
However in no case will an item of an “On Watch” nature be accepted.  It is understood and agreed that a borescope
inspection is a full hot section video borescope of the engines including
both stages of the turbine; and

 

(c)           the Lessee agrees that on and
following such Expiration Date (i) the Lessee will at Lessee’s cost
provide storage for such Aircraft and maintain insurance covering such Aircraft
on the terms set forth in §18 of such Return Provisions and (ii) upon
request of the Lessor, the Lessee will enter into a customary ferry services
agreement with the Lessor and the Lessee will ferry such Aircraft to a location
in North America selected by the Lessor and the Lessor will reimburse the
Lessee for the Lessee’s direct costs incurred in conducting such ferry flight.

 

(4)                                  With
respect to each Subject Lease, the Lessor and the Lessee hereby agree that:

 

(a)                                  §3(c)(2)(bb)
(Supplemental Rent) of such Subject Lease is hereby amended by deleting such
§3(c)(2)(bb) and replacing it with “(bb) any Make-Whole Premium if such amount
becomes payable in connection with  a
prepayment of Loan Certificates following the occurrence of an Event of Loss”;

 

4

 

(b)                                 §3(g) (Voluntary
Termination) of such Subject Lease is hereby amended by deleting such §3(g) and
replacing it with “[Intentionally Left Blank]”;

 

(c)                                  the
Lessee shall not have the right to renew the Lease and accordingly §3(h) (Renewal
Options) of such Subject Lease is hereby amended by deleting such §3(h) and
replacing it with “[Intentionally Left Blank]”;

 

(d)                                 the
Lessee shall not have the right to purchase the Aircraft and accordingly §16
(Purchase Options) of such Subject Lease is hereby amended by deleting such §16
and replacing it with “[Intentionally Left Blank]”;

 

(e)                                  if
an Event of Loss occurs to the Airframe, notwithstanding the terms of §11(b) of
such Subject Lease, the Lessee shall not have the right to elect to substitute
a Replacement Airframe for the Airframe subject to such Event of Loss;

 

(f)                                    if
no Event of Loss occurs to the Airframe on or prior to the SLV Date occurring
in December 2004, then the first sentence of clause (2) of §11(a) (Event
of Loss to the Airframe) of such Subject Lease is hereby amended by deleting
such sentence and replacing it with the following:  “If an Event of Loss occurs to the Airframe,
the Lessee shall pay or cause to be paid to the Lessor an amount equal to (x)(i) an
amount equal to the sum of (xx) the Stipulated Loss Value of the Aircraft,
determined as of the SLV Date first occurring on or after the date of the Event
of Loss plus (yy) the amount of Basic Rent that would have been scheduled to be
payable on the Payment Date coinciding with or next preceding such SLV Date
under this Lease as originally in effect (i.e., prior to any amendment to this
Lease), plus (ii) interest at the SLV Rate on the amount specified in the
preceding clause (i) from and including such SLV Date to and excluding the
payment date, plus (iii) all unpaid Basic Rent due on or prior to such SLV
Date, plus (iv) all other amounts of Supplemental Rent due on or before
the date of payment in full of all other amounts due under this §11(a)(2) and
any reasonable expenses and costs incurred in connection with such Event of
Loss by the Lessor, the Owner Participant, or the Loan Trustee, minus (y) all
Basic Rent due and payable after such SLV Date and actually paid by the Lessee.”;

 

(g)                                 §15(a)
(Remedies: Generally) of such Subject Lease is hereby amended by deleting
clauses (3), (4) and (5) of such §15(a) and replacing them with clauses (3),
(4) and (5) set forth in Schedule 4 hereto and by deleting any reference to
liability of the Lessee for Make-Whole Premium in such §15(a);

 

(h)                                 §15(a) (Remedies:
Generally) of such Subject Lease is hereby further amended by deleting the last
two paragraphs of such §15(a); and

 

5

 

(i)                                     §15(f) (Remedies:
Certain Matters) of such Subject Lease is hereby amended by deleting such §15(f) and
 replacing it with “[Intentionally Left
Blank]”.

 

(5)                                  With
respect to each Subject Lease and the other Subject Operative Documents related
thereto, the Lessee, the Owner Trustee, the Owner Participant (as defined in
such Subject Lease), the Loan Trustee and the Loan Participant agree:

 

(a)                                  that
in no event shall the Owner Trustee, the Owner Participant, the Loan Trustee or
the Loan Participant have any obligation or liability to make any payments to
the Lessee, or under such Subject Lease and such other Subject Operative
Documents, in each case arising out of or resulting from the termination of
such Subject Lease pursuant to paragraph (1) above or the condition of the
Aircraft (as defined in such Subject Lease) upon its return by the Lessee;

 

(b)                                 that
in no event shall the Lessee have any obligation or liability under the Tax
Indemnity Agreement (as defined in such Subject Lease) resulting from the
amendments set forth in this Agreement;

 

(c)                                  that
the indemnities and other obligations of the Lessee under such Subject Lease
and such other Subject Operative Documents shall survive such termination as
provided in such Subject Lease and such other Subject Operative Documents with
respect to provisions which survive the termination thereof, provided that in
no event shall the Lessee have any obligation or liability under such Subject
Lease and such other Subject Operative Documents arising out of or resulting
from the termination of such Subject Lease pursuant to paragraph (1) above,
except as provided in this Agreement; and

 

(d)                                 §15
(Refinancing) of the Participation Agreement (as defined in such Subject Lease)
is hereby amended by deleting such §15 and replacing it with “[Intentionally
Left Blank]”.

