Document:

exv10w2

Exhibit 10.2

Supplemental Agreement No. 2 (“SA-2”)

to

Purchase Agreement No. 3134

between

The Boeing Company

and

ATLAS AIR, INC

Relating to Boeing Model 747-8 Freighter Aircraft

     THIS SUPPLEMENTAL AGREEMENT, entered into as of the 1st day of March of 2010, by and
between THE BOEING COMPANY (Boeing) and ATLAS AIR, INC. (Customer);

     WHEREAS, the parties hereto entered into Purchase Agreement No. 3134 dated September 8, 2006
(the Purchase Agreement) relating to Boeing Model 747-8
Freighter aircraft (the Aircraft);

     WHEREAS, Boeing and Customer have mutually agreed to a [*] matters raised by the
Customer in its discussions with Boeing; AND

     WHEREAS, Boeing and Customer mutually agreed to the final configuration of its 747-8
Freighter Aircraft (Options).

     NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties agree
to amend the Purchase Agreement as follows:

1. Table of Contents, Articles, Tables and Exhibits:

     1.1 The “Table of Contents” to the Purchase Agreement is deleted in its entirety and
the new “Table of Contents” attached hereto and identified with an “SA-2” legend is
substituted in lieu thereof to reflect the changes made by this SA-2.

     1.2 The “Table 1 to Purchase Agreement No. 3134, Aircraft Information Table for the
747-8F Aircraft” (Table 1) is deleted in its
entirety and the new “Table 1”
attached hereto and identified with an “SA-2” legend is substituted in lieu thereof to reflect the
changes made in the [*], among other matters, resulting
from the 747-8 Freighter aircraft configuration definition for the Aircraft effected by this SA-2.

     1.3 The “Table 2 to Purchase Agreement No. 3134, Option Aircraft Delivery, Description,
Price and Advancer Payments” (Table 2) is deleted in its entirety and the new

	 	 	 

	P.A. No. 3134
	SA-2, Page 1

	BOEING PROPRIETARY

Supplemental Agreement 2, Page 1 of 43

 

 

[ * ]   Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit
has been filed separately with the Commission.

 

 

Table 2” attached hereto and identified with an “SA-2” legend is substituted in lieu
thereof to reflect the [*], among other matters, and the revision of the scheduled delivery period from
the originally scheduled delivery period for the option aircraft.

     1.4 The “Table 3 to Purchase Agreement No. 3134, Purchase Rights Aircraft Information
Table” (Table 3) is deleted in its entirety
and the new “Table 3” attached
hereto and identified with an “SA-2” legend is substituted in lieu thereof to reflect the revision
of the scheduled delivery period from the originally scheduled delivery period in the event of any
Customer exercise of its purchase rights.

     1.5 The Exhibit A to the Purchase Agreement entitled “Aircraft Configuration between the
Boeing Company and Atlas Air, Inc., (Exhibit A)” is deleted in its entirety and the
new “Exhibit A” attached hereto and identified with an “SA-2” legend is substituted in lieu
thereof to document Buyer’s decisions for Options comprising the configuration of its 747-8
Freighter Aircraft effected by this SA-2 (these Options being listed in the Attachment to Exhibit
A).

2. Letter Agreements:

     2.1 Letter Agreement 3134-01 to the Purchase Agreement entitled “Open Configuration
Matters,” is deleted in its entirety to reflect that the Customer has defined the
configuration of its 747-8 Freighter aircraft and the agreed upon configuration is identified in a
new Exhibit A incorporated herein by reference by this SA-2.

     2.2 Letter Agreement 6-1162-ILK-0432 to the Purchase Agreement entitled “747-8 Freighter
Aircraft [*] Letter,” ([*] Letter) is incorporated herein by reference to
document the [*] terms mutually agreed to by the parties;

     2.3 Letter Agreement 6-1162-ILK-0214 to the Purchase Agreement entitled “Right to Purchase
Additional Aircraft,” (Purchase Rights Letter Agreement) is deleted in its entirety and the
new “Purchase Rights Letter Agreement” attached hereto and identified with an “SA-2” legend is
substituted in lieu thereof to revise Article 2 to reflect the revision of the scheduled delivery
period from the originally scheduled delivery period in the event of any Customer exercise of its
purchase rights.

     2.4 Letter Agreement 6-1162-ILK-0215 to the Purchase Agreement entitled “Option Aircraft,”
(Option Aircraft Letter Agreement) is deleted in its entirety and the new “Option Aircraft
Letter Agreement” attached hereto and identified with an “SA-2” legend is substituted in lieu
thereof to revise:

2.4.1 [*]

2.4.2 Attachment to the Option Aircraft Letter Agreement to reflect revision of
the [*], among other matters, and the revision of the scheduled
delivery period from the originally scheduled delivery period for the option
aircraft.

     2.5 Letter Agreement 6-1162-ILK-0436 to the Purchase Agreement entitled
“747-8 Freighter [*] is incorporated herein by reference to document the terms and conditions relating to [*].

	 	 	 

	P.A. No. 3134

	SA-2, Page 2

	BOEING PROPRIETARY

Supplemental Agreement 2, Page 2 of 43

 

 

     2.6 Letter Agreement 6-1162-ILK-0437 to the Purchase Agreement entitled “[*]
Escalation Alternatives” is incorporated herein by reference to document the [*]
escalation terms mutually agreed to by the parties;

The Agreement will be deemed to be supplemented to the extent herein provided as of the date hereof
and as so supplemented will continue in full force and effect.

EXECUTED IN DUPLICATE as of the day and year first written above.

	 	 	 	 	 	 	 	 	 	 	 

	ATLAS AIR, INC	 	 	 	THE BOEING COMPANY	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	 

	 	Mr. Lawrence B. Gibbons
	 	 	 	 	 	[*]	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	Its:

	 	Vice President, Procurement
	 	 	 	Its:
	 	Attorney in Fact	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 

	 	 	 

	P.A. No. 3134
	SA-2, Page 3

	BOEING   PROPRIETARY

Supplemental Agreement 2, Page 3 of 43

 

 

Table 1 to

Purchase Agreement No. 3134

Aircraft Information Table for the 747-8F Aircraft

	 	 	 	 	 	 	 	 	 

	Airframe Model/MTOW:
	 	 	747-8F	 	 	970,000 pounds

	Engine Model/Thrust:
	 	GENX-2B67	 	66,500 pounds

	Airframe Price:
	 	 	[*]	 	 	 	 	 
	Optional Features:
	 	 	[*]	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	Sub-Total of Airframe and Features:
	 	 	[*]	 	 	 	 	 
	Engine Price (Per Aircraft):
	 	$	0	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	Aircraft Basic Price (Excluding BFE/SPE):
	 	 	[*]	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	Buyer Furnished Equipment (BFE) Estimate:
	 	$	0	 	 	 	 	 
	Seller Purchased Equipment (SPE) Estimate:
	 	$	0	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Refundable Deposit/Aircraft at Proposal Accept
	 	 	[*]	 	 	 	 	 

	 	 	 	 	 	 	 

	Detail Specification:	 	D019U022-C (10/24/2008)

	Airframe Price Base Year/Escalation Formula:	 	[*]	 	[*]
	Engine Price Base Year/Escalation Formula:	 	N/A	 	N/A
	 
	 	 	 	 	 	 
	Airframe Escalation Data:	 	 	 	 
	 
	Base Year Index (ECI):

	 	 	 	 	 	[*]
	Base Year Index (CPI):

	 	 	 	 	 	[*]

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 		 	[B]	 		 	[D]	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	[A]	 	4Q08	 	[C]	 	=	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	4Q08	 	Escalation	 	4Q08	 	[A]* [C] / [B]	 	 	 	 	 	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
	Originally	 	 	 	 	 	 	 	Escalation	 	Factor	 	Escalation	 	Adjusted	 	 	 	Escalation	 	Delivery):
	Contracted	 	 	 	Revised	 	 	 	Factor Using	 	Using	 	Factor Using	 	Escalation	 	 	 	Estimate Adv	 	 	 	 	 		 	 
	Delivery	 	 	 	Delivery	 	Manufacturer Serial	 	[*]	 	[*]	 	[*]	 	Factor	 	 	 	Payment Base	 		 		 		 	
	Date	 	[*]	 	Month	 	Number	 	(Airframe)	 	(Airframe)	 	(Airframe)	 	(Airframe)	 	 	 	Price Per A/P	 	[*]	 	[*]	 	[*]	 	[*]
	[*]
	 	[*]
	 	[*]
	 	37562
	 	[*]	 	[*]	 	[*]	 	[*]	 	1
	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]
	[*]
	 	[*]
	 	[*]
	 	37563
	 	[*]	 	[*]	 	[*]	 	[*]	 	2
	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]
	[*]
	 	[*]
	 	[*]
	 	37564
	 	[*]	 	[*]	 	[*]	 	[*]	 	3
	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]
	[*]
	 	[*]
	 	[*]
	 	37565
	 	[*]	 	[*]	 	[*]	 	[*]	 	4
	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]
	[*]
	 	[*]
	 	[*]
	 	37566
	 	[*]	 	[*]	 	[*]	 	[*]	 	5
	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]
	[*]
	 	[*]
	 	[*]
	 	37567
	 	[*]	 	[*]	 	[*]	 	[*]	 	6
	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]
	[*]
	 	[*]
	 	[*]
	 	37561
	 	[*]	 	[*]	 	[*]	 	[*]	 	7
	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]
	[*]
	 	[*]
	 	[*]
	 	37568
	 	[*]	 	[*]	 	[*]	 	[*]	 	8
	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]
	[*]
	 	[*]
	 	[*]
	 	37569
	 	[*]	 	[*]	 	[*]	 	[*]	 	9
	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]
	[*]
	 	[*]
	 	[*]
	 	37570
	 	[*]	 	[*]	 	[*]	 	[*]	 	10
	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]
	[*]
	 	[*]
	 	[*]
	 	37571
	 	[*]	 	[*]	 	[*]	 	[*]	 	11
	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]
	[*]
	 	[*]
	 	[*]
	 	37572
	 	[*]	 	[*]	 	[*]	 	[*]	 	12
	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]

	 	 	 	 	 

