Document:

Table of Contents
Exhibit
10.3

Aircraft Lease
Agreement

between

Maersk Aircraft A/S

as
Lessor

and

Sterling
Airlines A/S

as
Lessee

	
		
	

Relating to one
Boeing B737-700 aircraft, manufacturer’s serial number 28010,
Danish registration marks
OY-MRG

	
		
	

Dated on 12
September  2005

PORTIONS OF THIS EXHIBIT
MARKED BY AN *** HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

										
	Table
of
Contents					 	

	0.			RECITALS					1	

	1.			DEFINITIONS
AND
CONSTRUCTION					2	

	1.1			Definitions					2	

	1.2			Construction					7	

	2.			AGREEMENT
TO
LEASE					8	

	2.1			Lease					8	

	2.2			Lessee
waiver of
rights					8	

	2.3			Ownership					8	

	3.			DELIVERY					8	

	3.1			Delivery
location and
condition					8	

	3.2			Predelivery
procedure and
delivery					8	

	3.3			Waiver					9	

	3.4			Force
majeure affecting
delivery					10	

	3.5			Total
loss prior to
delivery					10	

	4.			CONDITIONS
PRECEDENT					10	

	4.1			Conditions
precedent requirements, Lessor
requirements					10	

	4.2			Sole
benefit of
lessor					10	

	4.3			Non-fulfilment					10	

	4.4			Conditions
precedent requirements, Lessee
requirements					10	

	4.5			Sole
benefit of
Lessee					10	

	4.6			Non-fulfilment					11	

	5.			RENTS,
COSTS AND
TAXES					11	

	5.1			Rent,
Additional Rent and
Deposit					11	

	5.2			No
set-off					11	

	5.3			No
Rent
reduction					11	

	6.			PAYMENTS					11	

	6.1			Rent,
Additional Rent and
Deposit					11	

	6.2			Deposit
and Letter of
Credit					12	

	6.3			Lessor
payment
details					12	

	6.4			Default
interest					12	

	6.5			Net
lease					12	

	6.6			VAT					13	

	6.7			Payment
in other
currency					13	

	6.8			IATA
clearance					13	

	6.9			Tax
indemnification					13	

	7.			ADJUSTMENT
OF ADDITIONAL
RENT					14	

	7.1			Adjustment
provisions					14	

	7.2			Engine
Reserve allocation
adjustment					14	

	7.3			Low
Utilisation					14	

	8.			LESSEE
COVENANTS					14	

	8.1			Licenses
and
certificates					14	

	8.2			Consents,
approvals and
filings					14	

	8.3			Base					14	

	8.4			Maintenance					15	

	8.5			Removal,
interchange and
modifications					15	

	8.6			Aircraft
documents					17	

	8.7			Negative
covenants					17	

	8.8			Protection
of
rights					18	

	8.9			Navigation,
over-flight and airport
charges					18	

	

I

										
	9.			LESSOR
COVENANTS					18	

	9.1			Quiet
enjoyment					18	

	9.2			Maintenance
contributions					19	

	9.3			Increased
contribution					19	

	9.4			Exceptions
to
contribution					20	

	9.5			Airworthiness
directive cost
share					20	

	9.6			Lessor
consultation					20	

	10.			SUB-LEASING					20	

	10.1			No
sub-lease					20	

	10.2			Permitted
sub-lease					20	

	10.3			Administration
of sub-lease
agreement					21	

	11.			INFORMATION
AND
INSPECTION					21	

	11.1			Aircraft
information					21	

	11.2			Financial
information					21	

	11.3			Inspections					21	

	12.			WARRANTIES					22	

	13.			INSURANCE					22	

	13.1			Liability
for
damage					22	

	13.2			Types
of
insurance					22	

	13.3			Renewal					22	

	13.4			No
coverage					23	

	13.5			Payee
amounts					23	

	13.6			General
insurance
requirements					23	

	13.7			Hull
insurance
requirements					23	

	13.8			Liability
insurance
requirements					24	

	13.9			No
suspension or
impairment					24	

	13.10			Assignment
of
insurances					25	

	13.11			Application
of insurance
proceeds					25	

	13.12			Covenants					25	

	13.13			Negative
undertakings					25	

	13.14			Reinsurance					26	

	13.15			AVN
67B
application					26	

	14.			REQUISITION
AND DEPRIVATION OF
POSSESSION					26	

	14.1			Requisition
of hire or
use					26	

	14.2			Requisition
proceeds, requisition for
hire					26	

	14.3			Requisition
proceeds, requisition for
title					27	

	15.			TOTAL
LOSS					27	

	15.1			Occurrence
of Total
Loss					27	

	15.2			Transfer
of title following Total
Loss					27	

	15.3			Total
loss not involving
airframe					27	

	16.			REDELIVERY
OF THE
AIRCRAFT					27	

	16.1			Redelivery					27	

	16.2			Pre-redelivery
procedure					28	

	16.3			Redelivery
flight					28	

	16.4			Non-compliance					28	

	16.5			Redelivery
certificate					29	

	16.6			Disputes
regarding aircraft
condition					29	

	16.7			Modifications					29	

	

II

										
	17.			INDEMNITIES					29	

	17.1			Loss
or damage to
aircraft					29	

	17.2			Losses
deriving from the
Lease					29	

	17.3			Losses
deriving from
default					30	

	17.4			Continued
insurance
coverage					30	

	17.5			Indemnity
survival					30	

	18.			DEFAULT					30	

	18.1			Events
of
Default					30	

	18.2			Following
an Event of
Default					32	

	18.3			After
termination due to Event of
Default					33	

	18.4			Cumulative
rights					33	

	18.5			Claim
following Event of
Default					33	

	19.			REPRESENTATIONS
AND
WARRANTIES					33	

	19.1			Lessee
representations					33	

	19.2			Lessor
representations					33	

	20.			COMPLETE
AGREEMENT					34	

	20.1			Complete
agreement					34	

	21.			NOTICES					34	

	21.1			Notices					34	

	22.			ASSIGNMENT					34	

	22.1			Lessee
no
assignment					34	

	22.2			Lessor
assignment					34	

	23.			APPLICABLE
LAW AND
JURISDICTION					35	

	23.1			Governing
law					35	

	23.2			Jurisdiction					35	

	23.3			No
immunity					35	

	24.			COSTS					35	

	24.1			Costs					35	

	25.			TIME
OF THE
ESSENCE					35	

	25.1			Time
of the
essence					35	

	26.			RIGHTS OF
THIRD
PARTIES					36	

	26.1			No
third party
rights					36	

	27.			EXECUTION
PAGE					36	

	27.1			Maersk
Aircraft
A/S					36	

	27.2			Sterling
Airlines
A/S					36	

	Annex
A					37	

	Form of Delivery
Acceptance Certificate					37	

	Annex
B					39	

	Aircraft
Specification					39	

	Annex
C					40	

	Aircraft
Documents					40	

	Annex
D					44	

	Conditions Precedent
Requirement					44	

	Annex
E					46	

	Form of Redelivery
Acceptance Certificate					46	

	Annex
F					48	

	General Condition
Requirements —
Redelivery					48	

	Annex
G					49	

	Specific Condition
Requirements —
Redelivery					49	

	

III

										
	Annex
H					50	

	Letter of
Authorisation					50	

	Annex
I					51	

	Additional Rental
Adjustment					51	

	Annex
J					52	

	Deregistration Power of
Attorney					52	

	Annex
K					54	

	Calculation of Rent
Control					54	

	

IV

Table of Contents
THIS
AIRCRAFT LEASE AGREEMENT is made on the 12th day of September
2005

between

		
	(1) 	MAERSK
AIRCRAFT A/S, a limited company organised and existing under the
laws of the Kingdom of Denmark with its principal office at Copenhagen
Airport South, DK-2791 Dragoer, Denmark (the
‘‘Lessor’’);
and

		
	(2) 	STERLING AIRLINES A/S,
a limited company organised and existing under the laws of Denmark with
its principal office at Copenhagen Airport South, DK-2791 Dragoer,
Denmark (the
‘‘Lessee’’).

		
	0. 	RECITALS

WHEREAS

		
	0.1 	The
parties wish to provide for the lease of the Aircraft to the Lessee on
the terms set forth herein.

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Table of Contents

IT IS HEREBY AGREED as
follows:

		
	1. 	DEFINITIONS AND
CONSTRUCTION

		
	1.1 	Definitions

In
this Aircraft Lease Agreement, the following expressions shall have the
following respective
meanings:

‘‘Acceptance
Certificate’’ means an acceptance certificate issued as
provided for in clause 3.2 substantially in the form set forth in Annex
A;

‘‘AD Compliance
Period’’ means ***;

‘‘AD
Threshold’’ means USD
***;

‘‘Additional Rent’’
means the sum of the Airframe Reserve, Landing Gear Reserve, APU
Reserve, Engine Reserve and Engine LLP
Reserve;

‘‘Agreed Aircraft
Value’’ means
***;

‘‘Agreed Engine
Value’’ means USD
***;

‘‘Aircraft’’ means
the aircraft identified and described in Annex B together with the
Engines and Components (whether or not any of the Engines may from time
to time be installed on the Airframe) together with the Aircraft
Documents;

‘‘Aircraft
Documents’’ means the documents, data and records
identified in Annex C and any other documents, data and records
required in connection with together with all additions, renewals,
revisions and replacements made from time to
time;

‘‘Airframe’’ means
the Aircraft excluding the Engines and all appliances, parts, spare
parts, instruments, appurtenances, accessories, furnishings or other
equipment or property of any kind delivered with the Aircraft or from
time to time installed on or attached
thereto;

‘‘Airframe
Reserve’’ means USD *** per Flight
Hour;

‘‘Airframe Structural
Check’’ means the structural maintenance programme as
defined in the Boeing Maintenance Planning Data Document D626A001 which
is designed timely detection and repair of structural damage,
corrosion, stress corrosion, fatigue cracking and other items by visual
and/non-destructive test as set forth
herein;

‘‘Airworthiness
Directive’’ means an airworthiness directive and/or
mandatory note issued by the State of Design Authority, the Aviation
Authority and the State of Registration (to the extent there is an
irreconcilable conflict between them, the State of Registration
requirements shall prevail and between State of Design Authority
requirements and Aviation Authority requirements, Aviation Authority
requirements shall
prevail);

‘‘AnnualAdditional Rent
Adjustment’’ means the Lessor’s adjustment,
acting reasonably (but subject to clause 7.1.1), of each the
constituents to the Additional Rent by reference to the current
Manufacturer’s catalogue prices, the Manufacturer’s
recommendations, industry experience, any change of the operational
environment of the Aircraft and any changes in industry costs compared
to such prevailing on the Delivery Date or on the last Annual
Additional Rent Adjustment in accordance with clause 7.1 (as the case
may be);

‘‘APU’’ means
the auxiliary power unit installed on the Airframe on the Delivery
Date, or any auxiliary power unit installed on the Airframe as a
replacement of the original auxiliary power unit (such replacement to
be in accordance with the terms
hereof);

‘‘APU Hour’’
means each hour or part thereof elapsed from ignition of the APU to
shut-down of the APU;

‘‘APU
Reserve’’ means USD *** per APU Hour to cover APU
overhaul in accordance with the Manufacturer’s maintenance
manual;

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‘‘Assignment of
Insurances’’ any assignment of Insurances in accordance
with clause 13.10;

‘‘Assumed
Ratio’’ means, with respect to the Landing Gear Reserve
1,400 Flight Cycles per calendar year and, with respect to the
remaining constituents to the Additional Rent, 2.5:1 Flight Hour to
Flight Cycle;

‘‘Aviation
Authority’’ means the Danish Civil Aviation
Administration (Statens Luftfartsvæsen), JAA, EASA or any other
authority or agency which may from time to time have control and
supervision of, or jurisdiction over, the registration, airworthiness
and operation of the Aircraft or matters relating to civil aviation
with respect to the Aircraft, the Lessee or the
Sub-Lessee;

‘‘Base’’
means Denmark (but excluding Greenland and the Faeroe Islands), Norway,
Iceland, Finland or
Sweden;

‘‘Banks’’ means
HSH Nordbank International S.A., Nordea Finance Sweden plc, Svenska
Handelsbanken, Copenhagen Branch and Landesbank
Berlin-Girozentrale;

‘‘Business
Day’’ means a day on which banks in Copenhagen, New
York City and the place of payment are open for foreign exchange
transactions;

‘‘C-Check’’
means the next sequential ‘‘C’’ check
(systems and zonal) or the equivalent in accordance with the
Manufacturer’s maintenance planning
document;

‘‘C-Check
Costs’’ means
***;

‘‘Component’’ means
all or any appliance, part, instrument, appurtenance, accessory,
furnishing, emergency equipment or other equipment of any kind (other
than complete Engines) incorporated in or installed on or attached to
the Airframe and any Engine on the Delivery Date and any replacement of
such appliance, part, instrument, appurtenance, accessory, furnishing,
emergency equipment or other equipment and any free of charge
modification kit and tool made available to the Lessee during the Lease
Period;

‘‘Currency of
Obligation’’ shall have the meaning ascribed to it in
clause 6.7;

‘‘Deductible
Amount’’ means USD
***;

‘‘Default Interest
Rate’’ means ***;

‘‘Delivery Date’’ means the
date on which the Aircraft is delivered to and accepted by the Lessee
under the Lease;

‘‘Delivery
Location’’ means Copenhagen, Denmark or such other
place, as the parties shall
agree;

‘‘Deposit’’ means
USD ***;

‘‘Deposit Payment
Date’’ means the Delivery
Date;