 

(6)                                  This
Agreement constitutes an amendment to the Subject Leases and the other
applicable Subject Operative Documents.

 

(7)                                  The
Lessee confirms that the United Call Rights as defined in the Participation
Agreements relating to the Subject Leases have terminated and accordingly
§§22(g)(2) and 22(g)(3) of the Participation Agreements are hereby
amended by deleting such §§22(g)(2) and 22(g)(3) and replacing them
with “[Intentionally Left Blank]”.

 

(8)                                  The
Lessee, the Owner Trustee, each Owner Participant, the Loan Trustee and the
Loan Participant agree that, in addition to any disclosure permitted by the
confidentiality provisions of the relevant Subject Operative Documents, each

 

6

 

Owner Participant, the Owner Trustee, the
Loan Participant and the Loan Trustee may disclose the Subject Operative
Documents and the terms thereof (“Information”) (a) to any assignee
of or participant in, or any prospective assignee of or prospective participant
in, any of the rights or obligations of either the Owner Trustee or the Lessee
under any Subject Operative Documents, or any prospective lessee of any Subject
Aircraft (provided that the persons to whom such disclosure is made are
informed of the confidential nature of such Information and instructed to keep
such Information confidential), including, for the avoidance of doubt, disclosure
of such Information as it relates to prospective assignees of the Lessee, or (b) to
directors, officers, employees, agents and advisors (including legal counsel
and accountants) of an assignee or participant, or prospective assignee,
prospective participant or prospective lessee, referred to in the immediately
preceding clause (provided that the persons to whom such disclosure is made are
informed of the confidential nature of such Information and instructed to keep
such Information confidential).

 

(9)                                  Each
of the parties hereto agrees to promptly and duly execute and deliver to the
other parties such further documents and assurances and take such further
action as any such Person from time to time reasonably requests in order to
carry out more effectively the intent of this Agreement and to establish and
protect the rights created or intended to be created in favor of any such
Person hereunder, including the execution and delivery of separate agreements,
in recordable form, evidencing the amendments effected by this Agreement.

 

(10)                            With
respect to each Guaranty, although such Guaranty provides that the Guarantor’s
obligations shall not be affected by any amendment, modification or other
change in, or supplement to, any of the Guaranteed Documents (as defined in
such Guaranty) or any other agreement, the Guarantor nevertheless confirms and
agrees that such Guaranty shall remain in full force and effect after giving
effect to this Agreement, that such Guaranty applies to such Guaranteed
Documents as modified by this Agreement and that this Agreement shall
constitute a Guaranteed Document for purposes of such Guaranty.

 

(11)                            With
respect to each Subject Mortgage and the Loan Certificates (as defined in such
Subject Mortgage), the Owner Trustee, the Loan Trustee and the Loan Participant
hereby agree that such Subject Mortgage and such Loan Certificates are hereby
amended to provide that:

 

(a)                                  on
each Monthly Payment Date accrued and unpaid interest on such Loan Certificates
on such Monthly Payment Date shall be payable on such Loan Certificates but no
scheduled installment of principal on such Loan Certificates shall be payable
on such Monthly Payment Date, and

 

(b)                                 no
Make-Whole Premium shall be payable in connection with any prepayment or
purchase of the Loan Certificates or if the Loan Certificates shall have become
due and payable as provided in such Subject Mortgage 

 

7

 

and
accordingly references to Make-Whole Premium in such Subject Mortgage are
hereby deleted.

 

(12)                            Each
of the undersigned Owner Participants, with respect to each Trust Agreement to
which it is a party, hereby instructs the Owner Trustee to sign this
Agreement.  The Loan Participant hereby
instructs the Loan Trustee to sign this Agreement.  The Loan Trustee and the Loan Participant
consent to the amendments effected hereby.

 

(13)                            The
Lessee shall pay or reimburse each other party hereto for all reasonable legal
fees and expenses of outside counsel in connection with preparation, negotiation,
execution and delivery hereof and the transactions contemplated hereby (whether
or not such transactions are consummated).

 

(14)                            This
Agreement may be executed by the parties hereto in separate counterparts, each
of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same instrument.  This Agreement shall be binding on and inure
to the benefit of the parties hereto and their successors and permitted
assigns.  This Agreement is being
delivered in the State of New York and shall be governed by the laws of the
State of New York.

 

(15)                            It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by Wachovia Bank, National Association (“Wachovia”),
not individually or personally but solely as owner trustee under the applicable
Trust Agreement, in the exercise of the powers and authority conferred and
vested in it as trustee, (b) each of the representations, undertakings and
agreements herein made on the part of the Owner Trustee is made and intended
not as personal representations, undertakings and agreements by Wachovia, but
is made and intended for the purpose of binding only the Trust Estate and (c) nothing
herein contained shall be construed as creating any liability on Wachovia,
individually or personally, to perform any covenant either expressed or implied
contained herein, all such liability, if any, being expressly waived by the
parties hereto and by any Person claiming by, through or under the parties
hereto.  However, nothing in this
paragraph (15) shall limit in scope or substance the general corporate
liability of Wachovia (x) to each Owner Participant under the applicable Trust
Agreement, (y) for the representations, warranties, agreements, and covenants
of Wachovia set forth in any of the other Subject Operative Documents to which
it is or becomes a party, or (z) for the consequences of its own gross
negligence or willful misconduct.

 

8

 

IN WITNESS WHEREOF, this Agreement was
entered into the day and year first above written.