	P.A. No. 3134, APR 53109

	 	SA-2, Page 4
	 	Table 1, Page 1
	 

	 	BOEING PROPRIETARY	 	 

Supplemental Agreement 2, Page 4 of 43

 

 

Table 2 to

Purchase Agreement No. 3134

Option Aircraft Delivery, Description, Price and Advance Payment

	 	 	 	 	 	 	 	 	 

	Airframe Model/MTOW:
	 	 	747-8F	 	 	970,000 pounds
	Engine Model/Thrust:
	 	GENX-2B67	 	66,500 pounds
	Airframe Price:
	 	 	[*]	 	 	 	 	 
	Optional Features:
	 	 	[*]	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	Sub-Total of Airframe and Features:
	 	 	[*]	 	 	 	 	 
	Engine Price (Per Aircraft):
	 	$	0	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	Aircraft Basic Price (Excluding BFE/SPE):
	 	 	[*]	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	Buyer Furnished Equipment (BFE) Estimate:
	 	$	0	 	 	 	 	 
	Seller Purchased Equipment (SPE) Estimate:
	 	$	0	 	 	 	 	 
	 
	Refundable Deposit/Aircraft at Proposal Accept:
	 	 	[*]	 	 	 	 	 

	 	 	 	 	 	 	 

	Detail Specification:	 	D019U022-C (10/24/2008)

	Airframe Price Base Year/Escalation Formula:	 	[*]	 	[*]
	Engine Price Base Year/Escalation Formula:	 	N/A	 	N/A
	 
	 	 	 	 	 	 
	Airframe Escalation Data:	 	 	 	 
	 
	Base Year Index (ECI):

	 	 	 	 	 	[*]
	Base Year Index (CPI):

	 	 	 	 	 	[*]

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	4Q08	 	 	 	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
	 	 	 	 	 	 	Escalation	 	Escalation	 	Delivery):
	Originally	 	 	 	 	 	Factor Using	 	Estimate Adv	 	 	 	 	 	 	 	 
	Contracted	 	Number of	 	Revised Option	 	[*]	 	Payment Base	 	 	 	 	 	 	 	 
	Delivery Date	 	Aircraft	 	Month	 	(Airframe)	 	Price Per A/P	 	[*]	 	[*]	 	[*]	 	[*]
	[*]	 	[*]	 	[*]	 	[*]
	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]

	 	 	 	 	 	 	 

	P.A. No. 3134, APR 53112
	 	SA-2,   Page   5	 	Table 2, Page 1
	 
	 	BOEING        PROPRIETARY	 	 	 	 

Supplemental Agreement 2, Page 5 of 43

 

 

Table of Available Purchase Rights for Aircraft with delivery to occur

from  [*] through [*], inclusive:

	 	 	 	 	 
	 	 	Purchase
	 	 	Rights
	Description	 	Available
	Purchase Rights at September 8, 2006
	 	 	[*]	 
	 
	 	 	 	 
	SA-2 Activity:
	 	 	 	 
	 
	 	 	 	 
	Liquidation of Purchase Right
	 	 	(0	)
	 
	 	 	 	 
	Conversion of Purchase Right into Option
	 	 	(0	)
	 
	 	 	 	 
	 
	 	 	 	 
	Remaining Purchase Rights at SA-2 Effective Date
	 	 	[*]	 
	 
	 	 	 	 

	 	 	 

	P.A. 3134
	 	 
	TLS

	SA-2, Table of Contents, Page i

	BOEING PROPRIETARY

Supplemental Agreement 2, Page 6 of 43

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	 	 	SA
	ARTICLES	 	 	 	NUMBER
	1. 

	 	Quantity, Model and Description	 	 
	2. 

	 	Delivery Schedule	 	 
	3. 

	 	Price	 	 
	4. 

	 	Payment	 	 
	5. 

	 	Miscellaneous	 	 
	 
	 	 	 	 
	TABLE
	 	 	 	 
	 
	 	 	 	 
	1. 

	 	Aircraft Information Table
	 	SA-2
	 
	 	 	 	 
	2. 

	 	Option Aircraft Information Table
	 	SA-2
	 
	 	 	 	 
	3. 

	 	Purchase Rights Aircraft Information Table
	 	SA-2
	 
	 	 	 	 
	EXHIBIT
	 	 	 	 
	 
	 	 	 	 
	A.

	 	Aircraft Configuration
	 	SA-2
	 
	 	 	 	 
	B.

	 	Aircraft Delivery Requirements and
Responsibilities	 	 
	 
	 	 	 	 
	SUPPLEMENTAL EXHIBITS
	 	 	 	 
	 
	 	 	 	 
	AE1.

	 	Escalation Adjustment/Airframe and Optional
Features	 	 
	 
	 	 	 	 
	CS1.

	 	Customer Support Variables	 	 
	 
	 	 	 	 
	EE1

	 	Engine Escalation/Engine Warranty and Patent
Indemnity	 	 
	 
	 	 	 	 
	SLP1.

	 	Product Assurance — First-Look Inspection
Program and Service Life Policy Components	 	 
	 
	 	 	 	 
	LETTER AGREEMENTS
	 	 	 	 
	 
	 	 	 	 
	3134-01 

	 	Open Configuration Matters: NO LONGER APPLICABLE
	 	N/A
	 
	 	 	 	 
	3134-02 

	 	Spare Parts Initial Provisioning	 	 
	 
	 	 	 	 
	RESTRICTED LETTER
	 	 	 	 
	AGREEMENTS
	 	 	 	 
	 
	 	 	 	 
	6-1162-ILK-0203

	 	747-8 Freighter Special Matters Letter	 	 
	 
	 	 	 	 
	6-1162-ILK-0204

	 	747-8 Freighter Performance Retention Commitment	 	 
	 
	 	 	 	 
	6-1162-ILK-0205

	 	Airworthiness Directive Cost Participation Program	 	 
	 
	 	 	 	 
	6-1162-ILK-0206

	 	Maintenance Cost Protection Program	 	 

	 	 	 

	P.A. 3134
	 	 
	TLS

	SA-2, Table of Contents, Page ii

	BOEING PROPRIETARY

Supplemental Agreement 2, Page 7 of 43

 

 

Supplemental Agreement No. 2 to

Purchase Agreement No. 3134

TABLE OF CONTENTS, continued

	 	 	 	 	 
	RESTRICTED LETTER	 	 	 	SA
	AGREEMENTS, continued	 	 	 	NUMBER
	6-1162-ILK-0207

	 	Special Matters relating to [*]	 	 
	 
	 	 	 	 
	6-1162-ILK-0208R1

	 	Promotional Support Agreement
	 	SA-1
	 
	 	 	 	 
	6-1162-ILK-0209

	 	Aircraft Performance Guarantees	 	 
	 
	 	 	 	 
	6-1162-ILK-0210

	 	Remedy for Deviation from Block Fuel Guarantees	 	 
	 
	 	 	 	 
	6-1162-ILK-0211

	 	Demonstration Flight Waiver	 	 
	 
	 	 	 	 
	6-1162-ILK-0214R1

	 	Right to Purchase Additional Aircraft
	 	SA-2
	 
	 	 	 	 
	6-1162-ILK-0215R1

	 	Option Aircraft
	 	SA-2
	 
	 	 	 	 
	6-1162-ILK-0216

	 	Service Reliability Guarantee	 	 
	 
	 	 	 	 
	6-1162-ILK-432#

	 	747-8 Freighter Aircraft [*]
	 	SA-2
	 
	 	 	 	 
	6-1162-ILK-0436*

	 	747-8 Freighter [*]
	 	SA-2
	 
	 	 	 	 
	6-1162-ILK-0437

	 	[*] Escalation Alternatives
	 	SA-2

 

			
	#	 	Letter Agreements after 6-1162-ILK-0216 and preceding 6-1162-ILK-0432 are not used in
this Purchase Agreement
	 
	*	 	Letter Agreements 6-1162-ILK-0433; 6-1162-ILK-0434; 6-1162-ILK-0435, inclusive, are
not used in this Purchase Agreement

	 	 	 

	P.A. 3134
	 	 
	TLS

	SA-2, Table of Contents, Page ii

	BOEING PROPRIETARY

Supplemental Agreement 2, Page 8 of 43

 

 

AIRCRAFT CONFIGURATION

between

THE BOEING COMPANY

and

ATLAS AIR, INC.

Exhibit A to Purchase Agreement Number 3134

	 	 	 	 	 

	P.A. No. 3134

	 	 	 	SA-2
	 

	 	BOEING PROPRIETARY	 	 

Supplemental Agreement 2, Page 9 of 43

 

 

Exhibit A to

Purchase Agreement No. 3134

Page 2

AIRCRAFT CONFIGURATION

Dated as of the Effective Date of SA-2

relating to

BOEING MODEL 747-8 FREIGHTER (747-8 F) AIRCRAFT

The Customer Airplane Description is based on Boeing 747-8 Freighter Configuration Specification
D019U022, Revision C, dated October 24, 2008 (Baseline Specification), or later version
then released, and the options accepted by Customer as more fully discussed in the Attachment to
this Exhibit A (Options). As soon as practicable, Boeing will furnish Customer with copies
of 747-8 Freighter Detail Specification D019U0022TLS48F-1, which is the Baseline Specification
revised to include these Customer selected Options.

The Aircraft Basic Price reflects and includes all effects of such Options.