‘‘Dollars’’ and
‘‘USD’’ means the lawful currency from
time to time of the United States of
America;

‘‘EASA’’means
the European Aviation Safety Agency or any successor
thereof;

‘‘Eligible Maintenance
Event’’ means each of the maintenance events referred
to in clause 9.2.1 through clause
9.2.5;

‘‘Engine’’ means
(i) each engine of the manufacture and model specified in the Lease for
the Aircraft which forms part of the Aircraft on the Delivery Date, the
serial numbers of which are set forth in Annex B, whether or not
installed on the Airframe and (ii) any Replacement Engine, with effect
from the time when title has passed to the Owner in accordance with the
Lease together with all
Components;

‘‘EngineLLP
Reserve’’ means USD *** per Engine per Flight
Cycle;

‘‘Engine
Refurbishment’’ means all scheduled and unscheduled
off-the-wing Engine maintenance and repair accomplished for each module
in accordance with the performance restoration or full overhaul
sections of the Manufacturer's workscope planning
guide;

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Table of Contents
‘‘Engine Relevant
Item’’ means, with respect to an Engine and as the case
may be, the (i) fan and front frame, (ii) the compressor, (iii) the
combustor, (iv) the high pressure turbine, (v) the low pressure turbine
and (vi) the accessory gearbox;

‘‘Engine
Reserve’’ means USD ***;

‘‘Event of Default’’
means any event or circumstance specified in clause
18.1;

‘‘FAA’’ means the
Federal Aviation Administration of the United States of America and any
successor thereof;

‘‘First Rent Payment
Date’’ means the Delivery
Date;

‘‘Flight Cycle’’
means one flight (i.e. one take-off and subsequent touch-down is equal
to one flight cycle);

‘‘Flight
Hour’’ means each hour or part thereof elapsed from
take-off to touchdown;

‘‘Governing
Law’’ means Danish
law;

‘‘IATA’’ means
International Air Transport
Association;

‘‘IATA Clearing
House’’ means the clearing system operated by IATA
through which participating companies can settle their interline
billings by offsetting their mutual
transaction;

‘‘Indebtedness’’
means indebtedness incurred by the Lessee in respect of (i) moneys
borrowed or raised; (ii) any bond, note, loan stock, debenture or
similar instrument; (iii) acceptance or documentary credit facilities;
(iv) deferred payments for assets or services acquired; (v)
payments under leases entered into primarily as a method of raising
finance or of financing the asset leased; and (vi) guarantees, bonds,
standby letters of credit or other assurances against financial loss in
respect of Indebtedness of any person falling within any of (i) to (vi)
above;

‘‘Insurances’’
means any and all contracts or policies of insurance, or renewals
thereof, required to be effected and maintained by the Lessee pursuant
to the provisions of clause 13 and all benefits thereof including
claims of whatsoever
nature;

‘‘JAA’’ means the
Joint Aviation Authorities, an associated body of the European Civil
Aviation regulatory authorities of a number of European states who have
agreed to co-operate in developing and implementing common regulatory
requirements, safety standards and procedures or EASA (gradually
succeeding into the functions of the Joint Aviation Authorities) or any
other successor organisation or
agency;

‘‘Landing Gear
Reserve’’ means USD *** per calendar month to cover
landing gear overhaul in accordance with Manufacturer’s
Component Maintenance Manual, latest revision for overhaul of the nose
and main landing
gears;

‘‘Lease’’ means
this Aircraft Lease Agreement and any schedules, addenda and documents
executed in connection hereto and
thereto;

‘‘Lease Period’’
means a period of 72 months commencing on the Delivery Date;

‘‘Lenders’’ mean the Banks,
their successors and assigns and/or any person granting a loan to the
Lessor with respect to the Aircraft and/or any person having been
granted security over and against the Aircraft by way of a Mortgage or
otherwise;

‘‘Lessee Conditions Precedent
Requirements’’ means the requirements detailed in Part
II to Annex D;

‘‘Lessor Conditions
Precedent Requirements’’ means the requirements
detailed in Part I to Annex D;

‘‘Letter
of Credit’’ means an on first demand letter of credit
or on first demand bank guarantee in the amount of USD *** and on such
terms, and rendered by such bank, as the Lessor shall reasonably
approve, it being understood that *** or *** is acceptable to the
Lessor;

4

Table of Contents
‘‘LIBOR’’
means, in relation to a particular period, the arithmetic mean (rounded
upwards, if necessary, to five decimal places) of the London interbank
offered rates for deposits of Dollars for a period equal to such period
at or about 11 a.m. on the Quotation Date for such period as displayed
on Telerate Screen page 3750 (or such other page as may replace such
page on such service for the purpose of displaying London interbank
offered rates of leading banks for deposits of Dollars or, if on such
date the offered rates for the relevant period of fewer than two
leading banks (reasonably selected by the Lessor) are so
displayed;

‘‘Maintenance
Performer’’ means the Lessee, the Permitted Sub-Lessee
and such other maintenance performer as is approved and internationally
recognised by the JAA to perform maintenance and/or modification
services on commercial aircraft and/or commercial aircraft engines,
which maintenance performer shall have recognised standing and
experience and be suitable equipped to perform such services to
aircraft of the same or improved model as the Aircraft and be
reasonably acceptable to the
Lessor;

‘‘Maintenance
Programme’’ means the maintenance programme for the
Aircraft as approved by the Lessor and the Aviation Authority and
complies with the standard maintenance programme from time to time
recommended by the respective Manufacturer of the Airframe, Engines and
Components; and which shall include an anti-fungus/biological growth
and contamination prevention control and treatment programme of all
fuel tanks in accordance with manufacturer’s approved procedures
and specifications; and which shall also include scheduled periodic
thorough cleaning of the Aircraft interior and exterior (all cleaning
materials to be used in accordance with the manufacturer’s
recommendations, specification and standard
practices);

‘‘Manufacturer’’
means the manufacturer of the Airframe, Engines or any Component, as
applicable in the context used
herein;

‘‘Minimum Airframe
Requirements’’ means
***;

‘‘Minimum Component
Requirements’’ means
***;

‘‘Minimum EGT
Margin’’ means satisfactory exhaust gas temperature
margin for operation, including, without limitation, in accordance with
the Engine Manufacturer’s published guidelines and
procedures;

‘‘Minimum Engine
Requirements’’ means
***;

‘‘Minimum Landing Gear
Requirements’’ means
***;

‘‘Mortgage’’ means
any mortgage, charge, pledge, negative pledge or similar security right
over the Aircraft, granted from time to time by the Lessor to any Bank
and/or any third party;

‘‘Other
Aircraft’’ means an
‘‘Aircraft’’ as such term shall be
understood under the Other
Leases;

‘‘Other
Leases’’ means any other aircraft lease agreement
(including for the sake of good order any subleases) made between the
Lessor or any of its affiliates as lessor and the Lessee or any of its
affiliates as lessee;

‘‘Owner’’ means Maersk
Aircraft A/S, Copenhagen Airport South, DK-2791 Dragoer,
Denmark;

‘‘Permitted
Sub-Lessee’’ means any person sub-leasing the Aircraft
under a Sub-Lease Agreement to which the Lessor has consented in
accordance with clause 10;

‘‘Permitted
Liens’’ means each of:

			
		(a) 	a lien
for Taxes, except Taxes imposed upon the income or property of the
Lessee, not yet assessed or, if assessed, not yet due and payable or,
if due and payable, which are being contested in good faith by
appropriate proceedings and so long as any such proceedings or the
continued existence of such lien do not involve any likelihood of the
sale, forfeiture or loss of the Aircraft or any Engine or any Component
or any interest therein;

			
		(b) 	a lien for the fees
or charges of any airport or air navigation authority not yet
determined or, if determined, not yet due and payable or, if due and
payable, which are being contested in good faith by appropriate
proceedings and so long as any such proceedings or the continued
existence of such lien do not involve any likelihood of the sale,
forfeiture or loss of the Aircraft or any Engine or any Component or
any interest therein;

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Table of Contents
			
		(c) 	inchoate
supplier’s, mechanic’s, workman’s,
repairer’s or other like liens arising in the ordinary course of
business in respect of amounts not yet due and payable or, if due and
payable, which are being contested in good faith by appropriate
proceedings and so long as any such proceedings or the continued
existence of such lien do not involve any likelihood of the sale,
forfeiture or loss of the Aircraft or any Engine or any Component or
any interest therein,

provided that in each case (i) the
amount for which such lien arises, does not exceed USD 500,000 (or the
equivalent in any other currency) and (ii) such lien does not arise as
a result of any default or omission on the part of the Lessee;
and

			
		(d) 	any encumbrance or security interest
created by or in relation to the Owner or the Lessor however and
wherever created or arising, including, but not limited to, any right
of ownership, security, mortgage, pledge, charge, encumbrance, lease,
lien, statutory or other right in rem, title retention, attachment,
levy, claim or right of possession or
detention.

‘‘Place of
Payment’’ means
***;

‘‘Quotation Date’’
means, in relation to any period for which LIBOR is to be determined,
the date on which quotations would customarily be provided by leading
banks in the London Interbank Market for deposits in Dollars for
delivery on the first day of any such
period;

‘‘Ratio Adjustment
Items’’ means the Airframe Reserve, the Engine Reserve
and the Landing Gear
Reserve.

‘‘Redelivery
Certificate’’ means a redelivery certificate to be
executed as provided in clause 16.5, substantially in the form set
forth in Annex E;

‘‘Redelivery
Check’’ means the C-Check;

‘‘Redelivery Condition
Requirements’’ means the requirements set out in Annex
F and or subject to (as the case may be) Annex G;

‘‘Redelivery Date’’ means
the date on which the Lessee redelivers the Aircraft to the Lessor in
accordance with clause 16;

‘‘Redelivery
Location’’ means Copenhagen,
Denmark;

‘‘Rent’’ means
each amount payable by the Lessee to the Lessor pursuant to clause
5.1.1 in respect of the use of the Aircraft
hereunder;

‘‘Rent
Amount’’ means the sum calculated in accordance with
Annex K;

‘‘Replacement
Engine’’ means an engine of the same manufacturer and
same or improved model and having equivalent or higher/better value,
utility, modification, status, time elapsed since hot section
refurbishment, cold section refurbishment, reduction gear overhaul,
life limited part utility and remaining equivalent or better warranty
status as the Engine it replaces in accordance with clause 8.5 and is
otherwise of an equivalent or higher/better value and utility, and
suitable for installation and use on the Airframe without impairing the
values or utility of the Airframe and compatible with the remaining
installed Engine(s);

‘‘Required Liability
Cover’’ means
***;

‘‘Requisition
Proceeds’’ means any and all amounts payable in
consequence of a requisition for title or hire or use of the
Aircraft;

‘‘Security
Interest’’ means any mortgage, charge, pledge, lien,
encumbrance, assignment, hypothecation, right of detention, right of
set-off or any other agreement or arrangement having the effect of
conferring security;

‘‘Scheduled
Delivery Date’’ means          September
2005 or such date as may be agreed by the
parties;

‘‘Second Rent Payment
Date’’ means the day falling on the numerically
corresponding day to the First Rent Payment Date of the next succeeding
month after the First Rent Payment Date or, if there is no such
numerically corresponding day, on the immediately preceding
day;

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‘‘Security
Documents’’ means the Assignment of Insurances and the
Letter of
Credit;

‘‘Specification’’
means the specification of the Aircraft as set forth in Annex B;

‘‘State of Design
Authority’’ means the
FAA;

‘‘State of
Incorporation’’ means
Denmark;

‘‘State of
Registration’’ means
Denmark;

‘‘Sub-Lease
Agreement’’ means such aircraft sub-lease agreement
with a Permitted Sub-Lessee as the Lessor shall approve in accordance
with clause 10.2;

‘‘Subsidiary’’ means, in
relation to any company or corporation,

			
		(i) 	a company or corporation which is
controlled, directly or indirectly, by the first mentioned company or
corporation;

			
		(ii) 	more than half the
issued share capital of which is beneficially owned, directly or
indirectly, by the first mentioned company or corporation;
or

			
		(iii) 	which is a Subsidiary of
another Subsidiary of the first mentioned company or
corporation;

‘‘STC’’
shall have the meaning ascribed to it in clause
8.5.6;

‘‘Taxes’’ mean any
and all present and future taxes, duties, withholdings, levies,
assessments, imposts, fees and other governmental charges of all kinds
(including any Value Added Tax and any stamp, documentary, license,
registration or similar fee or tax), together with any penalties,
fines, surcharges and interest thereon and any additions
thereto.

‘‘Tax
Indemnities’’ mean the Lessor, the Owner and the
Lenders;

‘‘Test Flight
Procedure’’ means the Manufacturer’s test flight
procedure for aircraft of same make and model as the
Aircraft;

‘‘Total Loss’’
means any of the following events:

			
		(a) 	the actual
or constructive, compromised, arranged or agreed total loss of the
Aircraft;

			
		(b) 	the Aircraft being destroyed,
damaged beyond economic repair or permanently rendered unfit for normal
use for any reason whatsoever;

			
		(c) 	the Aircraft
being requisitioned for title, or title to the Aircraft being otherwise
compulsorily acquired by the government of the State of Registry or any
other authority; or

			
		(d) 	the Aircraft being
hijacked, stolen, confiscated, detained or requisitioned for use or
hire for (i) a period of more than 60 days or (ii) if a shorter period,
such number of days as ends on the Redelivery
Date.

‘‘Value Added Tax’’
means any value added or analogous tax or similar charge imposed by any
government.