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

not in its individual capacity but solely as owner trustee under each
of the Trust Agreements described on Schedule 1 hereto, Lessor

 

	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  INDEPENDENCE AIR, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  FLYi, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  

 

 

[Signature
Page – Omnibus Amendment Agreement]

 

 

	
  WINDY CITY
  HOLDINGS, INC.,

  as Owner Participant

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:

  
	
   

  
	
  AFS
  INVESTMENTS XI, INC.,

  as Owner Participant

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:

  
	
   

  
	
  AFS
  INVESTMENTS XLI LLC,

  as Owner Participant

  
	
   

  
	
  By:

  	
  AFS INVESTMENTS XLI, INC.

  
	
   

  	
  Its Member

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:

  
	
   

  
	
  AFS
  INVESTMENTS XLII LLC,

  as Owner Participant

  
	
   

  
	
  By:

  	
  AFS INVESTMENTS XLII, INC.

  
	
   

  	
  Its Member

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:

  
	
   

  
	
  EXPORT DEVELOPMENT CANADA

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:

  
	
   

  	
   

  	
   

  
	
  U.S. BANK NATIONAL ASSOCIATION, as Loan
  Trustee

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:

  
	
   

  
	
  STATE STREET BANK AND TRUST COMPANY, as
  Loan Trustee

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:Exhibit
10.53

 

Pursuant to 17 CFR
240.24b-2, confidential information (indicated by [***]) has been omitted and
has been filed separately with the Securities and Exchange Commission pursuant
to a Confidential Treatment Application filed with the Commission.

 

Execution
Version

 

 

MILESTONE
AGREEMENT

 

dated as of
February 18, 2005

 

 

among

 

 

INDEPENDENCE
AIR, INC.,

as Lessee,

 

FLYi,
INC.,

as Guarantor,

 

and

 

the BENEFICIARIES

identified on Schedule I hereto

 

 

TABLE OF
CONTENTS

 

	
  ARTICLE I

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Definitions

  	
   

  
	
  Section 1.2

  	
  Interpretive Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  TRIGGER EVENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Trigger Events.

  	
   

  
	
  Section 2.2

  	
  Information Deliverables.

  	
   

  
	
  Section 2.3

  	
  Reconciliation Events.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Representations and Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  INDEMNITY

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Indemnity Obligation

  	
   

  
	
  Section 4.2

  	
  Expenses

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  MISCELLANEOUS PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Binding on Successors and Assigns;
  Assignment of Agreement; Mergers, Sales of Assets, Etc.

  	
   

  
	
  Section 5.2

  	
  Amendments, etc

  	
   

  
	
  Section 5.3

  	
  Notices

  	
   

  
	
  To Lessee:

  	
  Independence Air, Inc.

  	
   

  
	
   

  	
  45200 Business Court, Suite 100

  	
   

  
	
  Section 5.4

  	
  No Waiver; Remedies

  	
   

  
	
  Section 5.5

  	
  Severability

  	
   

  
	
  Section 5.6

  	
  Entire Agreement

  	
   

  
	
  Section 5.7

  	
  Counterparts

  	
   

  
	
  Section 5.8

  	
  Governing Law; Submission to Jurisdiction;
  Venue.

  	
   

  
	
  Section 5.9

  	
  WAIVER OF TRIAL BY JURY

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule I

  	
  –

  	
  Beneficiaries

  	
   

  
	
  Schedule II

  	
  –

  	
  IA Leases

  	
   

  

 

 

MILESTONE
AGREEMENT

 

THIS MILESTONE AGREEMENT (this “Agreement”),
dated as of February 18, 2005, is among INDEPENDENCE AIR, INC. (an “Obligor”
or “Lessee”); FLYi, INC. (an “Obligor” or “Guarantor” and
together with Lessee, the “Obligors”); and each of the BENEFICIARIES
identified on Schedule I hereto and such other Beneficiaries as may from time
to time be party hereto.

 

W I  T  N  E  S  S  E  T
H:

 

WHEREAS, the Obligors, General Electric Capital
Corporation (“GECC”) and the other Beneficiaries, and certain other
parties are concurrently herewith entering into a series of IA Lease Amendments
(as defined in Section 1.1);

 

WHEREAS, as a condition to GECC and the other
Beneficiaries entering into the IA Lease Amendments, the Obligors are required
to execute and deliver this Agreement; and

 

WHEREAS, it is in the best interests of the Obligors
to execute this Agreement inasmuch as the Obligors will derive substantial
direct and indirect benefits from the IA Lease Amendments;

 

NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1             Definitions. 
In addition to the terms defined in the introductory paragraphs to this
Agreement, the terms set out below have the following meanings when used in
this Agreement, including in the introductory paragraphs:

 

“Affiliate” means, with respect to 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 or by contract or otherwise and “controlling,” “controlled by” and “under common control with”
have correlative meanings.

 

“Applicable Beneficiary” means with respect to
each Original Selected Lease, the Beneficiary that is the Owner Participant (as
defined in such Original Selected Lease).

 

“Applicable Law”  means all applicable laws, statutes,
treaties, rules, codes, ordinances, regulations, permits, certificates, and
orders, all binding interpretations thereof, and all requirements and mandatory
conditions of licenses and permits, of any Governmental Authority, and
judgments, decrees, injunctions, writs, orders, or like action of any court, 

 

 

arbitrator or other administrative, judicial or quasi-judicial tribunal
or agency of competent jurisdiction.

 

“Applicable Loan Participants” means with
respect to each Original Selected Lease, the Person or Persons that are the
Loan Participants (as defined in such Original Selected Lease).