	 	 	 	 	 

	P.A. No. 3134

	 	 	 	SA-2, Exhibit A, Page 2
	 

	 	BOEING PROPRIETARY	 	 

Supplemental Agreement 2, Page 10 of 43

 

 

Attachment A of Exhibit A to Purchase Agreement No. 3134, Page 1

	 	 	 	 	 
	 	 	 	 	2005 Dollars
	Configuration	 	 	 	12 Aircraft
	Item Number	 	Title	 	Price Per A/C
	0110-000031
	 	 MAJOR MODEL 747 AIRPLANE 	 	IB
	0110B750B14
	 	 MINOR MODEL 747-8F AIRPLANE	 	IB
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]
	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]
	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]
	 	[*]
	[*]
	 	[*]
	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]
	 	[*]
	[*]
	 	[*]
	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]
	 	[*]

	 	 	 	 	 

	P.A. No. 3134
	 	 
	SA-2, Exhibit A, Attachment A, Page 1
	BOEING PROPRIETARY

Supplemental Agreement 2, Page 11 of 43

 

 

	Attachment A of Exhibit A to Purchase Agreement No. 3134, Page 2

	 	 	 	 	 	 	 
	 	 	 	 	2005 Dollars
	Configuration	 	 	 	12 Aircraft
	Item Number	 	Title	 	Price Per A/C
	[*]
	 	[*]	 	[*]

	[*]
	 	[*]	 	[*]

	[*]
	 	 	 	 	 	 
	[*]
	 	[*]	 	[*]

	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]

	7200C483C62

	 	GENX PROPULSION SYSTEM
	 	IB

	7200C483C63

	 	GENX ENGINES — 2B67 RATING
	 	IB

	 
	OPTIONS: 45

	 	TOTAL:
	 	[*]

	 	 	 	 	 

	P.A. No. 3134

	 	 
	SA-2, Exhibit A, Attachment A, Page 2
	BOEING PROPRIETARY

Supplemental Agreement 2, Page 12 of 43

 

 

The Boeing Company

P.O. Box 3707

Seattle, WA 98124-2207

6-1162-ILK-0432

Atlas Air, Inc.

2000 Westchester Avenue

Purchase, NY 10577-2543

	 	 	 	 	 

	Subject:

	 	747-8 Freighter Aircraft [*] Letter
	 
	 	 	 	 
	References:

	 	1) 
	 	Purchase Agreement No. 3134 (the Purchase Agreement) between The Boeing
Company (Boeing) and Atlas Air, Inc. (Customer) relating to Model 747-ADVF
aircraft consisting of twelve (12) firm Boeing Model 747-8 Freighter Aircraft, one (1) option
to purchase Boeing Model 747-8 Freighter Aircraft and thirteen (13) rights to purchase Boeing
Model 747-8 Freighter Aircraft, collectively (Aircraft)
	 
	 	 	 	 
	 

	 	2) 
	 	Letter agreement 6-1162-ILK-00427 entitled, “Agreement to
Reschedule the Delivery Months for Aircraft Contracted for [*]”
(Reschedule Agreement); and
	 
	 	 	 	 
	 

	 	3) 
	 	Letter agreement 6-1162-ILK-0436 entitled, “747-8
Freighter [*]” 

This letter agreement ([*] Agreement) amends and supplements the Purchase
Agreement. All terms used but not defined in this [*] Agreement have the same meaning as in
the Purchase Agreement. Boeing and Customer hereby agree as follows:

	1	 	Affected Aircraft

	 	1.1	 	Scope.

                   This [*] Agreement is limited to the [*]
 under the
Purchase Agreement and [*]
with respect to the Affected Aircraft defined below in Article 1.2
(Affected Aircraft).

	1.2	 	  Affected Aircraft.
	 
	 	 	  The Affected Aircraft are:

	 	1.2.1	 	the Aircraft identified in Supplemental Agreement No. 2
to the Purchase Agreement (SA 2), Table 1 to Purchase Agreement
No. 3134, Aircraft Information Table for the 747-8F Aircraft
with an “SA-2” legend (Table 1) (such aircraft being
referred to as Table 1 Aircraft); and

	 	 	 

	Purchase Agreement 3134

	 	SA-2
	TLS 747-8 Freighter [*] Letter
	 	 
	BOEING PROPRIETARY

Supplemental Agreement 2, Page 13 of 43

 

 

6-1162-ILK-0432

Page 2

	 	1.2.2	 	any Substitute Aircraft defined in Article 17 of Letter
Agreement 6-1162-ILK-0203 entitled “Special Matters Letter:
747-8 Freighter Aircraft.”

	2	 	[*]

[*]

	 	2.1	 	[*]

[*]

	 	2.1.1	 	[*]
	 
	 	2.1.2	 	[*]
	 
	 	2.1.3	 	[*]

	 	 	 

	Purchase Agreement 3134

	 	SA-2
	TLS 747-8 Freighter [*] Letter
	 	 
	BOEING PROPRIETARY

Supplemental Agreement 2, Page 14 of 43

 

 

6-1162-ILK-0432

Page 3

	 	2.2	 	[*]

	 	2.2.1	 	[*]

[*]

	 	2.2.2	 	[*]

[*]

	3	 	[*]

	 	3.1	 	[*]

[*]

	 	3.2	 	[*]

[*]

	 	 	 

	Purchase Agreement 3134

	 	SA-2
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BOEING PROPRIETARY

Supplemental Agreement 2, Page 15 of 43

 

 

6-1162-ILK-0432

Page 4

	 	3.3	 	[*]

[*]

	4	 	[*]

[*]

	 	4.1	 	[*]

[*]

	 	 	 

	Purchase Agreement 3134

	 	SA-2
	TLS 747-8 Freighter [*] Letter
	 	 
	BOEING PROPRIETARY

Supplemental Agreement 2, Page 16 of 43

 

 

6-1162-ILK-0432

Page 5

5 [*]

[*]

[*]

	 	 	 	 	 
	 	 	 	 	 
	[*]	 	[*]	 	[*]
	[*]	 	[*]	 	[*]
	 	 	 	 	 
	[*]	 	[*]	 	[*]
	 	 	 	 	 
	[*]	 	[*]	 	[*]
	 	 	 	 	 
	[*]	 	[*]	 	[*]
	 	 	 	 	 
	[*]	 	[*]	 	[*]

[*]

			
	 	 	 
	Purchase Agreement 3134
	 	SA-2
	TLS 747-8 Freighter [*] Letter	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 17 of 43

 

 

6-1162-ILK-0432

Page 6

6 [*]

[*]

7. [*]

[*]

8. Assignment.

This [*] Agreement cannot be assigned, in whole or in part, without the prior written
consent of Boeing.

9. Conflicts.

In the event of a conflict between the terms of this [*] Agreement and the terms of the
Purchase Agreement, the terms of this [*] Agreement shall control.

10. Confidential Treatment.

Customer understands that certain commercial and financial information contained in this [*]
Agreement is considered by Boeing as confidential. Customer agrees that it

			
	 	 	 
	Purchase Agreement 3134
	 	SA-2
	TLS 747-8 Freighter [*] Letter	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 18 of 43

 

 

6-1162-ILK-0432

Page 7

will treat this [*] Agreement and the information contained herein as confidential and
will not, without the prior written consent of Boeing, disclose this [*] Agreement or any
information contained herein to any other person or entity. In the event that Customer in good
faith concludes (based upon an opinion of counsel) that disclosure of information contained in this
[*] Agreement may be required by applicable law or governmental regulations, Customer shall
advise Boeing in writing prior to such disclosure, if possible, or, if not possible, then promptly
upon receiving such order or upon identifying such need to comply, in order to enable Boeing to
take whatever steps it deems necessary to protect its interests in this regard, and Customer will,
in any event, disclose only that portion of the information which it is legally required to
disclose and Customer will use its reasonable endeavors to protect the confidentiality of such
information to the widest extent possible in the circumstances. The parties acknowledge and agree
that information contained in this [*] Agreement may be disclosed to Customer’s existing
lenders (PDP Lenders) under the Facility Agreement dated January 30, 2008 (PDP Credit
Facility) among Customer, Norddeutsche Landesbank Girozentrale, and Bank of Utah, as security
trustee (Security Trustee) subject to the existing confidentiality agreement with the PDP
Lender.

Very truly yours,

THE BOEING COMPANY

	 	 	 	 	 

	By:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	[*]	 	 
	 
	 	 	 	 
	Its:

	 	ATTORNEY IN FACT
	 	 

			
	 	 	 
	Purchase Agreement 3134
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BOEING PROPRIETARY

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6-1162-ILK-0432

Page 8

Accepted and agreed to this 1stday of March of 2010.

ATLAS AIR, INC.

	 	 	 	 	 

	 	 	 
	 
	 	 	 	 
	By:

	 	Mr. Lawrence B. Gibbons	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Its:

	 	Vice President, Procurement
	 	 

			
	 	 	 
	Purchase Agreement 3134
	 	SA-2
	TLS 747-8 Freighter [*] Letter	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 20 of 43

 

 

Attachment 1 to [*] Agreement 6-1162-ILK-0432

[*], Page 1 OF 1

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
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	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	[*]	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	[*]	 
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	 		[*]	 	 		[*]	 	 		[*]	 	 		[*]	 	 		[*]	 	 		[*]	 	 		[*]	 	 		[*]	 	 		[*]	 	 		[*]	 	 		[*]	 	 		[*]	 	 		[*]	 

			
	 	 	 
	Purchase Agreement 3134
	 	SA-2
	TLS 747-8 Freighter [*] Letter	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 21 of 43

 

 

Attachment 1 to [*] Agreement 6-1162-ILK-0432

[*], Page 2

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
									
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	 	 	[*]	 	 	 	[*]	 	 	$	[*]	 	 	 	[*]	 

 

			
	*	 	- Excludes the aircraft delivering in [*] and [*] of [*] for which the [*].

			
	 	 	 
	Purchase Agreement 3134
	 	SA-2
	TLS 747-8 Freighter [*] Letter	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 22 of 43

 

 

The Boeing Company

P.O. Box 3707

Seattle, WA 98124-2207

6-1162-ILK-0214R1

Atlas Air, Inc.

2000 Westchester Avenue

Purchase, NY 10577-2543

	 	 	 	 	 

	Subject:	 	Right to Purchase Additional Aircraft
	 
	 	 	 	 
	References:

	 	(a)
	 	Purchase Agreement No. 3134 (the Purchase Agreement) between The
Boeing Company (Boeing) and Atlas Air, Inc. (Customer) relating to Model
747-8 Freighter aircraft; and
	 
	 	 	 	 
	 

	 	(b)
	 	Special Matters Letter: 747-8 Freighter Aircraft, Letter Agreement
6-1162-ILK-0203 (the Special Matters Letter).