		
	1.2 	Construction

In
the Lease;

		
	1.2.1 	the words
‘‘hereof’’,
‘‘herein’’ and
‘‘hereunder’’ and other words of similar import
refer to the Lease as a whole and not to any particular part of the
Lease;

		
	1.2.2 	the headings of clauses
are inserted for ease of reference only and shall not in any way affect
the interpretation of the
Lease;

		
	1.2.3 	where the context so
requires, in the Lease words importing the singular only shall also
include the plural and vice
versa;

		
	1.2.4 	reference herein to any
document, instrument or agreement means such document, instrument or
agreement as originally implemented or executed or as amended, modified
or supplemented in accordance with its terms from time to
time;

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	1.2.5 	unless
otherwise specifically stated, reference to any
‘‘clause’’ or ‘‘annex’’
is a reference to such clause of or annex to this Aircraft Lease
Agreement;

		
	1.2.6 	reference to any
person includes a reference to their successors and assigns and their
respective officers, servants, employees and agents;
and

		
	1.2.7 	reference to a
‘‘certified copy’’ of any document shall be to
a photostatic copy certified by the party required to issue or provide
such document as being a true, complete and up to date copy of the
original document in question.

		
	2. 	AGREEMENT
TO LEASE

		
	2.1 	Lease

For
good and valuable consideration the Lessor shall lease to the Lessee
and the Lessee shall lease from the Lessor the Aircraft upon and
subject to the terms and conditions of the Lease for the Lease
Period.

		
	2.2 	Lessee waiver of
rights

The Lessee hereby waives, to the extent
permitted by applicable laws, any and all rights which it may now have,
or which at any time hereafter may be conferred upon it, by statute or
otherwise, to terminate, cancel, quit or surrender the Lease except in
accordance with the express terms
hereof.

		
	2.3 	Ownership

During
the Lease Period, the Aircraft shall remain and be the property of the
Owner, and the Lessee shall have no rights or title therein, except the
rights specifically granted by the
Lease.

		
	3. 	DELIVERY

		
	3.1 	Delivery
location and condition

Delivery and acceptance of the
Aircraft shall take place on the Scheduled Delivery Date at the
Delivery Location or at such other location as may be agreed between
the Lessor and the Lessee whereupon the Aircraft shall become subject
to and governed by the Lease and the Lease Period shall
commence.

The Aircraft shall, on the Delivery Date be
configured and equipped in accordance with the
Specification.

		
	3.2 	Predelivery
procedure and delivery

			
		Prior to 	the
Scheduled Delivery Date, the Lessee shall be entitled
to;

			
		(1) 	inspect the structure, Engines,
Components, equipment and accessories of the
Aircraft;

			
		(2) 	inspect the Engines, including (i)
a complete video borescope inspection of (x) the low pressure and high
pressure compressors and (y) turbine area, including combusters and
(ii)  engine condition runs including full take-off power engine
run-up undertaken in accordance with the performance test in the
Manufacturer’s maintenance manual (with the Engines not
exceeding corrected limits for all parameters using temperature
corrected charts and power assurance
runs);

			
		(3) 	effect a complete video boroscope
inspection of the APU; and

			
		(4) 	inspect the
Aircraft Documents and all records relating to the
Aircraft.

Subject to the inspection referred to in this
clause 3.2 not revealing defects outside the Manufacturer’s
limits or subject to any such defects being corrected by the Lessor at
its own expense, the Lessor shall tender the Aircraft for delivery to
the Lessee on the Scheduled Delivery Date and the Lessee shall
thereupon accept delivery of the Aircraft and deliver to the

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Lessor the duly executed Acceptance
Certificate which shall evidence acceptance of the Aircraft by the
Lessee for all purposes of the Lease. Delivery by the Lessee to the
Lessor of the Acceptance Certificate shall constitute conclusive
evidence as between the Lessor and the Lessee that on the Delivery Date
the Lessee examined the Aircraft in accordance with the above clause
3.2 (1)-(4) and that the Aircraft was airworthy and in good working
order and repair, without defect (whether or not discoverable as at the
Delivery Date) save for any defect listed on the Acceptance Certificate
and in all respects satisfactory to the Lessee. The Lessor and the
Lessee may decide to postpone the performance of the inspection
referred to in this clause 3.2 (2) and (3), in which case the
Lessee’s acceptance of the Aircraft shall be subject to the
performance of such inspection within such time period as shall be
agreed between the Lessor and the Lessee, it being understood that any
defects outside the Manufacturer’s limits attributable to events
following the Delivery Date shall be for the Lessee’s
account.

If the inspection referred to in clause 3.2
reveals damage on the Aircraft which is due to improper maintenance,
misuse or mishandling by the Lessor, the Lessor shall (i) rectify such
damage prior to the Delivery Date or, if acceptable to the Lessee, at
such time following the Delivery Date which shall be agreed between the
Lessor and the Lessee or (ii) compensate the Lessee for the direct
costs involved in rectifying such
damage.

		
	3.3 	Waiver

SUBJECT
TO CLAUSE 3.2, THE LESSEE

			
		(I) 	ACKNOWLEDGES AND AGREES THAT THE
LESSOR HAS NOT MADE NOR SHALL BE DEEMED TO HAVE MADE, ANY TERM,
CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESSED OR IMPLIED
(WHETHER STATUTORY OR OTHERWISE), AS TO THE AIRWORTHINESS, QUALITY,
DURABILITY, CONDITION, DESIGN, OPERATION, DESCRIPTION, MERCHANTABILITY,
FITNESS FOR USE OR PURPOSE OR SUITABILITY OF THE AIRCRAFT, AS TO THE
ABSENCE OF LATENT OR OTHER DEFECTS (INCLUDING INHERENT DEFECTS),
WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF
ANY PATENT, TRADEMARK OR COPYRIGHT, OR AS TO ANY REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT,
ALL OF WHICH ARE HEREBY EXCLUDED AND THAT THE LESSEE IS LEASING THE
AIRCRAFT ‘‘AS IS, WHERE IS AND WITH ALL
FAULTS’’, AND

			
		(II) 	HEREBY WAIVES AS BETWEEN ITSELF,
THE OWNER AND THE LESSOR ALL ITS RIGHTS, EXPRESS OR IMPLIED (WHETHER
STATUTORY OR OTHERWISE) AGAINST THE OWNER, THE LESSOR OR THE AIRCRAFT
RELATING TO THE CAPACITY, AGE, QUALITY, DESCRIPTION, STATE, CONDITION,
DESIGN, CONSTRUCTION, USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT AND
THE LEASING THEREOF BY THE LESSOR TO THE LESSEE, OR TO THE
MERCHANTABILITY OR SUITABILITY OF THE AIRCRAFT OR ITS FITNESS FOR ANY
PARTICULAR PURPOSE OR AS TO ITS AIRWORTHINESS.

IN
PARTICULAR AND WITHOUT PREJUDICE TO THE GENERALITY OF THE FOREGOING,
SAVE AS EXPRESSLY PROVIDED IN THE LEASE, THE OWNER AND THE LESSOR SHALL
BE UNDER NO LIABILITY TO THE LESSEE WHATSOEVER AND HOWSOEVER ARISING,
AND FROM WHATEVER CAUSE, AND WHETHER IN CONTRACT OR IN TORT OR BOTH IN
RESPECT OF ANY LOSS (CONSEQUENTIAL OR OTHERWISE), LIABILITY, DAMAGE OR
DELAY OF, OR TO, OR IN CONNECTION WITH, THE AIRCRAFT, ANY PERSON OR
PROPERTY WHATSOEVER, WHETHER ON BOARD THE AIRCRAFT OR
ELSEWHERE.

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	3.4 	Force
majeure affecting delivery

If the Lessor is, for
reasons of force majeure (being acts outside the reasonable control of
the Lessor (such as, but not limited to, acts of God, fire, strikes,
labour disputes, slow down or interruption of work, adverse weather
conditions or any other causes beyond the control of the Lessor)),
unable to tender the Aircraft for delivery on the Scheduled Delivery
Date, the Lessor shall specify another date falling as soon as
possible, but no later than thirty (30) Business Days after the
Scheduled Delivery Date (or such later date as shall be mutually
acceptable to the Lessor and Lessee) as the date on which it shall
tender delivery of the Aircraft to the Lessee, subject to the
satisfaction by the Lessee of all of the Lessor Conditions Precedent
Requirements on the date so specified by the Lessor. The Lease Period
and the Lessee’s obligation to pay Rent, Additional Rent and all
other amounts payable hereunder shall commence with effect from the
(actual) Delivery Date. Notwithstanding that delivery of the Aircraft
is delayed in the circumstances contemplated by this clause 3.4, the
Lessor shall have no liability for any losses, damages, costs or
expenses sustained or incurred by the Lessee by reason of such
delay.

If the actual Delivery Date has not occurred on
or before thirty (30) Business Days after the Scheduled Delivery Date
(or such later date as shall be mutually acceptable to the Lessor and
Lessee) as a direct or indirect consequence of an event referred to in
this clause 3.4, then each of the Lessor and the Lessee shall have the
unilateral right to cancel and terminate the Lease in which case the
Lease shall terminate upon terminating party's notice hereof to
the other party. In the event that the Lease is so terminated, the
Lessor shall be under no further liability to the Lessee including,
without limitation, any consequential loss or damage or cost. The
Lessor shall, however, forthwith return any amount received from the
Lessee hereunder.

		
	3.5 	Total loss prior
to delivery

In the event of a Total Loss in relation to
the Airframe on or prior to the Delivery Date, the Lease shall
automatically be cancelled on the date of such Total Loss or the date
on which Lessor’s insurers shall declare total loss of the
Aircraft, and neither party shall be under any further obligations or
liability to the other with respect to the Aircraft and the Lessor
shall forthwith return any amount received from the Lessee
hereunder.

		
	4. 	CONDITIONS
PRECEDENT

		
	4.1 	Conditions precedent
requirements, Lessor requirements

The Lessor’s
obligation to deliver the Aircraft on the Scheduled Delivery Date to
the Lessee shall be subject to Lessee’s fulfilment to the
Lessor’s satisfaction of the Lessor Conditions Precedent
Requirements.

		
	4.2 	Sole benefit of
lessor

The Lessor Conditions Precedent Requirements are
for the sole benefit of the Lessor and may be waived or deferred in
whole or in part and with or without conditions by the Lessor.

		
	4.3 	Non-fulfilment

If the
Lessor Conditions Precedent Requirements have not been duly and timely
fulfilled by the Lessee, or waived by the Lessor, in accordance with
this clause 4 the Lessor shall be entitled to treat such non-fulfilment
as an Event of Default.

		
	4.4 	Conditions
precedent requirements, Lessee requirements

The
Lessee’s obligation to take delivery the Aircraft on the
Scheduled Delivery Date shall be subject to Lessor’s fulfilment
to the Lessee’s satisfaction of the Lessee Conditions Precedent
Requirements.

		
	4.5 	Sole benefit of
Lessee

The Lessee Conditions Precedent Requirements are
for the sole benefit of the Lessee and may be waived or deferred in
whole or in part and with or without conditions by the
Lessee.

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	4.6 	Non-fulfilment

If
the Lessee Conditions Precedent Requirements have not been duly and
timely fulfilled by the Lessor, or waived by the Lessee, in accordance
with this clause 4 the Lessee shall be entitled to treat such
non-fulfilment as a material default by the
Lessor.

		
	5 	RENTS, COSTS AND
TAXES

		
	5.1 	Rent, Additional Rent and
Deposit

The Lessee shall make the following payments to
the Lessor:

		
	5.1.1 	An instalment (the
‘‘Rent’’) equal to the Rent Amount for each
month (or part thereof) of the Lease Period. The Rent shall be
calculated for periods of 6 months (or, with respect to the last Rent
Amount calculation hereunder, such shorter period as may apply),
reflecting LIBOR for such period, and be payable monthly in advance in
accordance with clause
6.1.1.

		
	5.1.2 	Additional Rent per Flight
Hour or Flight Cycle (as the case may be) accrued by the Aircraft
during the Lease Period. The Additional Rent shall be payable monthly
in arrear, relate to the preceding month (or part thereof) of the Lease
Period, and be calculated and payable in accordance with clause
6.1.2.

		
	5.1.3 	The Deposit (if
applicable). The Deposit shall be payable in accordance with clause
6.1.3.

		
	5.2 	No
set-off

The Lessee’s obligation to pay Rent and
Additional Rent and to make other payments in accordance with the Lease
shall be absolute and unconditional irrespective of any contingency
whatsoever including (but not limited to) (i) any right of set-off,
counterclaim, recoupment, defence or other right which either party
hereto may have against the other, (ii) any unavailability of the
Aircraft for any reason of airworthiness, merchantability, fitness for
any purpose, condition, design, or operation of any kind or nature of
the Aircraft, or the ineligibility of the Aircraft for any particular
use or trade, or for registration or documentation under the laws of
any relevant jurisdiction, or the Total Loss of, or any damage to the
Aircraft, (iii) any failure or delay on the part of the Lessee in
performing or complying with any of the terms or undertakings under the
Lease, (iv) any insolvency, bankruptcy, reorganisation, arrangement,
readjustment of debt, dissolution, liquidation or similar proceedings
by or against the Lessor or the Lessee, (v) any invalidity or
unenforceability or lack of due authorisation of, or other defect in
the Lease and (vi) any other circumstances which, but for this
provision, would or might have the effect of terminating or in any way
affecting any obligation of the Lessee
hereunder.