 

“Beneficiary” means, individually or
collectively, as the context requires, each GE Affiliate that is now or
hereafter becomes an Owner Participant (as respectively defined in each IA
Lease), including, without limitation, each of the Beneficiaries identified on
Schedule I, but only if and so long as such Beneficiary is a GE Affiliate.

 

“Business Day” means
any day other than a Saturday, Sunday or other day on which banks in New York
City, New York are authorized or required by law to close.

 

“Cash” means (i) as of any Date of
Determination, the amount of “cash and cash equivalents” and “short-term investments”
included as such under current assets on the consolidated balance sheet of
Lessee and Guarantor as of such Date of Determination prepared in accordance
with GAAP and delivered in accordance with Section 2.2 and (ii) as of any Date
of Reconciliation, the amount of “cash and cash equivalents” and “short-term
investments” included as such under current assets on the consolidated balance
sheet of Lessee and Guarantor as of such Date of Reconciliation prepared in
accordance with GAAP and delivered in accordance with Section 2.3.  For avoidance of doubt, “Cash” shall not
include any cash, cash equivalent or short-term investment which constitutes
collateral for any obligation, or which is subject to any reserve requirement
or restrictive covenant, or which is committed for any particular purpose, or
which otherwise is included as “restricted cash” on such balance sheet.

 

“Cut-off Date” has the meaning set forth in
Section 2.1(a).

 

“Date of Determination” means the last day of
each Test Month.

 

“Date of Recalculation” means, with respect to
each Date of Reconciliation, the later of the date that the Lessee delivers to
the Beneficiaries (i) the officer’s certificate required to be provided to the
Beneficiaries in accordance with Section 2.3 with respect to such Date of
Reconciliation and (ii) the financial statements and Form 10-K or 10-Q, as the
case may be, required to be provided to the Beneficiaries in accordance with
the applicable IA Lease Documents with respect to such Date of Reconciliation.

 

“Date of Reconciliation” means the Date of
Determination that occurs in each of the following Test Months:  (i) June 2005, (ii) September 2005, (iii)
December 2005 and (iv) March 2006.

 

“EBITDAR” means with respect to Lessee for any
period, an amount equal to the sum of (a) operating income of Lessee for such
period (excluding one-time and non-recurring charges or gains), (b)
depreciation expense of Lessee for such period, (c) amortization expense of
Lessee for such period, (d) wage or other non-cash expense associated with the
expensing of stock options for such period and (e) aircraft rental expense of
Lessee during such period.

 

2

 

“EBITDAR Margin” means (i) as of any Date of
Determination, the fraction (expressed as a percentage), the numerator of which
is EBITDAR of Lessee for the period of three consecutive calendar months most
recently ended on such Date of Determination, and the denominator of which is
Lessee’s Passenger Revenue for such period, in each case as determined by
reference to the information provided to the Beneficiaries in accordance with
Section 2.2 and (ii) as of any Date of Reconciliation, the fraction (expressed
as a percentage), the numerator of which is EBITDAR of Lessee for the period of
three consecutive calendar months most recently ended on such Date of
Reconciliation, and the denominator of which is Lessee’s Passenger Revenue for
such period, in each case as determined by reference to the information
provided to the Beneficiaries in accordance with Section 2.3.

 

“Existing Early Termination Agreement” means
that certain Omnibus Amendment Agreement dated as of February 11, 2005, among
Lessee, certain of the Beneficiaries, Guarantor, Export Development Canada and
the other parties party thereto.

 

“GAAP” means generally accepted accounting
principles.

 

“GE Affiliate” means GECC and each Affiliate of
GECC.

 

“Governmental Authority” means any (a)
governmental entity, board, bureau, agency or instrumentality, (b)
administrative or regulatory authority (including any central bank or similar
authority) or (c) court, judicial authority or arbitrator, in each case,
whether foreign or domestic.

 

“IA Lease” means, individually or collectively
as the context requires, the Lease Agreements listed on Schedule II.

 

“IA Lease Amendment” means, with respect to
each IA Lease, the Agreement to Amend Operative Documents relating to such IA
Lease, dated as of the date hereof, among Lessee, Guarantor, the Applicable
Beneficiary, the Applicable Loan Participant and the other parties thereto.

 

“IA Lease Documents” means, with respect to
each IA Lease, the “Operative Documents” as such term is defined in such IA
Lease.

 

“Milestone Guaranty” means the Guaranty
relating to this Agreement, dated as of the date hereof, issued by Guarantor in
favor of the Beneficiaries.

 

“OAA” has the meaning set forth in Section
2.1(c).

 

“Original Selected Lease” has the meaning set
forth in Section 2.1(a).

 

“Passenger Revenue” means, for any period, all “passenger
revenues” included as such on the statement of operations of Lessee for such
period prepared in accordance with GAAP.

 

“Persons” or “persons” means
individuals, firms, partnerships, joint ventures, trusts, trustees,
Governmental Authorities, organizations, associations, corporations, limited 

 

3

 

liability companies or any committees, departments, authorities and
other bodies thereof, corporate or incorporate, whether having distinct legal
status or not, or any member of any of the same.

 

“Termination Date” has the meaning set forth in
Section 2.1(a).

 

“Termination Notice” has the meaning set forth
in Section 2.1(a).

 

“Termination Option” has the meaning set forth
in Section 2.1(a).

 

“Test Month” means each of the calendar months
listed under the column entitled “Test Month” in the table which is part of the
Trigger Event definition.