This letter agreement (Letter Agreement) amends and supplements the Purchase
Agreement. All capitalized terms used but not defined in this Letter Agreement have the
same meaning as in the Purchase Agreement. The Special Matters Letter contains the business
considerations which may be applicable to aircraft acquired through the exercise of a
purchase right. The predecessor of this Letter Agreement (Letter Agreement 6-1162-ILK-0214,
dated September 8, 2006) is deleted in its entirety and this Letter Agreement bearing the
“SA-2” legend is substituted in lieu thereof to effect the revisions in bold-faced text in
Articles 2.0 and 8.1 herein.

1.0 Right to Purchase Incremental Aircraft.

          Subject to the terms and conditions contained herein, in addition to the Aircraft
described in Table 1 to the Purchase Agreement as of the date of execution of this Letter
Agreement, Customer will have the right to purchase (Purchase Right) thirteen (13)
additional Boeing Model 747-8 Freighter aircraft on the terms and conditions described in
this Letter Agreement (Purchase Rights Aircraft).

2.0 Delivery.

          The Purchase Rights Aircraft are offered subject to available position for delivery
during the period [*] through [*].

			
	 	 	 
	P.A. No. 3134
	 	SA-2, Letter Agreement No. 6-1162-ILK-0214 R1, Page 1
	Purchase_ Rights	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 23 of 43

 

 

6-1162-ILK-0214R1

Page 2

3.0 Notice of Exercise and Payment of Deposit.

          Customer shall give written notice to Boeing (Notice of Exercise) of its
desire to exercise a Purchase Right. Such notice shall be accompanied by payment by
electronic transfer to the account specified below of Boeing’s then standard proposal
deposit for 747-8 Freighter aircraft (Deposit) for each Purchase Rights Aircraft
subject to the Notice of Exercise. The Deposit will be applied against the first advance
payment due for each such Purchase Rights Aircraft.

[*]

At the time of its receipt of each Notice of Exercise and related Deposit(s), Boeing will
advise Customer as to the availability of the delivery month(s) requested.

4.0 [*]

          [*]

5.0 Configuration.

          5.1 Subject to the provisions of Article 5.2, below, the configuration for the
Purchase Rights Aircraft will be the detail specification for Boeing Model 747-8 Freighter
aircraft at the revision level in effect at the time of the Notice of Exercise. Such detail
specification will be revised to include

          (i) changes applicable to such detail specification that are developed by Boeing between the
date of the Notice of Exercise and the signing of the definitive agreement to purchase the Purchase
Rights Aircraft,

          (ii) changes required to obtain required regulatory certificates, and

          (iii) other changes as mutually agreed.

          5.2 Boeing reserves the right to configure the Purchase Rights Aircraft starting from
a different configuration specification, provided that it can achieve the same
configuration which would result pursuant to the provisions of Article 5.1.

			
	 	 	 
	P.A. No. 3134
	 	SA-2, Letter Agreement No. 6-1162-ILK-0214R1, Page 2
	Purchase_ Rights	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 24 of 43

 

 

6-1162-ILK-0214R1

Page 3

6.0 Price.

          The Aircraft Price of each Purchase Rights Aircraft shall be determined in accordance
with the provisions of the Purchase Agreement using [*] at the
time of signing of the definitive agreement [*], except that the
airframe price for such Purchase Rights Aircraft shall be the sum of

(i) the price quoted for such airframe (including engine) in Table 1 to the Purchase
Agreement at the date of signing of this Letter Agreement and

(ii) [*] associated with any changes to the airframe from that
described in the detail specification identified in Table 1 to the Purchase Agreement
at the date of signing of the Letter Agreement after giving effect to all credit memos.

          Advance payments are required for each Purchase Rights Aircraft. The remainder of the
Aircraft Price will be due at delivery of each Purchase Rights Aircraft. The methodology
used to estimate the Advance Payment Base Prices will be that specified in the Purchase
Agreement at the date of signing of this Letter Agreement, and the escalation indices used
to estimate the Advance Payment Base Prices will be adjusted to Boeing’s then current
forecasts for such elements as of the date of signing of the definitive agreement for the
Purchase Rights Aircraft and shall be escalated in the same manner as the Airframe Price as
described in Supplemental Exhibit AE-1 and in conformance with the terms and conditions of
paragraph 19 of the Special Matters Letter.

7.0 Definitive Purchase Agreement.

          Following Customer’s exercise of a Purchase Right in accordance with the terms and
conditions stated herein and Boeing’s identification of an available delivery position
acceptable to Customer, the parties will sign a definitive agreement for the purchase of
such Purchase Rights Aircraft within 60 calendar days of such exercise. Such definitive
agreement will include the provisions then contained in the Purchase Agreement as modified
to reflect the provisions of this Letter Agreement and any additional mutually agreed terms
and conditions.

8.0 General Expiration of Rights.

          8.1 Each Purchase Right shall expire at the time of execution of the purchase
agreement for the applicable Purchase Rights Aircraft, or, if no such purchase agreement is
executed, at 11:59 pm (Seattle time) on [*].

			
	 	 	 
	P.A. No. 3134
	 	SA-2, Letter Agreement No. 6-1162-ILK-0214R1, Page 3
	Purchase_ Rights	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 25 of 43

 

 

6-1162-ILK-0214R1

Page 4

9.0 Assignment.

     The Purchase Rights described in this Letter Agreement cannot be assigned, in whole or
in part, without the prior written consent of Boeing.

10.0 Confidential Treatment.

     Customer understands that certain commercial and financial information contained in
this Letter Agreement is considered by Boeing as confidential. Customer agrees that it will
treat this Letter Agreement and the information contained herein as confidential and will
not, without the prior written consent of Boeing, disclose this Letter Agreement or any
information contained herein to any other person or entity. In the event that Customer in
good faith concludes (based upon an opinion of counsel) that disclosure of information
contained in this Letter Agreement may be required by applicable law or governmental
regulations, Customer shall advise Boeing in writing prior to such disclosure, if possible,
or, if not possible, then promptly upon receiving such order or upon identifying such need
to comply, in order to enable Boeing to take whatever steps it deems necessary to protect
its interests in this regard, and Customer will, in any event, disclose only that portion
of the information which it is legally required to disclose and Customer will use its
reasonable endeavors to protect the confidentiality of such information to the widest
extent possible in the circumstances.

Very truly yours,

THE BOEING COMPANY

	 	 	 	 	 

	By:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	[*]	 	 
	 
	 	 	 	 
	Its:

	 	Attorney-In-Fact
	 	 

			
	 	 	 
	P.A. No. 3134
	 	SA-2, Letter Agreement No. 6-1162-ILK-0214R1, Page 4
	Purchase_ Rights	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 26 of 43

 

 

6-1162-ILK-0214R1

Page 5

ACCEPTED
AND AGREED TO this 1st date of March of 2010.

ATLAS AIR, INC.

	 	 	 	 	 

	 	 	 
	 
	 	 	 	 
	By:

	 	Mr. Lawrence B. Gibbons	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Its:

	 	Vice President, Procurement
	 	 

			
	 	 	 
	P.A. No. 3134
	 	SA-2, Letter Agreement No. 6-1162-ILK-0214R1, Page 5
	Purchase_ Rights	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 27 of 43

 

 

The Boeing Company

P.O. Box 3707

Seattle, WA 98124-2207

6-1162-ILK-0215R1

Atlas Air, Inc.

2000 Westchester Avenue

Purchase, NY 10577-2543

	 	 	 	 	 

	Subject:	 	Option Aircraft
	 
	 	 	 	 
	Reference:

	 	(a)
	 	Purchase Agreement 3134 (the Purchase Agreement) between The Boeing Company
(Boeing) and Atlas Air, Inc. (Customer) relating to Model 747-8 Freighter aircraft
(the Aircraft); and
	 
	 	 	 	 
	 

	 	(b)
	 	Special Matters Letter: 747-8 Freighter Aircraft, Letter Agreement
6-1162-ILK-0203 (the Special Matters Letter).

This Letter Agreement amends the Purchase Agreement. All terms used but not defined in this
Letter Agreement have the same meaning as in the Purchase Agreement. The Special Matters Letter
contains the business considerations which may be applicable to aircraft acquired through the
exercise of an option. If Customer exercises its option, Boeing agrees to manufacture and sell
to Customer additional Model 747-8 Freighter aircraft as Option Aircraft. The delivery
months, number of aircraft, Advance Payment Base Price per aircraft and advance payment schedule
are listed in the Attachment to this Letter Agreement. The Airframe Price shown includes the
Engine Price. The predecessor of this Letter Agreement (Letter Agreement 6-1162-ILK-0215, dated
September 8, 2006) is deleted in its entirety and this Letter Agreement bearing the “SA-2”
legend is substituted in lieu thereof to effect the revisions in bold-faced text in (i) Article
4.2 herein; and (ii) the delivery month as identified in the column labeled “Revised Option
Month” in the attachment to this Letter Agreement.

1.0 Aircraft Description and Changes.

     1.1 Aircraft Description: The Option Aircraft is described by the Detail
Specification listed in the Attachment.

     1.2 Changes: The Detail Specification will be revised to include:

	 	(i)	 	Changes applicable to the basic Model 747-8 Freighter aircraft which are
developed by Boeing between the date of the Detail Specification and the signing of
the definitive agreement to purchase the Option Aircraft;
	 
	 	(ii)	 	Changes required to obtain required regulatory certificates; and
	 
	 	(iii)	 	Changes mutually agreed upon.

			
	 	 	 
	P.A. No. 3134
	 	SA-2, Letter Agreement No. 6-1162-ILK-0215, Page 1
	Option Aircraft	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 28 of 43

 

 

6-1162-ILK-0215R1

Page 2

2.0 Price.

     2.1 The pricing elements of the Option Aircraft are listed in the Attachment.

     2.2 Price Adjustments.

          2.2.1 Optional Features. The price for Optional Features selected for the Option
Aircraft will be adjusted to Boeing’s current prices as of the date of execution of the
definitive agreement for the Option Aircraft.

          2.2.2 Escalation Adjustments. The Airframe Price and the price of Optional
Features Option Aircraft will be escalated in the same manner as the Airframe Price as described
in Supplemental Exhibit AE-1 and in conformance with the terms and conditions of paragraph 19 of
the Special Matters Letter Agreement.

          2.2.3 Base Price Adjustments. The Airframe Price of the Option Aircraft shall be
as set forth in the Attachment to this Letter Agreement.