		
	5.3 	No Rent
reduction

The Lessee shall not be entitled to any
remission or reduction of Rent in respect of any period during which
the Aircraft is wholly or partially unserviceable for any reason
provided always that, after the occurrence of a Total Loss, the Lessee
shall pay Rent only up to the date of receipt by the Lessor of the full
amount payable by the Lessee pursuant to clause
15.1.

		
	6 	PAYMENTS

		
	6.1 	Rent,
Additional Rent and Deposit

Payments as set out in
clause 5.1 shall be made in accordance with this clause
6.1:

		
	6.1.1 	The Rent for the period from
the First Rent Payment Date to the Second Rent Payment Date shall be
payable on the First Rent Payment Date. The next Rent payment shall be
made on the Second Rent Payment Date and each succeeding Rent shall be
paid on the numerically corresponding day to the Second Rent Payment
Date of each succeeding month during the Lease Period or, if there is
no such numerically corresponding day, on the immediately preceding
Business Day. If any day on which Rent falls due is not a Business Day,
the relevant Rent shall be paid on the immediately preceding Business
Day.

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	6.1.2 	The
Additional Rent shall be calculated at the end of each calendar month
or, with respect to the last Additional Rent payable under the Lease,
at the end of the Lease Period, and be based on the Flight Hours and
Flight Cycles (as the case may be) accrued by the Aircraft during the
preceding calendar month (or part thereof). The Additional Rent shall
be paid no later than ten (10) days following the end of that calendar
month.

		
	6.1.3 	If applicable, the Deposit
shall be payable on the Deposit Payment Date.

		
	6.2 	Deposit and Letter of
Credit

		
	6.2.1 	If applicable, the Deposit
shall be retained by the Lessor and be applied and/or repaid to the
Lessee in accordance with this clause 6.2.1. The Lessor may, but shall
not be obliged to, at any time up to and including the later of sixty
(60) days following termination of the Lease and (ii)  sixty (60)
days following redelivery of the Aircraft, apply the Deposit in whole
or in part to make good any amount outstanding to the Lessor hereunder
or under the Other Leases. Within sixty (60) days following (i)
termination of the Lease Period and redelivery of the Aircraft to the
Lessor in accordance with and in the condition required by the Lease or
(ii) payment to the Lessor of the Agreed Aircraft Value following a
Total Loss after the Delivery Date, provided in each case that the
Lessor is satisfied that the Lessee has irrevocably paid to the Lessor
all amounts which may then be outstanding or become payable under this
Lease or which may then be outstanding under the Other Leases and has
discharged any such liability that may result in a lien over the
Aircraft or the Other Aircraft, the Lessor shall return to the Lessee
the Deposit.

		
	6.2.2 	If applicable, the
Letter of Credit shall be retained by the Lessor and be applied and/or
returned to the Lessee in accordance with this clause. The Lessor may,
but shall not be obliged to, at any time up to and including the later
of (i) sixty (60) days following termination of the Lease and (ii)
sixty (60) days following redelivery of the Aircraft draw on the Letter
of Credit in whole or in part to make good any amount outstanding
hereunder or under the Other Leases. Within sixty (60) days following
(i) termination of the Lease Period and redelivery of the Aircraft to
the Lessor in accordance with and in the condition required by the
Lease or (ii) payment to the Lessor of the Agreed Aircraft Value
following a Total Loss after the Delivery Date, provided in each case
that the Lessor is satisfied that the Lessee has irrevocably paid to
the Lessor all amounts which may then be outstanding or become payable
under this Lease or which may then be outstanding under the Other
Leases and has discharged any such liability that may result in a lien
over the Aircraft or the Other Aircraft, the Lessor shall return to the
Lessee the Letter of Credit.

		
	6.3 	Lessor
payment details

All payments of Rent, Additional Rent
and other amounts to be paid by the Lessee hereunder shall be made on
the due dates for payment in Dollars in immediately available funds to
the Place of Payment or to such other bank or account in such
jurisdiction as the Lessor may from time to time specify to the
Lessee.

		
	6.4 	Default
interest

If any payment of Rent, Additional Rent or any
other amounts payable by the Lessee hereunder is not made when due, the
Lessee shall, on demand by the Lessor, pay to the Lessor interest on
such overdue amount from the due date until the date of the
Lessor’s actual receipt of such payment at the Default Interest
Rate.

		
	6.5 	Net
lease

		
	6.5.1 	All payments to be made by
the Lessee hereunder shall be made in full, free and clear of and
without deduction or withholding for or on account of any
Taxes.

		
	6.5.2 	If at any time the Lessee
is required by law and/or regulation to make any deduction or
withholding from any amount payable by the Lessee hereunder (or if
there is any change in the rates at which or the manner in which any
such deduction or withholding is calculated), the 

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Lessee shall promptly notify the Lessor of
such requirement or change and shall deliver to the Lessor as soon as
practicable after the Lessee has made any payment from which it is
required by law to make any deduction or withholding, a certified copy
of the receipt issued by the authority (if any) to which the amount
deducted or withheld was
remitted.

		
	6.5.3 	If (i) the Lessee is
required by law and/or regulation to make any deduction or withholding
from any amount payable by the Lessee to the Lessor hereunder, or (ii)
the Lessor is required by law and/or regulation to make any payment, on
account of Taxes or otherwise, on or in relation to any amount received
or receivable by it hereunder (other than Taxes on the overall net
income or capital gains of the Lessor imposed by Danish authorities),
then the sum payable by the Lessee in respect of which such deduction,
withholding or payment is required to be made shall be increased to the
extent necessary to ensure that, after the making of such deduction,
withholding or payment, the Lessor receives and retains (free from any
liability in respect of any such deduction, withholding or payment) a
net sum equal to the sum which it would have received and so retained,
had no such deduction, withholding or payment been made. Upon (or as
soon as possible in accordance with the legislation relating to Taxes
applicable to the Lessor) the Lessor’s receipt from the Lessee
of such net sum equal to the sum which it would have received and
retained had no deduction, withholding or payment been made, the Lessor
shall, if available to the Lessor in accordance with the legislation
relating to Taxes applicable to it, apply for a tax credit or
equivalent tax benefit resulting from the deduction, withholding or
payment in question and the net tax credit or equivalent net tax
benefit shall be extended to the Lessee, PROVIDED that the amount of
such tax credit to the Lessee shall be limited to a maximum amount
equal to the amount that has been paid by the Lessee to the Lessor
under this clause 6.5.3 and further PROVIDED that under no
circumstances shall the Lessor be obliged to reveal any of its tax
affairs to the
Lessee.

		
	6.6 	VAT

There
shall be added to any sums payable by the Lessee to the Lessor
hereunder such amounts (if any) of Value Added Tax as may from time to
time be properly chargeable
thereon.

		
	6.7 	Payment in other
currency

If, under any applicable law, whether as a
result of judgement against the Lessee or the liquidation of the Lessee
or for any other reason, any payment under or in connection with the
Lease is made or is recovered in a currency other than the currency in
which it is payable pursuant to the Lease (the ‘‘Currency
of Obligation’’) then, to the extent that the payment (when
converted into the Currency of Obligation at the rate of exchange
prevailing on the date of payment or, in the case of a liquidation, the
latest date for the determination of liabilities permitted by the
applicable law) falls short of the amount due under the Lease, the
Lessee shall, as a separate and independent obligation, fully indemnify
the Lessor against the amount of the shortfall. For the purposes of
this clause, ‘‘rate of exchange’’ means the
rate at which the Lessor is able on the relevant date to purchase the
Currency of Obligation in London with that other
currency.

		
	6.8 	IATA
clearance

If the Lessee is or becomes a member of IATA
with the option of clearing and having outstanding amounts against it
cleared through the IATA Clearing House, it hereby consents and agrees
to and undertakes with the Lessor to accept the Lessor clearing any
amount outstanding under the Lease through the IATA Clearing House. The
original invoice or a copy of the invoice issued by the Lessor to the
Lessee and relating to outstanding amount shall, as against the IATA
Clearing House, constitute conclusive evidence that such amount is
outstanding and subject to clearance through the IATA Clearing
House.

		
	6.9 	Tax
indemnification

The Lessee shall pay and indemnify and
hold harmless the Tax Indemnitees against all Taxes (other than Taxes
on the overall net income, or Taxes relating to capital gains, of a Tax

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Indemnitee, in each case as imposed by the
Tax authorities in the state of incorporation of the relevant Tax
Indemnitee) as a result of (a) the leasing of the Aircraft to the
Lessee, (b) the sub-leasing of the Aircraft to the Permitted
Sub-Lessee, (c) the payment and receipt of Rent, Additional Rent and/or
any other payment required to be made by the Lessee under the Lease,
(d) the payment or advance of any amount under the Security Documents
or (e) the ownership, import, export, use, control, possession,
maintenance, storage, replacement, refurbishment, insurance, service,
overhaul, repair, testing, registration, delivery or redelivery of the
Aircraft.

		
	7 	ADJUSTMENT OF ADDITIONAL
RENT

		
	7.1 	Adjustment
provisions

***

		
	7.2 	Engine
Reserve allocation
adjustment

***

		
	7.3 	Low
Utilisation

***

		
	8 	LESSEE
COVENANTS

		
	8.1 	Licenses and
certificates

The Lessee
shall:

		
	8.1.1 	at all times during the
Lease Period ensure that it or the Permitted Sub-Lessee (as applicable)
is the holder of a valid air operator’s certificate issued by
the Aviation Authority and all other licenses and certificates as shall
be required under applicable law and/or by the Aviation Authority
and/or the applicable authorities in the State of Registration and the
State of Incorporation to permit the Lessee or Permitted Sub-Lessee (as
the case may be) to operate the Aircraft under this Lease or under the
Sub-Lease Agreement (as the case may be);
and

		
	8.1.2 	at all times during the Lease
Period ensure that the crew operating the Aircraft is licensed by the
Aviation Authority and/or validated by the Aviation Authority;
and

		
	8.1.3 	at all times during the Lease
Period ensure that the Maintenance Performer has all necessary
licenses, authorisations and permits to perform the maintenance of the
Aircraft; and

		
	8.1.4 	throughout the
Lease Period not do or omit to do or permit to be omitted or done any
act (i)  which would breach any applicable law or any such
certificates or licenses as are specified in clauses 8.1.1, 8.1.2 and
8.1.3 or (ii) whereby any such certificates or licenses would or would
be likely to cease to be in force, be revoked, withdrawn or suspended,
or adversely amended or affected, and shall from time to time on
request produce certified copies of such certificates or licenses to
the Lessor.

		
	8.2 	Consents, approvals and
filings

In addition to clause 8.1, the Lessee shall
ensure that, at all times during the Lease Period it has obtained
and/or completed and that the Permitted Sub-Lessee has obtained and/or
completed any and all consents, approvals, orders, authorisations,
registrations or filings required to authorise, or required in
connection with, the execution, legality, validity, enforceability or
admissibility in evidence of the Lease, the Sub-Lease Agreement, the
Security Documents and any related agreement, document or instrument or
the performance by the Lessee and the Permitted Sub-Lessee of any of
their respective obligations hereunder and
thereunder.

		
	8.3 	Base

The
Aircraft shall during the Lease Period be based at the Base.

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	8.4 	Maintenance

The
Lessee shall provide for the Aircraft being maintained, overhauled,
modified and repaired and the Lessee shall provide
for;

		
	8.4.1 	the Aircraft being kept in
as good operating condition and repair as the condition of the Aircraft
as at the Delivery Date subject to fair wear and
tear;

		
	8.4.2 	the maintenance of a
current certificate of airworthiness (issued by the Aviation Authority
in the appropriate public transport category) for the
Aircraft;

		
	8.4.3 	the compliance on a
terminating basis (where terminating action exists) with all applicable
regulations including the standard stipulated by JAR-OPS 1 and the
requirements of all Airworthiness Directives, all mandatory inspections
and modification requirements and, if applicable to the Lessee’s
operation of the Aircraft, all alert service bulletins, inspection
service bulletins or similar requirements applicable to the Aircraft or
any Component and to be carried out before the Redelivery Date and
within the AD Compliance Period after the Redelivery
Date;

		
	8.4.4 	the performance of engine
trend monitoring in accordance with a system satisfactory to the Lessor
and forward results to Lessor on
request;

		
	8.4.5 	the prompt replacement
of any Engine or Component (being an Engine or Component which is
time-expired, lost, destroyed or damaged and which cannot be repaired
in situ) with a replacement engine or component, complying with the
provisions of clause 8.5.2 or
8.5.3;

		
	8.4.6 	the accomplishment of
permanent repairs and/or replacement of cosmetic and appearance
defects, including hail damage which are not within the
Manufacturer’s
limitations;

		
	8.4.7 	all inspections,
services, repairs, overhauls, tests and modifications to be made or
carried out on or to the Aircraft and each part thereof are made or
carried out by the Maintenance
Performer;

		
	8.4.8 	requiring all
applicable service bulletin kits which are offered ‘‘no
charge’’ by any Manufacturer or vendor, prior to the
expiration of the ‘‘no charge’’ warranty period
and in failing to do so, pay to the Lessor the costs to the Lessor of
acquiring such service bulletin
kits;

		
	8.5 	Removal, interchange and
modifications

		
	8.5.1 	General:    The
Lessee or Sub-Lessee may replace Engines or Components in accordance
with clause 8.5.2 and 8.5.3 and may install any Engine or Component on
another aircraft that the Lessee or the Permitted Sub-Lessee owns or
leases in accordance with clause 8.5.4. The Lessee shall ensure that
any Engine or Component not installed on the Aircraft (or an aircraft
permitted by clause 8.5.4) is properly and safely stored and insured
and kept free of Security Interests save for Permitted
Liens.