 

“Trigger Event” means

 

(i) with respect to any Test Month, that one or more
of the following has occurred:  (a) the
EBITDAR Margin (as defined in clause (i) of the definition thereof), as of the
Date of Determination in such Test Month, shall not be at least equal to the
amount specified in the table below opposite such Test Month in the column
entitled “EBITDAR Margin”; (b) the amount of Cash (as defined in clause (i) of
the definition thereof), as of the Date of Determination in such Test Month,
shall not be at least equal to the amount specified in the table below opposite
such Test Month in the column entitled “Cash”; or (c) Lessee shall not have
provided GECC with the information and certifications required to be delivered
by Lessee to GECC pursuant to Section 2.2 for such Test Month by the date which
is 10 days following the date such information is required to be delivered by
such Section 2.2 (for the avoidance of doubt, a Trigger Event under this clause
(i)(c) shall occur if the information required to be delivered is not delivered
on or prior to the thirtieth (30th) day following the last day of the calendar
month to which it relates); and

 

(ii) with respect to any Date of Reconciliation, that
one or more of the following has occurred: 
(a) the EBITDAR Margin (as defined in clause (ii) of the definition
thereof), as of such Date of Reconciliation, shall not be at least equal to the
amount specified in the table below opposite the Test Month in which such Date
of Reconciliation occurred in the column entitled “EBITDAR Margin”; (b) the
amount of Cash (as defined in clause (ii) of the definition thereof), as of
such Date of Reconciliation, shall not be at least equal to the amount
specified in the table below opposite the Test Month in which such Date of
Reconciliation occurred in the column entitled “Cash”; or (c) Lessee shall not
have provided GECC with the information and certifications required to be delivered
by Lessee to GECC pursuant to Section 2.3 for such Date of Reconciliation by
the date required by such Section 2.3.

 

	
  Test Month

  	
   

  	
  EBITDAR Margin

  	
   

  	
  Cash

  	
   

  
	
  June 2005

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  
	
  September 2005

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  
	
  October 2005

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  
	
  November 2005

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  
	
  December 2005

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  
	
  January 2006

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  
	
  February 2006

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  
	
  March 2006

  	
   

  	
  [***]

  	
  %

  	
  $

  	
  [***]

  	
   

  

 

4

 

Section 1.2             Interpretive Provisions. 
For purposes of this Agreement: 
(a)  the foregoing definitions
shall be equally applicable to both the singular and plural forms of the
defined terms; (b) all terms defined directly or by incorporation in this
Agreement shall have the defined meanings when used in any certificate or other
document delivered pursuant hereto unless otherwise defined therein; (c)
accounting terms not otherwise defined in this Agreement, and accounting terms
partly defined in this Agreement to the extent not defined, shall have the respective
meanings given to them under GAAP; (d) references to any amount as on deposit
or outstanding on any particular date means such amount at the close of
business on such day; (e) the words “hereof,” “herein” and “hereunder” and
words of similar import refer to this Agreement (or the certificate or other
document in which they are used) as a whole and not to any particular provision
of this Agreement (or such certificate or document); (f) references to any
Section, Schedule or Exhibit are references to Sections, Schedules and Exhibits
in or to this Agreement (or the certificate or other document in which the
reference is made), and references to any paragraph, subsection, clause or
other subdivision within any Section or definition refer to such paragraph,
subsection, clause or other subdivision of such Section or definition; (g) the
term “including” means “including without limitation”; (h) references to any
law or regulation refer to that law or regulation as amended from time to time
and include any successor law or regulation; (i) references to any agreement
refer to that agreement as from time to time amended or supplemented or as the
terms of such agreement are waived or modified in accordance with its terms;
(j) references to any Person include that Person’s successors and permitted
assigns; and (k) headings are for convenience of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.

 

ARTICLE
II

TRIGGER EVENTS

 

Section 2.1             Trigger Events.

 

(a)           If, at any time, a Trigger Event with
respect to any Test Month or Date of Reconciliation shall have occurred, the
Beneficiaries shall have the option (such option, a “Termination Option”)
to terminate any one IA Lease (such IA Lease, the “Original Selected Lease”)
selected by the Beneficiaries in their sole discretion.  Any such termination shall occur on the
Business Day which is the first Business Day to occur on or next following the
forty-fifth (45th) day (any such day, a “Termination Date”) following
the delivery of written notice (a 

 

5

 

“Termination Notice”)
to Lessee.  In order to exercise a
Termination Option (it being understood that a Termination Option may be
exercised each time that a Trigger Event occurs with respect to a Test Month or
a Date of Reconciliation (if no Termination Notice has previously been given
for such Test Month), as the case may be, and therefore up to eight Trigger
Events could occur pursuant to this Agreement), the Applicable Beneficiary must
deliver a Termination Notice to Lessee (i) with respect to any Test Month with
respect to which a Trigger Event occurs, within ninety (90) days after the
receipt by GECC of the information relating to such Test Month required to be
delivered to it by Lessee pursuant to Section 2.2 or (ii) with respect to any
Date of Reconciliation, within ninety (90) days after the Date of Recalculation
relating to such Date of Reconciliation (the last day of any such ninety (90)
day period, the “Cut-off Date”). 
Such Termination Notice shall reference the Test Month or the Date of
Reconciliation, as the case may be, with respect to which such Trigger Event
occurred and shall identify the Original Selected Lease and the applicable
Termination Date.  Any such Termination
Notice delivered by an Applicable Beneficiary shall be irrevocable, unless
otherwise agreed by the Lessee.