3.0 Payment.

     3.1 Customer will pay a deposit to Boeing in the amount shown in the Attachment for each
Option Aircraft (Deposit), on the date of this Letter Agreement. If Customer exercises an
option, the Deposit will be credited against the first advance payment due. If Customer does not
exercise an option, Boeing will retain the Deposit for that Option Aircraft.

     3.2 Following option exercise, advance payments in the amounts and at the times listed in
the Attachment will be payable for the Option Aircraft. The remainder of the Aircraft Price for
the Option Aircraft will be paid at the time of delivery.

     3.3 Notwithstanding sub-paragraph 3.1 and 3.2 above, in accordance with paragraph 18 of the
Special Matters Letter, [*].

4.0 Option Exercise.

     4.1 Customer may exercise an option by giving written notice to Boeing on or before the
date [*] prior to the delivery dates listed in the Attachment (Option Exercise Date).

     4.2 [*]
at the effective date of Supplemental Agreement 2 to the Purchase Agreement: If Boeing
must make production decisions which are

			
	 	 	 
	P.A. No. 3134
	 	SA-2, Letter Agreement No. 6-1162-ILK-0215R1, Page 2
	Option Aircraft	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 29 of 43

 

 

6-1162-ILK-0215R1

Page 3

dependent on Customer’s exercising an option earlier than the Option Exercise Date, Boeing may
accelerate the Option Exercise Date subject to Customer’s agreement. If Boeing and Customer fail
to agree to a revised Option Exercise Date, either party may terminate the option and Boeing
will refund to Customer, without interest, any Deposit and advance payments received by Boeing
with respect to the terminated Option Aircraft. In the event of an exercise pursuant to this
Article 4.2:

	 	4.2.1	 	From the date of exercise by Customer pursuant to this Article 4.2 until
the date of exercise set forth by Article 4.1 herein, Boeing shall credit (as a
reduction of interest that is otherwise payable by the Customer) the Customer
with interest at the Deferred Interest Rate set forth in Article 14.2 of the
Special Matters Letter to accrue on the difference between

	 	   4.2.1.1	 	[*] of the Advance Payment Base Price and
	 
	 	   4.2.1.2	 	the non-refundable Option Deposit;

	 	4.2.2	 	Notwithstanding any requirement set forth by the Special Matters Letter,
Customer shall have no requirement for advance payments until twenty four months
prior to the scheduled delivery month (provided by Boeing pursuant to Article
4.3. herein) at which point advance payments in the amounts and at the times
listed in the Attachment will be payable for the Option Aircraft. Such advance
payment amounts are eligible for deferral pursuant to the Article 14 of the
Special Matters Letter.
The remainder of the Aircraft Price for the Option Aircraft will be
paid at the time of delivery.

     4.3 Boeing shall provide Customer with the scheduled delivery month at the time of option
exercise pursuant to either Article 4.1 or 4.2 herein.

5.0 Contract Terms.

     Boeing and Customer will document the exercise of the option for the purchase of an Option
Aircraft, in accordance with the terms and conditions contained in this Letter Agreement, in the
Purchase Agreement, and any other terms and conditions as may be agreed upon, by executing a
Supplemental Agreement with respect to the Purchase Agreement, within 30 days following option
exercise.

			
	 	 	 
	P.A. No. 3134
	 	SA-2, Letter Agreement No. 6-1162-ILK-0215R1, Page 3
	Option Aircraft	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 30 of 43

 

 

6-1162-ILK-0215R1

Page 4

6.0 Confidential Treatment.

     Boeing and Customer understand that certain information contained in this Letter Agreement,
including any attachments hereto, is considered by both parties to be confidential. Boeing and
Customer agree that each party will treat this Letter Agreement and the information contained
herein as confidential and will not, without the other party’s prior written consent, disclose
this Letter Agreement or any information contained herein to any other person. In the event that
Customer in good faith concludes (based upon an opinion of counsel) that disclosure of
information contained in this Letter Agreement may be required by applicable law or governmental
regulations, Customer shall advise Boeing in writing prior to such disclosure, if possible, or,
if not possible, then promptly upon receiving such order or upon identifying such need to
comply, in order to enable Boeing to take whatever steps it deems necessary to protect its
interests in this regard, and Customer will, in any event, disclose only that portion of the
information which it is legally required to disclose and Customer will use its reasonable
endeavors to protect the confidentiality of such information to the widest extent possible in
the circumstances.

Very truly yours,

THE BOEING COMPANY

	 	 	 	 	 

	By
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	[*]	 	 
	 
	 	 	 	 
	Its

	 	Attorney-In-Fact
	 	 

			
	 	 	 
	P.A. No. 3134
	 	SA-2, Letter Agreement No. 6-1162-ILK-0215R1, Page 4
	Option Aircraft	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 31 of 43

 

 

6-1162-ILK-0215R1

Page 5

ACCEPTED AND AGREED TO this 1st date of March of 2010.

ATLAS AIR, INC.

	 	 	 	 	 

	 	 	 
	 
	 	 	 	 
	By:

	 	Mr. Lawrence B. Gibbons	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Its:

	 	Vice President, Procurement
	 	 

Attachment

			
	 	 	 
	P.A. No. 3134
	 	SA-2, Letter Agreement No. 6-1162-ILK-0215R1, Page 5
	Option Aircraft	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 32 of 43

 

 

Attachment to

Letter Agreement No. 6-1162-ILK-0215R1

[*]

	 	 	 	 	 	 	 	 	 

	Airframe Model/MTOW:
	 	 	747-8F	 	 	970,000 pounds
	Engine Model/Thrust:
	 	 	GENX-2B67	 	 	66,500 pounds
	Airframe Price:
	 	 	[*]	 	 	 	 	 
	Optional Features:
	 	 	[*]	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	Sub-Total of Airframe and Features:
	 	 	[*]	 	 	 	 	 
	Engine Price (Per Aircraft):
	 	$	0	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	Aircraft Basic Price (Excluding BFE/SPE):
	 	 	[*]	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	Buyer Furnished Equipment (BFE) Estimate:
	 	$	0	 	 	 	 	 
	Seller Purchased Equipment (SPE) Estimate:
	 	$	0	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Refundable Deposit/Aircraft at Proposal Accept:
	 	 	[*]	 	 	 	 	 

	 	 	 	 	 

	Detail Specification:	 	D019U022-C (10/24/2008)

	Airframe Price Base Year/Escalation Formula:

	 	[*]
	 	[*]
	Engine Price Base Year/Escalation Formula:

	 	 N/A
	 	N/A

Airframe Escalation Data:

	 	 	 	 	 

	Base Year Index (ECI):

	 	 	[*]	 
	Base Year Index (CPI):

	 	 	[*]	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	4Q08	 	 	 	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to
	 	 	 	 	 	 	Escalation	 	Escalation	 	Delivery):
	Originally	 	 	 	 	 	Factor Using	 	Estimate Adv	 	 	 	 	 	 	 	 
	Contracted	 	Number of	 	Revised Option	 	[*]	 	Payment Base	 				 		 	
	Delivery Date	 	Aircraft	 	Month	 	(Airframe)	 	Price Per A/P	 	[*]	 	[*]	 	[*]	 	[*]
	[*]
	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]

			
	 	 	 
	P.A. No. 3134
	 	SA-2, Attachment to Letter Agreement No. 6-1162-ILK-0215R1, Page 1
	Option_Aircraft	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 33 of 43

 

 

The Boeing Company

P.O. Box 3707

Seattle, WA 98124-2207

6-1162-ILK-0436

Atlas Air, Inc.

2000 Westchester Avenue

Purchase, NY 10577-2543

	 	 	 	 	 	 	 

	Subject:	 	747-8 Freighter [*] in Relation
to [*]
	 
	 	 	 	 	 	 
	References:

	 	1)	 	Purchase Agreement No. 3134 (the Purchase Agreement) between The
Boeing Company (Boeing) and Atlas Air, Inc. (Customer) relating to Model
747-ADVF aircraft consisting of twelve (12) firm Boeing Model 747-8 Freighter Aircraft, one
(1) option to purchase Boeing Model 747-8 Freighter Aircraft and thirteen (13) rights to
purchase Boeing Model 747-8 Freighter Aircraft, collectively (Aircraft); and
	 
	 	 	 	 	 	 
	 

	 	2)	 	Letter Agreement 6-1162-ILK-0432 entitled “747-8 Freighter Aircraft
[*] Letter” ([*] Agreement).

This letter agreement (Letter Agreement) amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter Agreement have the same meaning
as in the Purchase Agreement and the [*] Agreement, as applicable.

1 Scope.

This Letter Agreement is applicable exclusively to the following [*] Aircraft (each a
[*]):

	 	 	 	 	 
	Month of Delivery per	 	Manufacturer	 	 
	Table 1	 	Serial	 	[*]
	(“Revised Delivery Month”)	 	Number	 	Reference
	[*]	 	[*]	 	[*]
	 	 	 	 	 
	[*]	 	[*]	 	[*]
	 	 	 	 	 
	[*]	 	[*]	 	[*]
	 	 	 	 	 
	[*]	 	[*]	 	[*]

			
	 	 	 
	Purchase Agreement 3134
	 	SA-2
	TLS 747-8 Freighter [*]	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 34 of 43

 

 

6-1162-ILK-0436

Page 2

[*]

2 [*]

[*]

3 [*]

[*]

			
	 	 	 
	Purchase Agreement 3134
	 	SA-2
	TLS 747-8 Freighter [*]	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 35 of 43

 

 

6-1162-ILK-0436

Page 3

4 [*]

[*]

5 [*]

[*]

6 Assignment.

Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations
described in this Letter Agreement are provided to Customer in consideration of Customer
becoming the operator of the [*] and cannot be assigned, in whole or in part,
without the prior written consent of Boeing.

			
	 	 	 
	Purchase Agreement 3134
	 	SA-2
	TLS 747-8 Freighter [*]	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 36 of 43

 

 

6-1162-ILK-0436

Page 4

7 Conflicts.

In the event of a conflict among the terms of (i) this Letter Agreement, (ii) the
[*] Agreement and (iii) the Purchase Agreement, the provisions of this Letter
Agreement shall control.