		
	8.5.2 	Permanent
Replacement:    If the Lessee or Permitted Sub-Lessee
permanently replaces an Engine or
Component:

		
	8.5.2.1 	In the case of an
Engine, the replacement engine must be of a Replacement
Engine.

		
	8.5.2.2 	in the case of a
Component, the replacement component must be in good operating
condition, have as much useful life available until the next scheduled
maintenance procedure, be of the same or a more advanced make and model
and of the same interchangeable modification status as the Component it
is replacing;

		
	8.5.2.3 	the Replacement
Engine or replacement component must have become and remain, until
replaced in accordance with this clause, the property of the Owner free
from Security Interests (other than Permitted
Liens);

		
	8.5.2.4 	the Lessee must have
full details of the source and maintenance records of the Replacement
Engine or replacement component and in the case of serialised rotable
parts, also have a complete service history: and

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	8.5.2.5 	if so
requested by the Lessor, the Lessee shall provide a properly executed
bill of sale or similar instrument to evidence the vesting in the Owner
of title to any such Replacement Engine or replacement component
permanently replacing an Engine or Component, free and clear of any
Security Interests (other than Permitted Liens); it being acknowledged
that the Lessor shall not generally and without good reason request a
bill of sale where the value of the relevant Replacement Engine or
replacement component is less than USD
20,000.

		
	8.5.3 	Temporary
Replacement:    The Lessee or Permitted Sub-Lessee may install
any engine or component on the Aircraft as a temporary replacement
if:

		
	8.5.3.1 	no Event of Default has
occurred and is continuing;

		
	8.5.3.2 	as
soon as reasonably practicable after an engine or component is
installed on the Aircraft, but before the Redelivery Date, the Lessee
or Permitted Sub-Lessee removes that engine or component and replaces
it with the original Engine or Component (or, in the case of a
Component, by a part which is allowed by clause 8.5.2);
and

		
	8.5.3.3 	the Insurances for the
Aircraft are not
affected.

		
	8.5.4 	Other
aircraft:    An Engine or Component may be installed on an
aircraft which Lessee or a Permitted Sub-Lessee owns or leases
if:

		
	8.5.4.1 	no Event of Default has
occurred and is continuing;

		
	8.5.4.2 	the
Lessee or the Permitted Sub-Lessee has operational control over the
aircraft;

		
	8.5.4.3 	the Owner keeps the
ownership of the Engine or Component concerned until replaced in
accordance with this
clause;

		
	8.5.4.4 	the Engine or Component
does not become subject to a Security Interest (other than a Permitted
Lien); and

		
	8.5.4.5 	the Engine or
Component is removed from the aircraft as soon as practicable but not
later than the Redelivery
Date.

		
	8.5.5 	Title to Removed
Engines or Components:    Any Engine or Component at any time
removed from the Aircraft shall remain the property of the Owner unless
and until a replacement has been effected in accordance with clause
8.5.2 and unless and until title in that replacement has passed to the
Owner subject to the Lease, free of all Security Interests (except for
Permitted Liens), whereupon title to the replaced Engine or Component
shall, provided no Event of Default has occurred and is continuing,
pass to the Lessee.

The Lessee or Permitted Sub-Lessee
may remove any item from the Aircraft without replacing it if such item
(i) has been installed by Lessee or Permitted Sub-Lessee on the
Aircraft on or after the Delivery Date as an addition to and not in
replacement of any item previously installed on or attached to the
Aircraft, (ii) is not required to be installed on or attached to the
Aircraft by the terms hereof and (iii) can be removed from the Aircraft
without impairing the airworthiness of the Aircraft or diminishing the
value of the Aircraft below the value which the Aircraft would have had
such additional item not been installed thereon or attached thereto and
upon such removal such item shall become free of all rights of the
Lessor and title therein shall vest in the Lessee or the Permitted
Sub-Lessee (as the case may be) free from any lien, charge or
encumbrance of the Lessor

Where an engine or component
of a third party owner is installed on the Airframe, the Lessor agrees
not to claim title in priority to the third party owner by virtue of
that installation PROVIDED that the Lessor has been duly notified in
writing of the said installation and the identity of the third party
owner prior to that installation (the reference to third party owner in
this sub-clause includes a reference to a third party holding a
Security Interest in the relevant engine or part provided such Security
Interest has been registered as required or permitted by applicable
law).

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	8.5.6 	Modifications:
Lessee or Permitted Sub-Lessee shall not make any major modification or
addition to the Aircraft, except for such
which:

			
		a. 	is expressly permitted or required by
the Lease; or

			
		b. 	has the prior written approval
of Lessor (not to be unreasonably withheld) and does not diminish the
condition or value of the Aircraft.

All modifications
and alterations incorporated throughout the Lease Period which deviate
from the Aircraft's certified specifications, type, design or
configuration to be completed in accordance with the
Manufacturer’s recommendations and instructions, must be
approved by the Aviation Authority, and where they deviate from the
certified configuration of the Aircraft, shall be covered by a
Supplemental Type Certificate (‘‘STC’’) issued
by the Aviation Authority or the State of Design
Authority.

		
	8.5.7 	So long as no Event of
Default has occurred and is continuing and subject to clause 16.7, the
Lessee or Permitted Sub-Lessee may remove any modification or addition
to the Aircraft provided that this does not diminish the value or
condition of the Aircraft. Furthermore, the Lessor may require the
Lessee to remove such modification on the Redelivery Date to restore
the Aircraft to its condition prior to that modification or
addition.

		
	8.6 	Aircraft
documents

Lessee shall keep the Aircraft Documents and
Records:

		
	8.6.1 	in the English
language;

		
	8.6.2 	according to best
airline practice; and

		
	8.6.3 	so they
meet the requirements of JAR-OPS Subpart M and the Maintenance
Programme.

		
	8.7 	Negative
covenants

The Lessee shall not and undertakes with the
Lessor that the Permitted Sub-Lessee shall
not;

		
	8.7.1 	operate or permit the
Aircraft to be operated in, to or from the United States of America or
outside the areas permitted by the Insurances or in any manner which is
contrary to the requirements of the
Insurances;

		
	8.7.2 	cause or permit to be
done with, to, about or in connection with the Aircraft anything in
breach of any applicable law, any applicable requirement of a
government agency, any airworthiness certificate, any mandatory
requirement of a Manufacturer, any provision of any applicable
international convention or any provision of any rule or regulation
issued under any such international convention applicable thereto;
or

		
	8.7.3 	hold out or represent or allow
to be held out and represented that any member of the crew of the
Aircraft is in the employment of the Lessor or the Owner or that the
Lessor or the Owner is carrying persons or goods in the Aircraft or are
in any way connected or associated with any operation of the
Aircraft;

		
	8.7.4 	use the Aircraft for
the carriage of:

		
	8.7.4.1 	whole animals
living or dead except in the cargo compartments according to IATA
regulations and except for domestic pet animals carried in a suitable
container to prevent the escape of any liquid and to ensure the welfare
of the animal;

		
	8.7.4.2 	acids, toxic
chemicals, other corrosive materials, explosives, nuclear fuels,
nuclear wastes, or any nuclear assemblies or components, except as
permitted for passenger aircraft under the ‘‘Dangerous
Goods Regulations’’ schedule issued by IATA from time to
time and provided that all the requirements for packing or otherwise
contained therein are
fulfilled;

		
	8.7.4.3 	any other goods,
materials or items of cargo which could reasonably be expected to cause
damage to the Aircraft and which would not be adequately covered by the
Insurances; or

		
	8.7.4.4 	any illegal item
or substance;

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	8.7.5 	utilise
the Aircraft for purposes of training, qualifying or reconfirming the
status of cockpit personnel if such purposes
are disproportionate to the use for such purpose of other
aircraft operated by the Lessee or the Permitted Sub-Lessee (as the
case may be);

		
	8.7.6 	attempt or hold
itself out as having any power to sell, lease (but for the sub-lease
under the Sub-Lease Agreement), charge or otherwise encumber or dispose
of the Aircraft or the whole or any part of the Insurances, nor create,
incur or suffer to exist any lien, charge or encumbrance over the
Aircraft (other than the Mortgage or any Permitted Liens) or over the
whole or any part of the Insurances or any interest of the Lessor
therein;

		
	8.7.7 	do or cause or permit to
be done any act (not being an act attributable to the Lessor, directly
or indirectly) which could reasonably be expected to result in the
Aircraft being arrested, confiscated, seized, taken in execution,
impounded, forfeited, detained in exercise or purported exercise of any
possessory lien or other claim or otherwise taken from the possession
of the Lessee and if any such arrest, confiscation, seizure, taking,
impounding, forfeiture or detention shall occur, the Lessee shall give
immediate notice thereof to the Lessor, and shall use its best
endeavours to procure the prompt release of the
Aircraft;

		
	8.7.8 	pledge to the credit of
the Lessor or Owner for any maintenance, service, repairs, overhauls
of, or modifications to, or changes or alterations in the Aircraft or
otherwise;

		
	8.8 	Protection of
rights

The Lessee shall make, or procure the making of,
all necessary filings and recordings of the Lease, the Sub-Lease
Agreement and the Security Documents in a timely fashion and from time
to time execute such other documents or instruments and make such
filings as may be necessary or advisable (in the reasonable opinion of
the Lessor or required by the Owner or the Lenders) for the purpose of
perfecting and protecting the Owner’s, Lenders' or
Lessor’s title and interest in, to and over the Aircraft. The
Lessee covenants that it shall and shall procure that the Permitted
Sub-Lessee shall, at the request and expense of the Lessor, execute all
such additional documents as the Lessor may reasonably require to
protect the rights and interests of the Owner, Lenders or Lessor in, to
and over the Aircraft, including, without limitation, all necessary
registrations and filings required by or advisable under any applicable
law or regulation, and not to do or omit or permit to be done or
omitted anything which might jeopardise the Owner’s,
Lenders' or Lessor’s rights and interests in, to and over
the Aircraft;

		
	8.9 	Navigation,
over-flight and airport charges

The Lessee shall pay
promptly or procure for the Permitted Sub-Lessee to pay promptly when
due all Eurocontrol charges, over-flight charges, en-route navigation
charges, navigation services charges, start and landing fees and all
other charges payable for the use of or for services provided at any
airport or elsewhere, whether in respect of the Aircraft or any other
aircraft operated by the Lessee or Permitted Sub-Lessee, and shall
indemnify and hold the Owner and Lessor harmless in respect of the
same. This indemnity shall continue in full force and effect
notwithstanding the termination or expiration of the leasing of the
Aircraft hereunder for any reason whatsoever or the return of the
Aircraft to the Lessor.

		
	9 	LESSOR
COVENANTS

		
	9.1 	Quiet
enjoyment

The Lessor represents and warrants to the
Lessee that the Lessor has full right and power to lease the Aircraft
to the Lessee on the terms of the Lease and that for as long as the
Lessee continues to observe its obligations hereunder and no Event of
Default has occurred, the Lessee shall be entitled to the quiet
enjoyment and use of the Aircraft free from interruption by the Owner,
the Lessor and the Lenders. The Lessee shall be entitled to register a
lease declaration with the Danish Register of Rights over Aircraft in
order to perfect the quiet enjoyment obligation on the Lessor under
this clause 9.1 and the Lessor undertakes to provide for the
beneficiary under any Mortgage to respect such lease declaration.

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	9.2 	Maintenance
contributions

Provided that no Event of Default has
occurred and is continuing, the Lessor shall pay the following amounts
to the Lessee by way of contribution to the cost of maintenance of the
Aircraft, upon receipt by the Lessor, within six months after
commencement of such maintenance and before the Redelivery Date, of an
invoice and supporting documentation reasonably satisfactory to the
Lessor evidencing performance of the following work by the Maintenance
Performer:

		
	9.2.1 	Airframe:    With
respect to the Airframe, the completion of the Airframe Structural
Check, the lesser of (i) the amount of that invoice and (ii) an amount
equal to the aggregate amount of the Airframe Reserve paid under the
Lease at the date such work starts less the aggregate amount previously
paid by the Lessor under this
sub-clause;

		
	9.2.2 	Engine
Life-Limited Parts:    With respect to life-limited Components
within any Engine, the performance of any replacement or repair of
those Components, the lesser of (i) the amount of that invoice and (ii)
an amount equal to the aggregate amount of the Engine LLP Reserve paid
in respect of that Engine under the Lease at the date such work starts
less the aggregate amount previously paid in respect of that Engine by
the Lessor under this
sub-clause;

		
	9.2.3 	Engine
Refurbishment:    With respect to any Engine, the performance of
Engine Refurbishment in respect of that Engine the lesser of (i) the
amount of that invoice and (ii) an amount equal to the aggregate amount
of the Engine Reserve paid under the Lease in respect of that Engine at
the date such work starts less the aggregate amount previously paid in
respect of that Engine by the Lessor under this
sub-clause;

		
	9.2.4 	APU:    With
respect to the APU, the performance of such overhauls as referred to in
the definition of ‘‘APU Reserve’’ in clause
1.1, the lesser of (i) the amount of that invoice and  (ii) an
amount equal to the aggregate amount of the APU Reserve paid under the
Lease at the date such work starts less the aggregate amount previously
paid by the Lessor under this sub-clause;
and

		
	9.2.5 	Landing
gear:    With respect to the Aircraft’s landing gear, the
performance of such overhauls as referred to in the definition of
‘‘Landing Gear Reserve’’ in clause 1.1, the
lesser of (i) the amount of that invoice and (ii) an amount equal to
the aggregate amount of the Landing Gear Reserve paid under the Lease
at the date such work starts less the aggregate amount previously paid
by the Lessor under this
sub-clause.