 

(b)           At any time during the term of this
Agreement, the Obligors agree, immediately upon request by one or more
Beneficiaries, to negotiate in good faith with such Beneficiaries and the other
applicable parties an omnibus amendment agreement (an “OAA”) relating to
an Original Selected Lease with a goal of entering into such OAA on or before
the occurrence of the Cut-Off Date relating to the Trigger Event giving rise to
a Termination Option.  Any such OAA shall
contemplate the termination of such Original Selected Lease on the Termination
Date specified, or to be specified, in the Termination Notice delivered, or to
be delivered, in connection with such Trigger Event.  Each OAA entered into pursuant hereto shall
be on substantially the same terms as provided for in the Existing Early
Termination Agreement, except that (i) the effective date for the early termination
of the applicable Original Selected Lease shall be the Termination Date
referenced in the applicable Termination Notice and (ii) other than with
respect to the IA Lease identified in position 1 on Schedule II, references to
make whole will be changed to breakage such that Lessee shall have no liability
for breakage under § 3(c) (except following the occurrence of an event of
loss) or § 15 of such Original Selected Lease.

 

(c)           Each of the Obligors agrees to promptly
and duly execute and deliver to the Beneficiaries such further documents and
assurances and take such further action as any such Beneficiary from time to
time reasonably requests in order to carry out more effectively the intent of
this Agreement and to establish and protect the rights created or intended to
be created in favor of any such Beneficiary hereunder.

 

(d)           With respect to each ACAH Guaranty (as
respectively defined in each IA Lease) provided by the Guarantor, although such
Guaranty provides that the Guarantor’s obligations shall not be affected by any
amendment, modification or other change in, or supplement to, any of the
Guaranteed Documents (as defined in such ACAH Guaranty) or any other agreement,
the Guarantor nevertheless confirms and agrees that such ACAH Guaranty shall
remain in full force and effect after giving effect to this Agreement and any
termination effected pursuant hereto.

 

6

 

Section 2.2             Information Deliverables.

 

(a)           Lessee shall deliver to GECC, within 20
days after the end of each calendar month, a consolidated balance sheet of
Lessee and Guarantor as of the end of such calendar month and a related
statement of operations of Lessee for the period of such calendar month,
setting forth, in each case, in comparative form the figures for the previous
two calendar months (or, in the case of the balance sheet, as of the end of the
previous two calendar months), in each case, prepared in accordance with GAAP
consistently applied, all in reasonable detail and certified by the chief
financial officer of Lessee as (i) having been prepared in accordance with GAAP
(subject to changes resulting from year-end adjustments and having been
prepared with no notes) and (ii) fairly presenting the consolidated financial
position of Lessee and Guarantor as of such date and the results of operations
of Lessee for the period ended on such date.

 

(b)           Simultaneously with the delivery of the
financial statements specified in Section 2.2(a) above at the end of any Test
Month, Lessee shall deliver to GECC, an officer’s certificate of the Chief
Financial Officer of Lessee certifying as to the EBITDAR Margin and Cash as of
the most recently occurring Date of Determination and setting forth in
reasonable detail the calculations used by Lessee to determine such EBITDAR
Margin and Cash.

 

Section 2.3             Reconciliation Events.

 

(a)           In addition to the information required
to be delivered pursuant to Section 2.2, simultaneously with the delivery of
the audited and unaudited financial statements, as the case may be, and the
Forms 10-Q and 10-K, as the case may be, delivered to the applicable
Beneficiaries pursuant to the terms of applicable IA Lease Documents with
respect to each Date of Reconciliation, Lessee shall deliver to GECC, an
officer’s certificate of the Chief Financial Officer of Lessee certifying as to
the EBITDAR Margin and Cash as of the Date of Reconciliation based on such
financial statements and Form 10-K or 10-Q, as the case may be, and setting
forth in reasonable detail the calculations used by Lessee to determine such
EBITDAR Margin and Cash.

 

(b)           In the event that a Trigger Event shall
have occurred, as of any Date of Reconciliation, the Beneficiaries shall be
entitled to exercise their rights pursuant to, and in accordance with, Section
2.1, notwithstanding any previous determination that no Trigger Event had
occurred as of any Date of Determination based on information provided pursuant
to Section 2.2.  For the avoidance of
doubt, if on a Date of Reconciliation, a previously believed to have occurred
Trigger Event with respect to a Test Month is determined not to have existed
and the Beneficiaries have not previously delivered a Termination Notice with
respect to such Test Month, the Beneficiaries shall not have the right to
deliver a Termination Notice for such Test Month and (ii) if on a Date of
Reconciliation, a previously believed to have occurred Trigger Event with
respect to a Test Month is determined not to have existed and the Beneficiaries
have previously delivered a Termination Notice with respect thereto in
accordance herewith, the fact that such Trigger Event did not in fact occur
shall in no way affect the effectiveness of such Termination Notice or the
rights and obligations of the parties hereunder with respect thereto.

 

7

 

ARTICLE
III

 

REPRESENTATIONS AND WARRANTIES

 

Section 3.1             Representations and Warranties. 
Each of the Obligors represents and warrants to each Beneficiary as set
forth below.

 

(a)           Such Obligor is a corporation duly
organized and validly existing in good standing under the laws of its
jurisdiction of organization.