8 Confidential Treatment.

Customer understands that certain commercial and financial information contained in this
Letter Agreement is considered by Boeing as confidential. Customer agrees that it will
treat this Letter Agreement and the information contained herein as confidential and will
not, without the prior written consent of Boeing, disclose this Letter Agreement or any
information contained herein to any other person or entity. In the event that Customer in
good faith concludes (based upon an opinion of counsel) that disclosure of information
contained in this Letter Agreement may be required by applicable law or governmental
regulations, Customer shall advise Boeing in writing prior to such disclosure, if possible,
or, if not possible, then promptly upon receiving such order or upon identifying such need
to comply, in order to enable Boeing to take whatever steps it deems necessary to protect
its interests in this regard, and Customer will, in any event, disclose only that portion
of the information which it is legally required to disclose and Customer will use its
reasonable endeavors to protect the confidentiality of such information to the widest
extent possible in the circumstances. The parties acknowledge and agree that information
contained in this Letter Agreement may be disclosed to Customer’s existing lenders (PDP
Lenders) under the Facility Agreement dated January 30, 2008 among Customer,
Norddeutsche Landesbank Girozentrale, and Bank of Utah, as security trustee subject to the
existing confidentiality agreement with the PDP Lender.

Very truly yours,

THE BOEING COMPANY

	 	 	 	 	 

	By:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	[*]	 	 
	 
	 	 	 	 
	Its:

	 	ATTORNEY IN FACT
	 	 

			
	 	 	 
	Purchase Agreement 3134
	 	SA-2
	TLS 747-8 Freighter [*]	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 37 of 43

 

 

6-1162-ILK-0436

Page 5

Accepted and agreed to this 1st day of March of 2010.

ATLAS AIR, INC.

	 	 	 	 	 

	 	 	 
	 
	 	 	 	 
	By:

	 	Mr. Lawrence B. Gibbons	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Its:

	 	Vice President, Procurement
	 	 

			
	 	 	 
	Purchase Agreement 3134
	 	SA-2
	TLS 747-8 Freighter
[ * ]	 	 

BOEING PROPRIETARY

Supplemental Agreement 2, Page 38 of 43

 

 

The Boeing Company

P.O. Box 3707

Seattle, WA 98124-2207

6-1162-ILK-0437

Atlas Air, Inc.

2000 Westchester Avenue

Purchase, NY 10577-2543

	 	 	 	 	 	 	 

	Subject:	 	[*] Escalation Alternatives
	 
	 	 	 	 	 	 
	References:

	 	1)	 	Purchase Agreement No. 3134 (the Purchase Agreement) between The
Boeing Company (Boeing) and Atlas Air, Inc. (Customer) relating to Model
747-ADVF aircraft consisting of twelve (12) firm Boeing Model 747-8 Freighter Aircraft, one
(1) option to purchase Boeing Model 747-8 Freighter Aircraft and thirteen (13) rights to
purchase Boeing Model 747-8 Freighter Aircraft, collectively (Aircraft); and
	 
	 	 	 	 	 	 
	 

	 	2)	 	Letter Agreement 6-1162-ILK-0432 entitled “747-8
Freighter Aircraft [*] Letter” ([*] Agreement).

This letter agreement (Letter Agreement) amends and supplements the Purchase
Agreement. All terms used but not defined in this Letter Agreement have the same meaning
as in the Purchase Agreement and the [*] Agreement, as applicable.

1. Definitions.

          1.1 “[*]” shall mean a [*]
placed on the [*] for the [*] as set forth in
Attachment 1 to this Letter Agreement.

          1.2 “Airframe Escalation Adjustment” is defined as the price adjustment to the
[*] and the [*] resulting from the calculation using the
economic price formula contained in Supplemental Exhibit AE1 to the Purchase Agreement.

          1.3 “Eligible Aircraft” means any [*].

          1.4 “Escalation Period” means the period commencing on the effective date of
this Letter Agreement and ending on the earlier to occur of the (a) actual delivery date of
each Eligible Aircraft or (b) [*].

          1.5 “Original Option Aircraft” shall mean the Aircraft specified in Letter
Agreement Number 6-1162-ILK-0215R1 entitled “Option Aircraft” as of the date of this Letter
Agreement.

P.A. No. 3134

[*] Escalation Alternatives

BOEING PROPRIETARY

Supplemental Agreement 2, Page 39 of 43

 

 

Atlas Air, Inc.

6-1162-ILK-0437 Page 2

          1.6 “Purchase Rights Aircraft” shall mean the Aircraft specified in Letter
Agreement Number 6-1162-ILK-0214R1 entitled “Right to Purchase Additional Aircraft” as of
the date of this Letter Agreement.

          1.7 “Table 1 Aircraft” shall mean the [*] Aircraft identified in the
following table:

	 	 	 
	Month of [*] per Article	 	Manufacturer Serial
	[*] of the [*] Agreement	 	Number
	[*]	 	[*]
	[*]	 	[*]
	[*]	 	[*]
	[*]	 	[*]
	[*]	 	[*]
	[*]	 	[*]
	[*]	 	[*]
	[*]	 	[*]
	[*]	 	[*]
	[*]	 	[*]
	[*]	 	[*]
	[*]	 	[*]

2. Scope.

This Letter Agreement applies only to Eligible Aircraft. Notwithstanding any provision of
the Purchase Agreement to the contrary, the parties agree that the Airframe Escalation
Adjustment during the Escalation Period for each Eligible Aircraft shall be determined in
accordance with this Letter Agreement.

3. [*]

          3.1 The [*] shall apply to the Aircraft specified in Articles 3.1.1 and
3.1.2 as follows:

          3.1.1 Table 1 Aircraft and Original Option Aircraft. Attachment 1
specifies the escalation factors corresponding to the [*]
 applicable to Eligible Aircraft from among [*].

          3.1.2 Purchase Rights Aircraft. Tables analogous to Attachment 1
containing escalation factors corresponding to the [*] using the
[*]

P.A. No. 3134

[ * ]  Escalation Alternatives

BOEING PROPRIETARY

Supplemental Agreement 2, Page 40 of 43

 

 

Atlas Air, Inc.

6-1162-ILK-0437 Page 3

          3.3 Escalation after Escalation Period for Aircraft which Elected [*].
For those aircraft for which Customer has [*], if an
aircraft has not [*] within the [*], the [*] will be calculated in accordance with the
provisions of the Standard Escalation Formula or the Standard Escalation Formula, as set
forth below [*] and [*] for
the Purchase Rights Aircraft as described in 3.1.2 above), whichever is less.

	 		 	[*]

          Where:

	 		 	[*]
	
				

4. Confidential Treatment.

Customer understands that certain commercial and financial information contained in this
Letter Agreement is considered by Boeing as confidential. Customer agrees that it will
treat this Letter Agreement and the information contained herein as confidential and will
not, without the prior written consent of Boeing, disclose this Letter Agreement or any
information contained herein to any other person or entity. In the event that Customer in
good faith concludes (based upon an opinion of counsel) that disclosure of information
contained in this Letter Agreement may be required by applicable law or governmental
regulations, Customer shall advise Boeing in writing prior to such disclosure, if possible,
or, if

[*] Escalation Alternatives

BOEING PROPRIETARY

Supplemental Agreement 2, Page 41 of 43

 

 

Atlas Air, Inc.

6-1162-ILK-0437 Page 4

not possible, then promptly upon receiving such order or upon identifying such need to
comply, in order to enable Boeing to take whatever steps it deems necessary to protect its
interests in this regard, and Customer will, in any event, disclose only that portion of
the information which it is legally required to disclose and Customer will use its
reasonable endeavors to protect the confidentiality of such information to the widest
extent possible in the circumstances. The parties acknowledge and agree that information
contained in this Letter Agreement may be disclosed to Customer’s existing lenders (PDP
Lenders) under the Facility Agreement dated January 30, 2008 among Customer,
Norddeutsche Landesbank Girozentrale, and Bank of Utah, as security trustee subject to the
existing confidentiality agreement with the PDP Lender.

Very truly yours,

THE BOEING COMPANY

	 	 	 	 	 

	By:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	[*]	 	 
	 
	 	 	 	 
	Its:

	 	ATTORNEY IN FACT
	 	 

Accepted and agreed to this 1st day of March of 2010.

ATLAS AIR, INC.

	 	 	 	 	 

	 	 	 
	 
	 	 	 	 
	By:

	 	Mr. Lawrence B. Gibbons	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Its:

	 	Vice President, Procurement
	 	 

P.A. No. 3134

[*] Escalation Alternatives

BOEING PROPRIETARY

Supplemental Agreement 2, Page 42 of 43

 

 

Atlas Air, Inc.

Attachment 1 to 6-1162-ILK-0437 Page 1 of 1

   Attachment 1: [*]

	 	 	 	 	 

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P.A. No. 3134

[*] Escalation Alternatives

BOEING
PROPRIETARY [*]

Supplemental Agreement 2, Page 43 of 43exv10w1

Exhibit 10.1

EMPLOYMENT AGREEMENT

     This Agreement made effective as of April 5, 2010 by and between Advocat Inc., a Delaware
corporation (the “Company”), and Kelly Gill (the “Executive”).

     In consideration of the mutual covenants contained in this Agreement, the parties hereby agree
as follows:

SECTION I

EMPLOYMENT

     The Company agrees to employ the Executive and the Executive agrees to be employed by the
Company for the Period of Employment as provided in Section III.A. below and upon the terms and
conditions provided in the Agreement.

SECTION II

POSITION AND RESPONSIBILITIES

     During the Period of Employment, the Executive agrees to serve as Chief Operating Officer of
the Company and to be responsible for the typical management responsibilities expected of an
officer holding such positions and such other responsibilities as may be assigned to Executive from
time to time by the Chief Executive Officer and Board of Directors of the Company.

SECTION III

TERMS AND DUTIES

     A. Period of Employment

          The period of Executive’s employment under this Agreement will commence as of the date hereof
and shall continue through March 31, 2011, subject to extension or termination as provided in this
Agreement (“Period of Employment”). On each anniversary of the commencement of the Period of
Employment, the period of Executive’s employment shall be extended for additional one (1) year
periods, unless either party gives notice thirty (30) days in advance of the expiration of the then
current period of employment of such party’s intent not to extend the Period of Employment.