		
	9.3 	Increased
contribution

		
	9.3.1 	If, after completion
of the first Eligible Maintenance Event following the Delivery Date
with respect to

			
		(i) 	the
Airframe;

			
		(ii) 	life-limited
Components within each
Engine;

			
		(iii) 	the Engine Relevant
Items;

			
		(iv) 	APU; and

			
		(v) 	Landing Gear Relevant
Items,

the payment to be made by the Lessor under the
relevant clause of clauses 9.2.1 through 9.2.5 does not reimburse in
full the Lessee’s costs in having completed the subject first
Eligible Maintenance Event, the Lessor shall pay to the Lessee (which
payment shall be effected together with the payment under referenced
clauses 9.2.1 through 9.2.5) an amount equivalent to such shortfall
(subject to clause 9.3.2).

		
	9.3.2 	The
Lessor’s payment in respect of each of the items referred in (i)
through (v) of clause 9.3.1 shall be limited as
follows:

			
		(i) 	with respect to the
Airframe, the Flight Hours on the Delivery Date since last relevant
Eligible Maintenance Event multiplied by the Airframe
Reserve;

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		(ii) 	with
respect to the life-limited Components within each Engine, the Flight
Cycles on the Delivery Date since last relevant Eligible Maintenance
Event multiplied by the Engine LLP
Reserve;

			
		(iii) 	with respect to the
Engine Relevant Items, the Flight Hours on the Delivery Date since last
relevant Eligible Maintenance Event multiplied by the Engine
Reserve;

			
		(iv) 	with respect to the
APU, the Flight Hours on the Delivery Date since last relevant Eligible
Maintenance Event multiplied by the APU Reserve;
and

			
		(v) 	with respect to the landing
gear, the number of months on the Delivery Date since last Eligible
Maintenance Event multiplied by the Landing Gear
Reserve.

		
	9.3.3 	For the purposes of
clause 9.3.2, the ‘‘Airframe Reserve’’,
‘‘Engine LLP Reserve’’,
‘‘Engine Reserve’’, ‘‘APU
Reserve’’ and ‘‘Landing Gear
Reserve’’ shall mean such USD amount as referred to in
the definitions of such in clause 1.1 hereof (but not adjusted in
accordance with clauses 7.1 and 7.3), discounted annually (counting
from the Delivery Date) by 3% back to the relevant Eligible
Maintenance Event prior to the Delivery
Date.

		
	9.4 	Exceptions to
contribution

The Lessor shall not pay any such
contribution as referred to in clauses 9.2 and
9.3;

			
		(a) 	for repairs arising as a result of
accidents or incidents (whether or not eligible for recovery under the
Insurances), operational or maintenance mishandling or airworthiness
directive work; nor

			
		(b) 	for repairs arising as a
result of foreign object damage, the removal, installation, maintenance
and repair of QEC (Quick Engine Change) kits and/or any elective
components
replacement.

		
	9.5 	Airworthiness
directive cost
share

***

		
	9.6 	Lessor
consultation

With respect to the maintenance events
referred to in clause 9.2 and the implementation of Airworthiness
Directives referred to in clause 9.5 (with respect to the latter, the
cost of which exceeding the AD Threshold), the Lessee shall, prior to
initiating such event or implementation, consult with the Lessor with a
view to decide upon the workscope for such event or
implementation.

		
	10 	SUB-LEASING

		
	10.1 	No
sub-lease

Except for wet-leases under which the Lessee
or Permitted Sub-Lessee retains the control over the Aircraft in full,
the Lessee shall not lease or hire the Aircraft to another person or
persons and the Lessee undertakes with the Lessor for the Permitted
Sub-Lessee not to so lease or hire the
Aircraft.

		
	10.2 	Permitted sub-lease

Subject to the Lessor’s prior, written consent, and
notwithstanding clause 10.1, the Lessee (but not the Permitted
Sub-Lessee) shall be allowed to sub-lease the Aircraft to an airline of
international standing, and in a jurisdiction acceptable to the Lessor
and on terms acceptable to the Lessor. The Lessor shall not
unreasonably withhold its consent to such sub-lease of the Aircraft. As
a matter of exemplification, it shall not be unreasonable for the
Lessor to deny giving its consent if the Owner (save where the Owner is
identical with the Lessor) or the Lenders shall not be willing to allow
such sub-lease. Any consent may be given subject to
conditions.

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	10.3 	Administration
of sub-lease agreement

The Lessee shall duly and
punctually perform and comply with its obligations under the Sub-Lease
Agreement and shall enforce due and punctual performance and observance
by the Permitted Sub-Lessee. The Lessee shall not without the prior
written consent (not to be unreasonably withheld or delayed) of the
Lessor agree to any amendment, variation, or waiver in respect of the
Sub-Lease Agreement nor grant any consent expressed in the Sub-Lease
Agreement to be required of the Lessee where consent is required to the
same matter under the Lease. The Lessee shall promptly notify the
Lessor upon becoming aware of any event of default or default under the
Sub-Lease Agreement and shall promptly comply with all directions of
the Lessor in relation
thereto.

		
	11 	INFORMATION AND
INSPECTION

		
	11.1 	Aircraft
information

		
	11.1.1 	Promptly upon
becoming aware of same, the Lessee shall notify the Lessor
of:

		
	11.1.1.1 	any required major
repair;

		
	11.1.1.2 	any casualty or other
damage or accident to the Aircraft or Engines except for insignificant
occurrences; and

		
	11.1.1.3 	any event
which shall or may reasonably be considered likely to become a Total
Loss and promptly notify the Lessor of any event or claim which shall
or may reasonably be considered likely to involve the Owner, Lessor,
Lenders or any of them in any cost, expense, loss or
liability.

		
	11.1.2 	On a weekly basis,
the Lessee shall provide the Lessor with information on and all repair
data, modifications and alterations with respect to the Aircraft (if,
during such week, the Aircraft has been repaired, modified or
altered).

		
	11.1.3 	No later than on the
7th day of each month during the Lease Period, the Lessee
shall provide the Lessor with information
on;

		
	11.1.3.1 	total Flight Hours and
Flight Cycles accumulated during the immediate preceding month by the
Aircraft; each engine and APU installed on the Aircraft as well as each
Engine and the APU delivered with the
Aircraft.

		
	11.1.4 	Forthwith upon the
Lessor’s reasonable request, the Lessee shall provide the Lessor
with information on;

		
	11.1.4.1 	the
Aircraft, its employment, condition, position and engagements;
and

		
	11.1.4.2 	Aircraft weight
changes.

		
	11.2 	Financial
information

The Lessee shall throughout the Lease
Period;

		
	11.2.1 	deliver to the Lessor
within 14 days after publication thereof (and in any event within 150
days after the end of the relevant financial year), copies of the
audited financial statements of the Lessee and the Permitted Sub-Lessee
for each of its financial years ending after the date
hereof;

		
	11.2.2 	deliver to the Lessor no
later than 60 days after the end of teach first financial half-year
un-audited semi annual financial statements of the Lessee and the
Permitted Sub-Lessee for each of its financial half-years ending after
the date
hereof.

		
	11.3 	Inspections

The
Lessee shall and shall procure that the Permitted Sub-Lessee
shall;

		
	11.3.1 	make or cause to be made
available to the Lessor on request for inspection or copying or both,
the log books and computer records of the Aircraft and all repair,
maintenance, modification, overhaul or other records kept by the Lessee
in respect of the Aircraft and all certificates that are from time to
time in force in relation to the same and forthwith deliver the
originals (if such party’s possession is not required and in
such case, deliver copies), or, in the case of the log books, a
photocopy of the same to the other party if requested;

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	11.3.2 	upon the
Lessor’s reasonable request permit the Owner, Lessor and Lenders
to inspect the
Aircraft.

		
	12 	WARRANTIES

The
Lessor shall;

		
	12.1 	assign to the
Lessee, for the duration of the Lease Period or until an Event of
Default has occurred and is continuing, any existing warranties from
the Manufacturers in relation to the Airframe and the Engines, provided
that such are assignable;
and

		
	12.2 	remain entitled to each and
any other warranty, express or implied, with respect to the Aircraft,
an Engine or Component so far as concerns any Manufacturer, vendor,
sub-contractor or supplier. The Lessor shall without prejudice to its
rights under the Lease co-operate with the Lessee in respect of any
claim which may be pursued under any such warranty in relation to
defects affecting the Aircraft, any Engine or Component, if such claim
or circumstance leading to such claim arises during the Lease Period.
The Lessee shall notify the Lessor promptly upon becoming aware of any
such
claim.

		
	13 	INSURANCE

		
	13.1 	Liability
for damage

The Lessee shall be liable for all damage to
the Aircraft during the Lease
Period.

		
	13.2 	Types of
insurance

The Lessee shall throughout the Lease Period
provide for the Aircraft to be insured at its own risk and expense with
such first class reputable insurers reasonably approved in advance by
the Lessor (which insurers shall, if so required by the Lessor, at all
times re-insure substantially all of the risks so insured against with
insurers of internationally recognised standing in the field of
aviation insurance reasonably approved by the Lessor, it being
understood that the Lessor will require such reinsurance to the extent
only the Lessor is not satisfied with the primary insurers), arranged
through insurance brokers reasonably acceptable to the Lessor and on
such terms and conditions and in such forms, as the Lessor may require
for:

		
	13.2.1 	‘‘All
Risks’’, including war and associated risks, hull insurance
on the Aircraft (including all flight and ground risks and ingestion
coverage) on an agreed value basis payable in USD in an amount not less
than the Agreed Aircraft
Value;

		
	13.2.2 	‘‘All
Risks’’ (including War and Allied Risks except when on
ground or in transit other than by air) insurance on the Engines while
not installed on any airframe in an amount per Engine on an agreed
value basis payable in USD of not less than the Agreed Engine Value;
and

		
	13.2.3 	third party legal liability,
bodily injury and property damage, passenger, mail and cargo legal
liability, including aviation war, high-jacking and other perils excess
liability insurance in accordance wit Extended Coverage Endorsement
(aviation liabilities) AVN 52E, for such combined single limit per any
one occurrence as per the Required Liability
Cover.

		
	13.3 	Renewal

All
policies providing insurance required by this clause 13 shall be
renewed (or a new policy or policies providing similar coverage
therefor taken out) prior to the respective expiration dates of the
coverage of such policies, and the Lessee shall furnish to the Lessor a
facsimile message setting out the progress in and stage of the
negotiations with the insurers for the renewal of the Insurances and
the prospects of such renewal no later than seven (7) Business Days
prior to each expiration date, and prior to such respective expiration
dates, furnish evidence acceptable to the Lessor of such renewal or
substitution in the form of certificates of insurance evidencing the
insurances to be effected under the Lease.

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	13.4 	No
coverage

If any damage or loss is caused to the
Aircraft, and/or if the Aircraft is seized by any governmental or other
authority (including in the State of Registration) (whether de facto or
de jure) or by others, during the Lease Period, and all costs deriving
therefrom are not covered by the insurers, the Lessee shall pay all
such uncovered costs deriving from such damages directly to the Lessor
within thirty (30) days after such costs have been
incurred.

		
	13.5 	Payee
amounts

All claims in respect of a Total Loss and all
other claims in excess of the Deductible Amount shall be paid directly
to the Lessor or the Lenders (as the case may be) and so long as no
Event of Default shall have occurred and be continuing, claims not in
excess of Deductible Amount shall be paid to the
Lessee.

		
	13.6 	General insurance
requirements

The policies evidencing the Insurances
required under clause 13.2
shall:

		
	13.6.1 	provide that the cover
afforded to the Owner, Lessor and Lenders by the Insurances shall not
be invalidated by any act or omission (including misrepresentation and
non-disclosure) of any other person or party which results in a breach
of any term, condition or warranty of the
policies;

		
	13.6.2 	specifically refer to
the Lease and shall provide that the insurers agree that the coverage
under the policies is extended (to the extent of the risks covered by
the policies) to insure the Aircraft in accordance with the terms of
the Lease;

		
	13.6.3 	provide for worldwide
coverage (subject only to such exceptions as the Lessor may agree in
writing);

		
	13.6.4 	provide that the
insurers agree to waive rights of recourse against the Owner, Lenders,
Lessor and their respective officers, directors, employees and
agents;

		
	13.6.5 	provide that the Owner,
Lenders and Lessor do not have any operational interest in the
Aircraft;

		
	13.6.6 	provide that the
insurers shall waive any right of subrogation against the Owner,
Lenders and Lessor;

		
	13.6.7 	provide that
none of the Owner, Lessor or Lenders shall be liable for any premiums
in respect thereof, and that the insurers shall not exercise any right
of set-off or counterclaim, except in respect of outstanding premiums
in respect of the Aircraft, against the interests of any of the Owner,
Lenders or Lessor;

		
	13.6.8 	provide that
the insurers or insurance brokers (as the case may be) shall promptly
notify the Lessor in the event of cancellation or of any change
whatsoever of a restrictive nature affecting the Insurances or of any
act or omission or any event which might invalidate or render
unenforceable the Insurances or in the event that any premium or
instalment of premium shall not be paid when due and that the
Insurances shall continue unaltered for the benefit of the Owner,
Lessor and Lenders and their successors and assigns, directors,
officers, agents and employees for at least thirty (30) days after date
of issue by the insurers of written notice of such cancellation,
change, event or non-payment of premium or an instalment thereof except
in the case of war risks and allied perils for which seven (7)
days’ notice (or such lesser period as may be customarily
available) shall be given;

		
	13.6.9 	be
subject only to such deductibles as the Lessor shall reasonably
approve;

		
	13.6.10 	provide that no claim
arising under a required policy shall be settled, without the prior
written consent of the Lessor, unless it is for less than the
Deductible Amount. The Lessee shall give the Lessor immediate notice in
writing of any occurrence which may result in a claim which shall
exceed the Deductible Amount.