 

(b)           This Agreement has been duly authorized,
executed, and delivered by such Obligor and, assuming due authorization,
execution, and delivery by the other parties hereto, is a legal, valid, and binding
obligation of such Obligor, enforceable against such Obligor in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
or similar laws affecting enforcement of creditors’ rights generally and by
general principles of equity.  Such
Obligor’s execution and delivery of, and performance of its obligations under,
this Agreement do not and will not violate its articles of incorporation or
by-laws, do not and will not contravene any existing law, governmental rule or
regulation, judgment, or order applicable to or binding on such Obligor, and do
not and will not contravene any provision of, or constitute a default under,
any contract to which such Obligor is a party or by which it or any of its
properties is bound, and do not and will not require the consent or approval of
its stockholders or any trustee or holders of any indebtedness or obligations
of such Obligor, except such as have been duly obtained.

 

(c)           Neither Obligor’s execution and delivery
of this Agreement, nor Obligor’s consummation of any of the transactions
contemplated hereby, requires the consent or approval of, giving of notice
(other than subsequent reporting requirements) to, registration with, or taking
of any other action in respect of, any Governmental Authority, except any which
are in full force and effect.

 

ARTICLE
IV

 

INDEMNITY/EXPENSES

 

Section 4.1             Indemnity Obligation. 
Lessee agrees to indemnify and hold harmless on a net after-tax basis
each Beneficiary, and each of their respective successors and permitted assigns
in such capacities, agents, servants, officers, employees and directors
(hereinafter in this Article IV referred to individually as an “Indemnitee,”
and, collectively, as “Indemnitees”) against any and all liabilities,
obligations, losses, damages, penalties, claims, demands, actions, suits,
judgments and any and all costs and expenses (including reasonable attorneys’
fees, disbursements and other charges) (for the purposes of this Article IV the
foregoing are collectively called “Losses”) incurred or suffered by any
of the Indemnitees arising out of, or relating to Lessee’s failure to perform
its obligations under this Agreement or the breach of any representation or
warranty in this Agreement or the exercise or enforcement of any of the terms,
rights or remedies hereunder, (but excluding any such Losses to the extent
incurred by reason of (i) the gross negligence or willful misconduct of such
Indemnitee or any related Indemnitee (as defined below), or (ii) breaches by
such Indemnitee of this Agreement).  For 

 

8

 

purposes of subclause (i) above, an Indemnitee shall be considered a “related”
Indemnitee with respect to another Indemnitee if such Indemnitee is an
Affiliate or employer of such other Indemnitee or a director, officer, employee
or agent of such other Indemnitee, or a successor or assignee of such other
Indemnitee.

 

Section 4.2             Expenses.  Lessee shall
pay or reimburse each Beneficiary for all reasonable legal fees and expenses of
outside counsel in connection with preparation, negotiation, execution and
delivery hereof and the transactions contemplated hereby including all
reasonable fees and expenses incurred by the Beneficiaries and/or any
Applicable Loan Participant with respect to the termination of any Selected
Lease (whether or not such transactions are consummated).

 

ARTICLE
V

 

MISCELLANEOUS PROVISIONS

 

Section 5.1             Binding on Successors and Assigns;
Assignment of Agreement; Mergers, Sales of Assets, Etc.

 

(a)           This Agreement shall be binding upon and
inure to the benefit of each party hereto and its respective permitted
successors and permitted assigns; provided, however, that, except in connection with a transaction
permitted pursuant to Section 5.1(b) hereof or Section 10(b) of the Milestone
Guaranty, the Obligors may not assign any of their obligations hereunder
without the prior written consent of the Beneficiaries, and no Beneficiary may
assign any of its rights or obligations hereunder except, in connection with an
assignment of such Beneficiary’s interest under any IA Lease Document, to a GE
Affiliate.

 

(b)           Lessee shall not consolidate with or
merge into any other Person, or sell, convey, lease, or otherwise transfer all
or substantially all of its assets as an entirety (whether in one transaction
or a series of transactions) to any Person (a “Reorganization Transaction”),
unless:

 

(1)           the Person formed by such consolidation
or surviving such merger, or the Person who acquires by sale, conveyance,
transfer, or lease all or substantially all of Lessee’s assets as an entirety
(the “Successor”) is a U.S. Citizen (as defined in the IA Leases)
holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to chapter 447 of the Transportation Code;

 

(2)           the Successor executes and delivers to
the Beneficiaries an agreement, in form and substance reasonably satisfactory
to the Beneficiaries, containing an assumption by the Successor of the due and
punctual performance and observance of Lessee’s obligations under this
Agreement;

 

(3)           the Milestone Guaranty shall remain in
full force and effect (unless the Guarantor is the Successor) in respect of the
obligations of the Successor hereunder; and (4) the Successor delivers to the
Guaranteed Parties a certificate, signed on its behalf by an authorized
officer, stating that the conditions precedent set forth in clauses (b)(1),
(b)(2),  and (b)(3) have been complied
with and an opinion of counsel for the Lessee or 

 

9

 

for the Successor, from counsel and in form and
substance reasonably satisfactory to the Beneficiaries, (aa) stating that the
agreements entered into to effect such consolidation, merger, sale, conveyance,
transfer, or lease and such assumption agreement have been duly authorized,
executed, and delivered by the Successor and that they (and this Agreement so
assumed) and the Milestone Guaranty constitute legal, valid, and binding
obligations of the Successor and the Guarantor, as the case may be, enforceable
in accordance with their terms (in the case of this Agreement, to the same
extent as this Agreement was enforceable against Lessee and Guarantor
immediately prior to such transaction and, in the case of the Milestone
Guaranty, to the same extent as the Milestone Guaranty was enforceable against
the Guarantor immediately prior to such transaction), (bb) stating that all
conditions precedent that are legal in nature provided for in this Agreement
and relating to such transaction have been fulfilled, and (cc) containing such
other matters as GECC reasonably requests.