     B. Duties

          During the Period of Employment, the Executive shall devote all of his business time,
attention and skill to the business and affairs of the Company and its subsidiaries. The Executive
will perform faithfully the duties which may be assigned to him from time to time by the Chief
Executive Officer and the Board of Directors.

 

 

SECTION IV

COMPENSATION AND BENEFITS

     A. Compensation

          For all services rendered by the Executive in any capacity during the Period of Employment,
the Executive shall be compensated as follows:

          1. Base Salary

               The Company shall pay the Executive a base salary (“Base Salary”) as follows: three hundred
thousand dollars ($300,000.00) per annum.

               Base Salary shall be payable according to the customary payroll practices of the Company but
in no event less frequently than once each month. The base salary shall be reviewed annually and
shall be subject to increase according to the policies and practices adopted by the Company from
time to time.

     B. Annual Incentive Awards

          The Company will pay the Executive annual incentive compensation awards as may be granted by
the Board or a Compensation Committee to the Executive under any executive bonus or incentive plan
in effect from time to time. It is anticipated that there will be a target bonus of up to 50% of
the Base Salary for the first year of employment, prorated for the duration of employment during
the measurement period, although the final amount will be as determined by the Board or
Compensation Committee.

     C. Additional Benefits

          The Executive will be entitled to participate in all compensation or employee benefit plans or
programs and receive all benefits and perquisites for which any salaried employees are eligible
under any existing or future plan or program established by the Company for salaried employees.
The Executive will participate to the extent permissible under the terms and provisions of such
plans or programs in accordance with program provisions. These may include group hospitalization,
health, dental care, life or other insurance, tax qualified pension, car allowance, savings, thrift
and profit sharing plans, termination pay programs, sick leave plans, travel or accident insurance,
disability insurance, and contingent compensation plans including capital accumulation programs,
Restricted Stock programs, stock purchase programs and stock option plans. Nothing in this
Agreement will preclude the Company from amending or terminating any of the plans or programs
applicable to salaried or senior executives as long as such amendment or termination is applicable
to all salaried employees or senior executives. The Executive will be entitled to an annual
four-week paid vacation.

2

 

          D. SARS

          Executive shall receive a grant of 35,000 SARS upon the commencement of employment hereunder.
Executive by separate letter shall be granted a cash signing bonus of $75,000.00 and reimbursement
of up to $25,000 in separation expenses.

SECTION V

BUSINESS EXPENSES

     The Company will reimburse the Executive for all reasonable travel and other expenses incurred
by the Executive in connection with the performance of his duties and obligations under this
Agreement.

SECTION VI

DISABILITY

     A. In the event of disability of the Executive during the Period of Employment, the Company
will continue to pay the Executive according to the compensation provisions of this Agreement
during the period of his disability, until such time as Executive’s long term disability insurance
benefits are available. However, in the event the Executive is disabled for a continuous period of
six (6) months after the Executive first becomes disabled, the Company may terminate the employment
of the Executive. In this case, normal compensation will cease except for earned but unpaid Base
Salary and Incentive Compensation Awards which would be payable on a pro-rated basis for the year
in which the disability occurred. In the event of such termination, all unvested stock options
held by Executive shall be deemed fully vested on the date of such termination.

     B. During the period the Executive is receiving payments of either regular compensation or
disability insurance described in this Agreement and as long as he is physically and mentally able
to do so, the Executive will furnish information and assistance to the Company and from time to
time will make himself available to the Company to undertake assignments consistent with his prior
position with the Company and his physical and mental health. If the Company fails to make a
payment or provide a benefit required as part of the Agreement, the Executive’s obligation to
fulfill information and assistance will end.

     C. The term “disability” will have the same meaning as under any disability insurance provided
pursuant to this Agreement or otherwise.

SECTION VII

DEATH

     In the event of the death of the Executive during the Period of Employment, the Company’s
obligation to make payments under this Agreement shall cease as of the date of death, except for
earned but unpaid Base Salary and Incentive Compensation Awards which will

3

 

be paid on a pro-rated basis for that year. The Executive’s designated beneficiary will be
entitled to receive the proceeds of any life or other insurance or other death benefit programs
provided in this Agreement.

SECTION VIII

EFFECT OF TERMINATION OF EMPLOYMENT

     A. If the Executive’s employment terminates due to either a Without Cause Termination or a
Constructive Discharge, as defined later in this Agreement, the Company will pay the Executive in a
lump sum an amount equal to 100% of his Base Salary as in effect at the time of the termination
upon such Termination or Constructive Discharge or, if necessary to comply with Code Section
409A(a)(2)(B)(i), on the six (6) month anniversary of such Termination or Constructive Discharge.
Earned but unpaid Base Salary and Incentive Compensation Awards will be paid in a lump sum upon
such Termination or Constructive Discharge. The benefits and perquisites described in this
Agreement as in effect at the date of termination of employment will be continued for eighteen (18)
months. If the Executive’s employment terminates due to either a Without Cause Termination or a
Constructive Discharge, or pursuant to Section XI, all unvested options, SARS or restricted stock
grants (“Options”) granted to the Executive under the Company’s 2005 Long-Term Incentive Plan or
other stock option program or plan (the “Plan”) shall be deemed vested, and the Company shall cause
the Options to remain exercisable until the later of (i) the fifteenth (15th) day of the
third (3rd) month following the date on which the Options would have expired or (ii)
December 31 of the calendar year in which the Option would have expired..

     B. If the Executive’s employment terminates due to a Termination for Cause, earned but unpaid
Base Salary will be paid on a pro-rated basis for the year in which the termination occurs. No
other payments will be made or benefits provided by the Company.

     C. Upon termination of the Executive’s employment other than for reasons due to death,
disability, or pursuant to Paragraph A of this Section or Section XI, the Period of Employment and
the Company’s obligation to make payments under this Agreement will cease as of the date of the
termination except as expressly defined in this Agreement.

     D. For this Agreement, the following terms have the following meanings:

          1. “Termination for Cause” means termination of the Executive’s employment by the Company’s
Board of Directors acting in good faith by the Company by written notice to the Executive
specifying the event relied upon for such termination, due to the Executive’s serious, willful
misconduct with respect to his duties under this Agreement, including but not limited to conviction
for a felony or perpetration of a common law fraud, which has resulted or is likely to result in
material economic damage to the Company.

          2. “Constructive Discharge” means termination of the Executive’s employment by the Executive
due to a failure of the Company to fulfill its obligations under this Agreement in any material
respect including any reduction of the Executive’s Base Salary or

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other compensation other than reductions applicable to all employees of the Company or failure
to appoint or reappoint the Executive to the position specified in Section II hereof, or other
material change by the Company in the functions, duties or responsibilities of the position which
would reduce the ranking or level, responsibility, importance or scope of the position. The
Executive will provide the Company a written notice which describes the circumstances being relied
on for the termination with respect to the Agreement within ninety (90) days after the event giving
rise to the notice. The Company will have thirty (30) days to remedy the situation prior to the
Termination for Constructive Dismissal.

          3. “Without Cause Termination” means termination of the Executive’s employment by the Company
(a) other than due to death, disability, Termination for Cause or pursuant to Section XI; or (b)
upon expiration of the Period of Employment as a result of the giving of notice by the Company of
its intent not to extend the Period of Employment as provided in Section III.A.

     E. Stock Option Repurchase.

          If the Executive’s employment terminates due to either a Without Cause Termination or a
Constructive Discharge or pursuant to Section XI, Executive may require the Company to repurchase
any Options for an amount equal to the difference between the fair market value of a share of the
Company’s common stock on the date of termination and the per share exercise price set forth in the
Options, times the number of shares (whether vested or unvested) granted to the Executive under the
Options.

SECTION IX

OTHER DUTIES OF THE EXECUTIVE DURING

AND AFTER THE PERIOD OF EMPLOYMENT

     A. The Executive will, with reasonable notice during or after the Period of Employment,
furnish information as may be in his possession and cooperate with the Company as may reasonably be
requested in connection with any claims or legal actions in which the Company is or may become a
party.

     B. The Executive recognizes and acknowledges that all information pertaining to the affairs,
business, clients, customers or other relationships of the Company, as hereinafter defined, is
confidential and is a unique and valuable asset of the Company. Access to and knowledge of this
information are essential to the performance of the Executive’s duties under this Agreement. The
Executive will not during the Period of Employment or after except to the extent reasonably
necessary in performance of the duties under this Agreement, give to any person, firm, association,
corporation or governmental agency any information concerning the affairs, business, clients,
customers or other relationships of the Company except as required by law. The Executive will not
make use of this type of information for his own purposes or for the benefit of any person or
organization other than the Company. The Executive will also use his best efforts to prevent the
disclosure of this information by others. All records, memoranda, etc.

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relating to the business of the Company whether made by the Executive or otherwise coming into
his possession are confidential and will remain the property of the Company.

     C. During the Period of Employment and for a twelve (12) month period thereafter, the
Executive will not use his status with the Company to obtain loans, goods or services from another
organization on terms that would not be available to him in the absence of his relationship to the
Company. During the Period of Employment and for a twelve (12) month period following termination
of the Period of Employment, other than termination due to a Without Cause Termination, a
Constructive Discharge or termination pursuant to Section XI: the Executive will not make any
statements or perform any acts intended to advance the interest of any existing or prospective
competitors of the Company in any way that will injure the interest of the Company; the Executive
without prior express written approval by the Board of Directors of the Company will not directly
or indirectly own or hold any proprietary interest in or be employed by or receive compensation
from any party engaged in the same or any similar business in the same geographic areas the Company
does business; and the Executive without express prior written approval from the Board of
Directors, will not solicit any members of the then current clients of the Company or discuss with
any employee of the Company information or operation of any business intended to compete with the
Company. For the purposes of the Agreement, proprietary interest means legal or equitable
ownership, whether through stock holdings or otherwise, of a debt or equity interest (including
options, warrants, rights and convertible interests) in a business firm or entity, or ownership of
more than 5% of any class of equity interest in a publicly-held company. The Executive
acknowledges that the covenants contained herein are reasonable as to geographic and temporal
scope. For a twelve (12) month period after termination of the Period of Employment for any
reason, the Executive will not directly or indirectly hire any employee of the Company or solicit
or encourage any such employee to leave the employ of the Company.