		
	13.7 	Hull
insurance requirements

The policies evidencing the
Insurances required under clauses 13.2.1 and 13.2.2
shall:

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	13.7.1 	include
the Owner, Lessor and Lenders as named assured for their respective
rights and interests;

		
	13.7.2 	provide
that the insurances provided hereunder shall be primary and without
right of contribution from any other insurance which may be available
to the Owner, Lenders or
Lessor;

		
	13.7.3 	include, in the event of
separate insurances being arranged to cover the ‘‘All
Risks’’ hull insurance and the ‘‘War
Risk’’ and related insurance, a 50/50% provision as
set forth in Lloyds Aviation Form AVS 103;
and

		
	13.7.4 	include a loss payable
clause acceptable to the
Lessor.

		
	13.8 	Liability insurance
requirements

The policies evidencing the insurances
required under clause 13.2.3
shall:

		
	13.8.1 	include the Owner,
Lenders, Lessor and their respective officers, directors, employees,
agents, successors and assigns as additional assureds for their
respective rights and
interests;

		
	13.8.2 	insure the indemnity
provisions of the Lease to the extent of the risks being
insurable;

		
	13.8.3 	provide that all the
provisions thereof, except the limits of liability, shall operate to
give each assured the same protection as if there were a separate
policy covering each named
assured;

		
	13.8.4 	be primary and without
right of contribution from other insurance which may be available to
the Owner, Lenders or Lessor or their respective officers, directors,
employees, agents, successors and assigns;
and

		
	13.8.5 	be for a minimum amount
equal to the Required Liability Cover as a combined single limit on any
one occurrence or such higher amount as the Lessor may reasonably
require in order for such amount to reflect the best industry practise
for airlines and aircraft operates comparable to the
Lessee.

		
	13.9 	No suspension or
impairment

The Lessee covenants, warrants and represents
that it and the Permitted Sub-Lessee shall not do any act whereby any
Insurances shall or may be suspended, impaired or defeated, and it
shall take all reasonable actions necessary to restore any of the
Insurances which have been suspended, impaired or defeated, and that
the Lessee and the Permitted Sub-Lessee shall not in any circumstances
suffer or permit the Aircraft to be used or operated at any time during
the Lease Period without all of the Insurances being fully in effect.
In the event that the Lessee or Permitted Sub-Lessee should for any
reason fail to renew any policy or contract constituting the Insurances
prior to the expiration thereof or fail to keep any such policy or
contract in full force and effect, the Lessor shall have the option (if
possible), but shall not be required or obliged, to pay the premiums on
such policy or contract or to take out new insurance in and for an
amount, type, coverage and on terms satisfactory to the Lessor,
provided, however, that the exercise by the Lessor of such option shall
not in any way affect the provisions of the Lease. The obtaining of
such insurance or payment of such premium in any instance shall not
oblige the Lessor to continue to do so and any such payment shall be
reimbursed by the Lessee to the Lessor forthwith on demand. The Lessee
shall not and shall not permit the Permitted Sub-Lessee to, without the
prior written consent of the Lessor, take out insurances or provide for
the Lessee, the Permitted Sub-Lessee, the Owner, the Lessor or the
Lenders to be named assured in insurances effected by the Lessee or the
Permitted Sub-Lessee with respect to the Aircraft, other than as
required under the Lease, where such insurances shall or may prejudice
the Insurances or the Owner's, Lessor’s or Lenders'
recovery thereunder.

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	13.10 	Assignment
of insurances

On the Lessor’s request, the Lessee
shall, and shall provide for the Permitted Sub-Lessee to, assign to and
in favour of the Lessor (and the Owner and Lenders if so requested by
the Lessor) by way of security for the Lessee’s obligations
under the Lease, all rights, title and interest, present and future, of
the Lessee and Permitted Sub-Lessee in and to the Insurances from time
to time effected and all benefits thereof (including claims and return
of premiums). The Lessee undertakes (i) to give notice or to procure
that notice of such assignment is given to all insurers and to procure
the acknowledgement and agreement of the insurers thereto and (ii) to
provide copies of such notices to the
Lessor.

		
	13.11 	Application of insurance
proceeds

Any insurance proceeds received in respect of
the Aircraft, other than in respect of a Total Loss, shall promptly be
applied firstly in or towards the cost of reinstating or repairing the
Aircraft so that the same is in as good an operating condition as it
would have been had such loss not occurred and had the Aircraft been
maintained in the condition required by the Lease and if the Aircraft
shall have been so reinstated or repaired the balance of such proceeds
remaining shall be paid over to or retained by the Lessee, provided
that if there shall be an Event of Default that has not been remedied,
the balance of such insurance proceeds may be applied first in or
towards payment of any sum then owed by the Lessee to the Lessor under
the Lease. All insurance proceeds received on account of a claim under
the Insurances referred to in clause 13.2.3 shall be applied in
discharge of, or in reimbursement of a payment made in discharge of,
the liability to which such claim
relates.

		
	13.12 	Covenants:

The
Lessee shall:

		
	13.12.1 	upon effecting or
renewing any of the Insurances and in addition from time to time upon
receipt of a request from the Lessor to deliver to the Lessor an
insurance certificate demonstrating compliance with this clause
13;

		
	13.12.2 	furnish to the Lessor on
request certified copies of the relevant parts of all documents
constituting, evidencing or regulating the terms of the Insurances or
any of them;

		
	13.12.3 	furnish to the
Lessor forthwith upon the making of arrangements for the same, full
details of any material modification to any of the Insurances adverse
to the interests of the Lessor so far as it affects the Aircraft and
the coverage afforded to parties assured
thereunder;

		
	13.12.4 	furnish to the
Lessor, on request, evidence that each sum payable under or in
connection with any of the Insurances has been
paid;

		
	13.12.5 	furnish to the Lessor, on
request, all reports and data concerning claims made under the
Insurances relating to the subject matter of the
Lease;

		
	13.12.6 	bear any part of any
loss or liability which is to be borne by the insureds under any of the
Insurances and keep the Owner, Lenders and Lessor and each of their
respective officers, directors, employees, agents, successors and
assigns at all times indemnified against any claims, costs, proceedings
or expenses whatsoever in connection with any of the Insurances;
and

		
	13.12.7 	cause each of the brokers
or insurers (as applicable) through or with whom any of the Insurances
were effected to issue to the Owner, Lenders and the Lessor an
undertaking with regard to the Insurances with which it or they is or
are concerned in a form acceptable to the Lessor and to supply
certified copies of all documents constituting, evidencing or
regulating the terms of the same to the Lessor on
request.

		
	13.13 	Negative
undertakings

In connection with the Insurances, the
Lessee shall not and shall procure that the Permitted Sub-Lessee shall
not without the prior written consent of the
Lessor:

		
	13.13.1 	make any material
modification to any of the Insurances (on renewal or otherwise) adverse
to the interests of the Owner, Lenders or Lessor;

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	13.13.2 	in case
of hostilities in any part of the world (whether war be declared or
not) cause or permit the Aircraft to be in any zone declared by the
insurers of the Aircraft in respect of any relevant risk to be a war
zone unless the cover provided by Insurances is in full force and
effect and any additional premiums required by the insurers have been
paid;

		
	13.13.3 	operate the Aircraft at
any time when, or in any place where, it is not insured in compliance
with the provisions of this clause 13 or cause or permit the Aircraft
to be employed in any place or in any manner or for any purpose
inconsistent with the terms of, or outside the cover provided by, any
of the Insurances; and

		
	13.13.4 	settle,
compromise or abandon any claim under any of the Insurances other than
a claim involving an amount not exceeding the Deductible
Amount.

		
	13.14 	Reinsurance

If
the Lessor shall require reinsurance to be effected by the primary
insurers of the Aircraft in the circumstances contemplated by clause
13.2, such reinsurances shall, without prejudice to the right of the
Lessor, approve the form and terms and conditions
thereof:

		
	13.14.1 	if in accordance with
best industry practise, contain a
‘‘cut-through’’ clause in terms satisfactory to
the Lessor; and

		
	13.14.2 	provide for
payment to be made
notwithstanding:

		
	13.14.2.1 	any
bankruptcy, insolvency, liquidation or dissolution of any of the
primary insurers; and/or

		
	13.14.2.2 	that
the primary insurers have made no payment under the primary insurance
policies.

		
	13.15 	AVN 67B
application

Subject to the second paragraph of this
clause 13.15, the Lessor and the Lessee acknowledge that the
endorsements required by this clause 13 generally conform to the
endorsement known as AVN67B. The Lessor hereby agrees that if and to
the extent AVN67B remains a generally accepted form of endorsement in
the international aircraft finance industry, the AVN67B form of
endorsement shall be deemed to satisfy the corresponding provisions of
this clause 13 and, to the extent any provision of this clause 13 is
inconsistent with the AVN67B endorsement, such inconsistent provision
shall be deemed amended to conform to the corresponding requirements of
AVN67B. If and to the extent that changes in AVN67B (or any amendment
or successor to AVN67B) become generally available in the international
insurance market on commercially reasonably terms during the Lease
Period, the Lessee agrees to cause its insurers to incorporate such
changes in its policies as may be reasonably requested by the Lessor;
provided, however, no such change shall adversely affect the rights and
obligations of the Lessee, Owner, Lenders or Lessor hereunder.

If AVN67B is applied, the parties agree that such shall be
amended in order to provide the Lessor with such cover as had the
Lessor not itself operated and maintained the Aircraft, including,
without limitation, by omitting
‘‘repairer’’ in clause 2.3 and omitting
clause 3.3 in its entirety, in each case from the standard AVN67B form
(in its current form).

		
	14 	REQUISITION AND
DEPRIVATION OF
POSSESSION

		
	14.1 	Requisition of hire or
use

If the Aircraft is requisitioned for hire or use by
or under authority of any governmental or other authority (including in
the State of Registration) occurs the Lessee shall, as soon as may be
reasonably practicable after the end of the period for which it is so
requisitioned for hire or use or, as the case may be, after recovery of
possession of the Aircraft, cause it to be in all respects put into the
condition required by the Lease, save when the Lessee or its insurers
has paid an amount equivalent to the Agreed Aircraft Value to the
Lessor in accordance with clause 15.1.

		
	14.2 	Requisition proceeds, requisition for
hire

Subject to no Event of Default having occurred and
is continuing, the Lessee shall be entitled to receive and retain all
Requisition Proceeds in respect of a requisition for hire provided
that, 

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notwithstanding the foregoing, if for any
reason the Lessor receives any such Requisition Proceeds the Lessor
shall be entitled to apply the same to meet any payments due and
payable by the Lessee hereunder before accounting to the Lessee for the
balance of such Requisition
Proceeds.

		
	14.3 	Requisition proceeds,
requisition for title

The Lessee shall take all steps
necessary to ensure that Requisition Proceeds arising on a requisition
of title shall be paid to the Lessor or as it may direct. All
Requisition Proceeds so received by the Lessor or its nominee shall be
applied by the Lessor in satisfaction pro tanto of the Lessee’s
obligations hereunder and any surplus then held by the Lessor shall be
paid to or for the account of the Lessee provided no Event of Default
shall have occurred and be
continuing.

		
	15 	TOTAL
LOSS

		
	15.1 	Occurrence of Total
Loss

If a Total Loss occurs after the Delivery Date,
Lessee shall pay the Agreed Aircraft Value to the Lessor or the Lenders
(as the case may be) on or prior to the earlier of (i) 30 days after
the date of occurrence of the Total Loss and (ii) the date of receipt
of insurance proceeds in respect of that Total
Loss.

		
	15.2 	Transfer of title following
Total Loss

Subject to the rights of any insurers and
reinsurers or other third party, upon irrevocable payment in full to
the Lessor of the Agreed Aircraft Value and all other amounts which may
be or become payable to the Lessor under the Lease, the Lessor shall,
or shall procure that the Owner shall, without recourse or warranty
(except as to freedom from Permitted Liens as set forth in paragraph
(d) of the definition thereof in clause 1.1) transfer to the Lessee or
shall procure that the Owner transfers to the Lessee all of the
Owner’s rights to the Aircraft, on an as-is where-is basis, and
shall at the Lessee's expense, execute and deliver or shall
procure that the Owner executes and delivers such bills of sale and
other documents and instruments as the Lessee may reasonably request to
evidence (on the public record or otherwise) such transfer, free and
clear of all rights of the Lessor, Owner and Lenders. Lessee shall
indemnify Lessor and Owner for all fees, expenses and Taxes incurred by
Lessor or Owner in connection with any such
transfer.

		
	15.3 	Total loss not involving
airframe

Upon the occurrence of an event similar to such
set forth in the definition of Total Loss in clause 1.1 in relation
to;

			
		(i) 	any Engine not installed on
the Airframe or

			
		(ii) 	an Engine
installed on the Airframe not involving a Total Loss of the Airframe
or

			
		(iii) 	any Component not installed
or not involving the Total Loss of the Airframe,

the
Lessee shall give the Lessor prompt written notice thereof and the
Lessee shall pay for the replacement of such Engine or Component as
soon as reasonably possible in accordance with clause
8.5.2.