 

Upon any such consolidation, sale, conveyance, merger,
transfer, or lease, the Successor shall succeed to, shall be substituted for,
and may exercise every right and power of Lessee under this Agreement, with the
same effect as if the Successor had been named as Lessee herein.  No such merger or consolidation or
conveyance, sale, transfer, or lease of all or substantially all Lessee’s
assets as an entirety shall have the effect of releasing Lessee (or any
Successor) from its liability under this Agreement.  Lessee shall pay all reasonable out of pocket
expenses of the Beneficiaries in respect of such transfer.

 

Section 5.2             Amendments, etc. 
No amendment to or waiver of any provision of this Agreement, nor
consent to any departure by the Obligors herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Beneficiaries
and the Obligors, and any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.

 

Section 5.3             Notices.  All requests,
demands, notices, and other communications hereunder shall be in writing
(including telecopies), shall be in English, shall be effective on delivery,
and shall be addressed as follows (or to such other address as any such person
shall designate by notice to each other such person):

 

	
   

  	
  To Lessee:

  	
   

  	
  Independence
  Air, Inc.

  
	
   

  	
   

  	
   

  	
  45200 Business
  Court, Suite 100

  
	
   

  	
   

  	
   

  	
  Dulles, VA 20166

  
	
   

  	
   

  	
   

  	
  Attention:       Chief
  Financial Officer

  
	
   

  	
   

  	
   

  	
  Telecopy:       (703)
  650 6294

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  To Guarantor:

  	
   

  	
  FLYi, Inc.

  
	
   

  	
   

  	
   

  	
  45200 Business Court,
  Suite 100

  
	
   

  	
   

  	
   

  	
  Dulles, VA 20166

  
	
   

  	
   

  	
   

  	
  Attention:       Chief
  Financial Officer

  
	
   

  	
   

  	
   

  	
  Telecopy:       (703)
  650 6294

  

 

10

 

	
   

  	
  To the Beneficiaries:

  	
   

  	
  c/o GE Capital Aviation
  Services, Inc.

  
	
   

  	
   

  	
   

  	
  201 High Ridge Road

  
	
   

  	
   

  	
   

  	
  Stamford, CT 06927

  
	
   

  	
   

  	
   

  	
  Attention:       Head
  of Portfolio and

  
	
   

  	
   

  	
   

  	
                         Risk
  Management

  
	
   

  	
   

  	
   

  	
  Telecopy:       (203)
  357 6680

  

 

Section 5.4             No Waiver; Remedies. 
No failure on the part of any party to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative
and not exclusive of any remedies provided by law or in equity.

 

Section 5.5             Severability. 
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

Section 5.6             Entire Agreement. 
This Agreement and the Milestone Guaranty constitute the entire
understanding among the parties hereto with respect to the subject matter
hereof and supersede any prior agreements, written or oral, with respect
thereto.

 

Section 5.7             Counterparts. 
This Agreement may be executed by the parties hereto in several
counterparts, each of which shall be deemed to be an original and all of which
shall constitute together but one and the same agreement.

 

Section 5.8             Governing Law; Submission to
Jurisdiction; Venue.

 

(a)           This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
be governed by the laws of the State of New York.

 

(b)           Each of the parties hereto irrevocably
agrees that any legal action or proceeding with respect to, or in connection
with, this Agreement may be brought and determined in the Supreme Court of the
State of New York, New York County, or in the United States District Court for
the Southern District of New York, and each of the parties hereto hereby
irrevocably accepts with regard to any such action or proceeding, for itself
and in respect of its properties, generally and unconditionally, the nonexclusive
jurisdiction of those courts.  Each of
the parties hereto hereby irrevocably waives, and agrees not to assert, by way
of motion, as a defense or counterclaim, or otherwise, in any such action or
proceeding, any claim that it is not personally subject to the jurisdiction of
the foregoing courts, that it or its property is exempt or immune from
jurisdiction of any court or from any legal process (whether through service of
notice, attachment prior to judgment, attachment in aid of execution, or
otherwise), and, to the extent permitted by law, that the suit, action, or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action, or proceeding is improper, or that this Agreement or the subject matter
hereof may not be enforced in or by such courts, and further irrevocably
waives, to the extent permitted by law, the benefit of any defense that would
hinder or delay the levy, execution, or collection of any amount to which any
party hereto is entitled pursuant to a final judgment of any court having
jurisdiction (provided, that this sentence
shall not waive any 

 

11

 

requirement of service of
process).  Nothing herein shall affect
any Beneficiary’s right to commence legal proceedings or otherwise proceed
against an Obligor in any other jurisdiction in which such Obligor shall be
subject to suit.  Each of the parties
consents to service of process to its address as set forth in Section 5.3.

 

Section 5.9             WAIVER OF TRIAL BY JURY.  EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

 

[Signature page follows]

 

12

 

IN WITNESS WHEREOF, each party hereto has caused this
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.

 

	
   

  	
  INDEPENDENCE AIR, INC., as Lessee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  FLYi, INC., as Guarantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  GENERAL ELECTRIC CAPITAL

  CORPORATION, as Beneficiary

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  WINDY CITY HOLDINGS, INC., as Beneficiary

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  AFS INVESTMENTS XI, INC., as Beneficiary

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  AFS INVESTMENTS XLI LLC, as Beneficiary

  
	
   

  	
   

  
	
   

  	
  By: AFS INVESTMENTS XLI, INC., its Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

Signature Page - Milestone
Agreement]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}]]