     D. The Executive acknowledges that his breach or threatened or attempted breach of any
provision of Section IX would cause irreparable harm to the Company not compensable in monetary
damages and that the Company shall be entitled, in addition to all other applicable remedies, to a
temporary and permanent injunction and a decree for specific performance of the terms of Section IX
without being required to prove damages or furnish any bond or other security.

     E. The Executive shall not be bound by the provisions of Section IX in the event of the
default by the Company in its obligations under this Agreement which are to be performed upon or
after termination of this Agreement.

SECTION X

INDEMNIFICATION, LITIGATION

     The Company will indemnify the Executive to the fullest extent permitted by the laws of the
state of incorporation in effect at that time, or certificate of incorporation and by-laws of the
Company whichever affords the greater protection to the Executive. The Executive will be entitled
to any insurance proceeds related to any award, or any fees or expenses incurred in

6

 

connection with any action, suit or proceeding to which he may be made a party by reason of
being a director or officer of the Company.

SECTION XI

CHANGE IN CONTROL

     In the event there is a Change in Control of the ownership of the Company and within the six
(6) month period following such event, the Executive elects to resign upon written notice to the
Company, the Company shall pay to the Executive on such resignation or, if necessary to comply with
Code Section 409A(a)(2)(B)(i), on the six (6) month anniversary of the Executive’s resignation in a
lump sum an amount equal to 100% of his Base Salary as in effect at the time of such resignation.
In addition, earned but unpaid Base Salary and Incentive Compensation Awards will be paid on a
pro-rated basis for the year in which resignation occurs. Any [options, SARS or restricted stock
grants] granted to the Executive prior to termination pursuant to the Plan, but subject to vesting
restrictions, will be fully vested upon a Change in Control whether or not the Executive resigns.
The benefits and perquisites described in this Agreement as in effect at the date of termination of
employment will also be continued for eighteen (18) months from the effective date of termination
pursuant to Change of Control.

     A “Change in Control” shall be deemed to have occurred if (i) a tender offer shall be made and
consummated for the ownership of more than 50% of the outstanding voting securities of the Company,
(ii) the Company shall be merged or consolidated with another corporation and as a result of such
merger or consolidation less than 75% of the outstanding voting securities of the surviving or
resulting corporation shall be owned in the aggregate by the former shareholders of the Company, as
the same shall have existed immediately prior to such merger or consolidation, (iii) the Company
shall sell all or substantially all of its assets to another corporation which is not a
wholly-owned subsidiary, (iv) a person, within the meaning of Section 3(a)(9) or of Section
13(d)(3) (as in effect on the date hereof) of the Securities and Exchange Act of 1934 (“Exchange
Act”)), shall acquire more than 50% of the outstanding voting securities of the Company (whether
directly, indirectly, beneficially or of record) ) or (v) the individuals who, as of the date
hereof, constitute the Board of the Company (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by or on behalf of a
person or group other than the Board. For purposes hereof, ownership of voting securities shall
take into account and shall include ownership as determined by applying the provisions of Rule
13d-3(d)(1)(i) (as in effect on the date hereof) pursuant to the Exchange Act.

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SECTION XII

PROCEDURES FOR DETERMINING

THE APPLICATION OF CODE SECTION 409A

     The Executive and the Company shall cooperate to determine the application of Code Section
409A for purposes of Sections VIII and XI of this Agreement. If the Executive and the Company are
unable to agree on the application of Code Section 409A within ten (10) business days after the
Executive’s separation from service with the Company, then the application of Code Section 409A for
purposes of Sections VIII and XI of this Agreement shall be determined by an accounting firm of
recognized national standing acceptable to the Executive and the Company. The accounting firm
shall be instructed to use every reasonable effort to make its determination within ten (10)
business days after it is retained. The parties will cooperate fully with the accounting firm.
The costs and expenses for the services of the accounting firm shall be borne equally by the
Executive and the Company.

SECTION XIII

WITHHOLDING TAXES

     The Company may directly or indirectly withhold from any payments under this Agreement all
federal, state, city or other taxes that shall be required pursuant to any law or governmental
regulation.

SECTION XIV

EFFECTIVE PRIOR AGREEMENTS

     This Agreement contains the entire understanding between the Company and the Executive with
respect to the subject matter and supersedes any prior employment or severance agreements between
the Company and its affiliates, and the Executive.

SECTION XV

CONSOLIDATION, MERGER OR SALE OF ASSETS

     Nothing in this Agreement shall preclude the Company from consolidating or merging into or
with, or transferring all or substantially all of its assets to, another corporation which assumes
this Agreement and all obligations and undertakings of the Company hereunder. Upon such a
Consolidation, Merger or Sale of Assets, the term “the Company” as used will mean the other
corporation and this Agreement shall continue in full force and effect. This Section XV is not
intended to modify or limit the rights of the Executive hereunder, including without limitation,
the rights of Executive under Section XI.

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SECTION XVI

MODIFICATION

     This Agreement may not be modified or amended except in writing signed by the parties. No
term or condition of this Agreement will be deemed to have been waived except in writing by the
party charged with waiver. A waiver shall operate only as to the specific term or condition waived
and will not constitute a waiver for the future or act on anything other than that which is
specifically waived.

SECTION XVII

GOVERNING LAW; ARBITRATION

     This Agreement has been executed and delivered in the State of Tennessee and its validity,
interpretation, performance and enforcement shall be governed by the laws of that state.

     Any dispute among the parties hereto shall be settled by arbitration in Nashville, Tennessee,
in accordance with the rules then obtaining of the American Arbitration Association and judgment
upon the award rendered may be entered in any court having jurisdiction thereof.

SECTION XVIII

NOTICES

     All notices, requests, consents and other communications hereunder shall be in writing and
shall be deemed to have been made when delivered or mailed first-class postage prepaid by
registered mail, return receipt requested, or if delivered by hand, overnight delivery service or
confirmed facsimile transmission, to the following:

          (a) If to the Company, at 1621 Galleria Boulevard, Brentwood, TN 37027-2926, Attention:
President or Chief Executive Officer, or at such other address as may have been furnished to the
Executive by the Company in writing; or

          (b) If to the Executive, at 9480 Ashford Place, Brentwood, Tennessee, 37027, or such other
address as may have been furnished to the Company by the Executive in writing.

SECTION XIX

BINDING AGREEMENT

     This Agreement shall be binding on the parties’ successors, heirs and assigns.

9

 

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above
written.

	 	 	 	 	 
	 	ADVOCAT INC.

 	 
	 	By:  	/s/ William R. Council, III
 	 
	 	 	William R. Council, III 	 
	 	 	Title:  	President and Chief Executive
Officer 	 
	 
	 	EXECUTIVE:

 	 
	 	/s/ Kelly Gill
 	 
	 	Kelly Gill 	 
	 	 	 
	 

10

 

Attachment 1

Advocat Inc.

1621 Galleria Boulevard

Brentwood, TN 37027

February 21, 2010

Kelly Gill

9480 Ashford Place

Brentwood, TN37027

Re: Employment Terms

Dear Kelly,

It is my pleasure to outline the terms of your proposed employment with Advocat Inc. (the
“Company”) as Chief Operating Officer (“COO”). I and the Board have enjoyed getting to know you,
and look forward to your acceptance of our offer and commencement of employment soon.

Accordingly, attached you will find a proposed compensation package as we have discussed, and a
proposed employment agreement. If these are acceptable to you, we will prepare and execute the
final agreements at a mutually convenient time, and arrange for a public announcement that you are
joining the Company.

Please evidence your agreement to the proposed terms by signing a copy of this letter in the space
provided below.

With best regards,

	 	 	 

	/s/ William R. Council, III
 

William R. Council, III 

President and Chief Executive Officer

	 	 
	Advocat Inc.
	 	 
	 
	 	 
	Accepted February 21, 2010:
	 	 
	 
	 	 
	/s/ Kelly Gill
 

Kelly Gill

	 	 

11

 

Proposed Employment Terms-Attachment to letter of February 21, 2010.

Proposed compensation Package — Kelly Gill:

	 	 	 

	$300,000

	 	Base Salary
	 
	 	 
	$150,000

	 	Target Bonus at 50%
	 
	 	 
	$12,000

	 	EIRP at 4% of salary. Executive Incentive Retirement program –
basically is a taxable match of “retirement investment” done by employee,
up to 4% (at board’s discretion). Definition of “retirement investment”
is very broad.
	 
	 	 
	$462,000

	 	Total target cash compensation
	 
	 	 
	$75,000

	 	Signing bonus – paid in cash or in restricted stock units
	 
	 	 
	$35,000

	 	SoSARS to be issued at employment, at market price on date of grant.
Three year vesting schedule. Annual grants at the discretion of the
board
of directors.
	 
	 	 
	Other benefits:
	 	 
	$25,000

	 	Separation Expenses — Advocat will cover Kelly, up to $25,000 for
appropriate legal and other expenses in connection with separation from
current employer. Vacation — Kelly would receive the same vacation
package available to other officers — 4 weeks per year, maximum
accumulation of 160 hours, which adjusts at calendar year end.
	 
	 	 
	Sick

	 	Kelly would receive same benefits as available to other.
	 
	 	 
	Benefits

	 	Kelly would be eligible for all benefits, including health, short and
long term disability, etc., subject to any required waiting period.
	 
	 	 
	401(K)

	 	Kelly would be eligible for participation in the 401 (k) at the first
quarter end following 1 year of service. The Company currently matches
25% of
all contributions. The Company’s plan is “Top Heavy” and “highly
compensated” employees contributions are limited to approximately
$4,000 per year.
	 
	 	 
	Expenses

	 	Company pays all reasonable costs associated with the conduct of
business, pursuant to our travel and entertainment policies. In addition,
we cover expenses of appropriate professional associations, training, etc.
	 
	 	 
	Employment

	 	Contract/Separation benefits: one year following certain types of
termination, consistent with other executives. Proposed Employment
agreement form attached for review.

12

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