		
	16 	REDELIVERY OF THE
AIRCRAFT

		
	16.1 	Redelivery

At
the expiry or earlier termination of the Lease Period, the Aircraft
shall be redelivered to the Lessor at the Redelivery Location or such
other location as may be agreed between the Lessor and the Lessee,
comply with the Redelivery Condition Requirements, have no open or
deferred items, comply with all other terms and conditions of the Lease
and have all Aircraft Documents duly maintained in the English
language.

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Upon redelivery of the Aircraft,
the Lessee shall provide to the Lessor all reasonable assistance, and
shall execute and deliver to the Lessor all documents which the Lessor
may reasonably require in order to enable the Lessor to export the
Aircraft from the State of Registration and register the Aircraft on
the register of the country to which the Aircraft is to be exported and
otherwise to satisfy the requirements of the relevant civil aviation
authority.

		
	16.2 	Pre-redelivery
procedure

After completion of the Redelivery Check the
Aircraft may be flown only in connection with redelivery/acceptance
flights and necessary ferry flights to and from the workshop performing
the Redelivery Check. Save for the Lessor’s payment of the
C-Check Costs, the remaining costs of such Redelivery Check and of all
other work necessary to get the Aircraft into the condition required by
the Lease at the time of redelivery to the Lessor, ordinary wear and
tear excepted, shall be borne by the Lessee. All such work shall take
place prior to redelivery. During the Redelivery Check, the Lessee
shall, at its own expense, make the Aircraft and all records relating
to the Aircraft available to the Lessor for inspection in order to
verify that the condition of the Aircraft complies with the provisions
of the Lease. The period allowed for the inspection shall be of
sufficient duration so as to permit the Lessor
to:

			
		(1) 	inspect the structure, Engines,
Components, equipment and accessories of the
Aircraft;

			
		(2) 	inspect the Engines after the
performance of the Test Flight Procedure, including (i) a complete
video borescope inspection of (x) the low pressure and high pressure
compressors and (y) turbine area, including combusters and (ii) engine
condition runs including full take-off power engine run-up undertaken
in accordance with the performance test in the Manufacturer’s
maintenance manual (with the Engines not exceeding corrected limits for
all parameters using temperature corrected charts and power assurance
runs);

			
		(3) 	effect a complete video boroscope
inspection of the APU; and

			
		(4) 	inspect the
Aircraft Documents and all records relating to the
Aircraft.

Furthermore, Lessee acknowledges that the next
operator of the Aircraft will need to inspect the Aircraft, the Engines
and the Aircraft Documents prior to redelivery and Lessee hereby agrees
to cooperate with Lessor and/or such next operator in order to
coordinate and grant access for inspections and/or meetings as
necessary (with the inspections being timed wherever practicable, to
minimise disruption to the scheduled maintenance and operation of the
Aircraft). In this connection, the Lessor shall use employees,
subcontractors or agents of Lessor or an affiliate of Lessor (a
‘‘Lessor Inspector’’) to carry out an
initial visit and inspection for the purpose of gathering and copying
information normally requested by inspectors and providing such to
prospective next operators, so as to minimise the demands on
Lessee/Permitted Sub-Lessee time. If it is necessary for an inspector
of any prospective next operator to visit and inspect the Aircraft such
inspector shall be accompanied by a Lessor Inspector who shall assist
Lessee’s/Permitted Sub-Lessee's personnel during such an
inspection visit. Lessee shall be entitled to obscure commercially
sensitive confidential
information.

		
	16.3 	Redelivery
flight

The Lessee shall perform a redelivery flight for
the Lessor of up to 90 minutes airborne time at the Lessee’s
expense during which the Test Flight Procedure shall be performed. If
agreed by the Lessor, the redelivery flight may be conducted en-route.
The Lessor shall be allowed two of its qualified representatives on
board the Aircraft during such redelivery
flight.

		
	16.4 	Non-compliance

To
the extent that, upon the inspection set out in clause 16.2 and the
redelivery flight set out in clause 16.3, the condition of the Aircraft
and Aircraft Documents does not comply with the provisions hereof
rectification will need to be carried out as soon as possible. The
Lessor may, in its discretion and at the expense of the Lessee, choose
to carry out any such rectification itself. In the event that such
rectification extends beyond the end of the Lease Period and provided

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that, unless and until such rectification is
effected, the Lessor would not be able to immediately put the Aircraft
into commercial operation in the required redelivery configuration, the
Lease Period shall, at the option of the Lessor, be extended and the
provisions of the Lease shall remain in force until such rectification
has been completed; provided however, that the Lessor shall have the
right, after the end of the Lease Period, to take possession of the
Aircraft and demand compensation for direct and documented costs
incurred by the Lessor in connection with such repossession and in
connection with putting the Aircraft and Aircraft Documents in the
condition required by the
Lease.

		
	16.5 	Redelivery
certificate

Upon redelivery and provided that neither
the inspection carried out pursuant to clause 16.2, nor the redelivery
flight referred to in clause 16.3 has revealed that the condition of
the Aircraft does not comply with the provisions of the Lease to the
extent that upon redelivery the Lessor would not be able immediately to
put the Aircraft into commercial operation, the Lessor shall sign a
Redelivery Certificate. In a schedule to the Redelivery Certificate,
the Lessee and the Lessor shall list any defect not caused by the gross
negligence of the Lessor which is to be rectified after the redelivery
flight, the cost of which shall be for the account of the Lessee. Both
parties shall evidence their agreement thereto by signing such
schedule. After completion of the redelivery flight, the cost of any
fuel remaining onboard the Aircraft, in excess of the fuel onboard the
Aircraft on the Delivery Date, shall be reimbursed to the Lessee by the
Lessor and any amount of fuel less than the amount onboard the Aircraft
on the Delivery Date shall be reimbursed by the Lessee to the
Lessor.

		
	16.6 	Disputes regarding
aircraft condition

In the event of any dispute between
the Lessor and the Lessee as to the condition on redelivery of any
Engine, the parties hereto agree to refer such dispute to an
independent engineer nominated by the relevant Manufacturer (who shall
act as an expert and not as an arbitrator) and whose findings shall be
conclusive and binding on the parties hereto. The costs and expenses of
such independent engineer shall be borne by the unsuccessful party to
such
dispute.

		
	16.7 	Modifications

The
Lessee may in accordance with clause 8.5.6, prior to redelivery, remove
any alterations, modifications or additions to the Aircraft (other than
those which may be required for the Aircraft to meet the Redelivery
Condition Requirements), at the Lessee’s expense and down time,
provided that, if the Lessor wishes to retain any such alterations,
modifications or additions, the Lessor and the Lessee shall negotiate
in order to agree a reasonable price to be paid by the Lessor to the
Lessee upon redelivery in respect
thereof.

		
	17 	INDEMNITIES

		
	17.1 	Loss
or damage to aircraft

The Lessee hereby undertakes to
indemnify and hold the Owner, Lenders and Lessor harmless from and
against any and all loss of or damage to the Aircraft during the Lease
Period and agrees, irrespective of the reason for such loss or damage,
except where payment is made by the insurers, to pay to the Lessor any
amount necessary to reinstate, repair or replace as soon as practicable
the relevant part(s) of the Aircraft so that the same is in as good an
operating condition as it was on the Delivery Date (assuming that the
same complied with the requirements of the Lease) and the terms and
conditions of the Lease shall remain in full force and effect. The
indemnification obligation on the Lessee in this clause 17.1 shall not
apply to loss of or damage to the Aircraft that are attributable to the
gross negligence or wilful misconduct of the Owner, Lenders or
Lessor.

		
	17.2 	Losses deriving from the
Lease

The Lessee hereby undertakes to indemnify and hold
harmless the Owner, Lessor and Lenders and their respective successors,
assigns and shareholders, officers, agents and employees (each

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an ‘‘lndemnitee’’
and collectively the ‘‘lndemnitees’’) from and
against any and all claims, actions, damages, losses, costs, charges,
expenses, or payments caused by or arising out of or related, in whole
or in part, directly or indirectly to the operation, maintenance,
condition, possession, registration, import, control, modification,
replacement, delivery, re-delivery, or sale or use of the Aircraft
under the Lease, the Sub-Lease Agreement, the Security Documents and
any other relevant documents at any time from the Delivery Date up to
re-delivery of the Aircraft and agrees to defend or, with the prior
written consent of the Lessor, to settle, any action or proceeding in
respect of any such claim. The Lessor agrees that it shall, at the
Lessee’s expense, provide all assistance reasonably requested by
the Lessee in defending any such action or proceeding. If the Lessee
fails so to defend or settle any such action or proceeding, the Lessee
hereby undertakes to indemnify and hold harmless the Indemnitees from
and against all costs, legal fees, expenses and liabilities occurred in
and in relation to such claims, the investigation thereof and the
defence of any such action or proceeding. The indemnification
obligation on the Lessee in this clause 17.2 shall not apply to claims,
actions, damages, losses, costs, charges, expenses or payments
hereunder against an Indemnitee if such are attributable to the gross
negligence or wilful misconduct of such
Indemnitee.

		
	17.3 	Losses deriving from
default

The Lessee hereby undertakes to indemnify and
hold harmless the Lessor from and against all costs, losses and
expenses, including reasonable legal fees, incurred by it in connection
with  (i) the occurrence of any Event of Default, (ii) delivery
and acceptance of the Aircraft not taking place on the Scheduled
Delivery Date by reason of the non-fulfilment of any of the conditions
precedent applicable to the Lessee, (iii) any action brought by the
Lessor to recover any amount due and unpaid hereunder or to recover
possession of the Aircraft, whether such action progresses to judgement
or not or (iv) preventing or attempting to prevent the arrest,
confiscation, seizure, impounding, forfeiture or detention of the
Aircraft or securing the release of the
same.

		
	17.4 	Continued insurance
coverage

With respect to the Lessee’s liability
under the indemnity set out in clause 17.2, the Lessee shall ensure
that the Indemnitees are covered by the Lessee’s or Permitted
Sub-Lessee’s general liability insurance after the expiry or
earlier termination of the Lease Period or, if the Lessee ceases to
operate aircraft, to effect and maintain insurance with respect to such
liability in any event for such period as the Lessor may reasonably
request (but not exceeding more than 2 years or the next Airframe
Structural Check which is due, whichever comes first), which provides
for each Indemnitee to be named as additional insured. The
Lessee’s obligation in this clause 17.4 shall not be affected by
the Lessee ceasing to be lessee of the Aircraft and/or any of the
Indemnitees ceasing to have any interest in respect of the
Aircraft.

		
	17.5 	Indemnity
survival

The indemnity given in this clause 17 shall
survive the termination of the Lease Period with respect to any claims
or cause of action arising out of any event occurring on or prior to
redelivery of the Aircraft irrespective of whether such claim is raised
during such period or
thereafter.

		
	18 	DEFAULT

		
	18.1 	Events
of Default

Each of the following events shall constitute
an Event of Default:

		
	18.1.1 	the Lessee
fails to pay any sum due and payable by it under the Lease or any
Security Document on the due date thereof and such failure has not been
remedied with *** from receipt of notice of such payment failure, or,
in the case of sums payable on demand, within *** of
demand;

		
	18.1.2 	any default by the
Lessee or the Permitted Sub-Lessee under the Security
Documents;

		
	18.1.3 	any default by the
Lessee under the Sub-Lease Agreement, except if remedied within any
applicable grace periods;

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	18.1.4 	if
applicable, the Lessee fails to ensure that the Deposit is, at all
times during the entire Lease Period, in an amount as referred to in
the definition of ‘‘Deposit’’
notwithstanding that the Lessor may have applied the Deposit, or part
thereof, in making good any amount or amounts owed by the Lessee under
the Lease in accordance with clause
6.2.1;

		
	18.1.5 	if applicable, the Lessee
fails to ensure that the Letter of Credit provides, at all times during
the entire Lease Period, the Lessor with full security in the amount
referred to in the definition of ‘‘Letter of
Credit’’ notwithstanding that the Lessor has drawn
against the Letter of Credit in making good any amount or amounts owed
by the Lessee under the Lease in accordance with clause 6.2.2;

		
	18.1.6 	the Lessee or the Permitted
Sub-Lessee fails to obtain or maintain the Insurances for any reason or
if any insurer in respect of the Insurances cancels the Insurances or
disclaims liability for any
reason;

		
	18.1.7 	the Lessee or the
Permitted Sub-Lessee sub-leases or otherwise parts with possession of
the Aircraft (save as expressly authorised hereunder) without the prior
written consent of the
Lessor;

		
	18.1.8 	any representation,
warranty or statement made or deemed to be made by or on behalf of the
Lessee herein or otherwise in connection with the Lease or the Security
Documents or in any certificate, statement, notice, opinion or other
document given, made or furnished to the Lessor pursuant to or in
connection herewith proves to be untrue or incorrect (as at the date
when, or when deemed to have been, given, made, furnished or entered
into) in any material respect or any condition, event or circumstance
shall occur or exist as a result of which if any of such
representations, warranties or statements had been repeated immediately
thereafter by reference to the facts and circumstances existing at the
time of such repetition, such representation, warranty or statement
would not be true and correct in any material respect, provided,
however, that if such event has not been caused by the Lessee’s
gross negligence or wilful misconduct then the Lessee shall be
permitted fifteen (15) days (from receipt of a written or facsimiled
advice of such breach from the Lessor) to correct such
event;

		
	18.1.9 	if any consent, approval,
order, authorisation, registration or filing required to authorise, or
required in connection with, the execution, legality, validity,
enforceability or admissibility in evidence of the Lease, the Sub-Lease
Agreement or the Security Documents, or the performance by the Lessee
or the Permitted Sub-Lessee of any of their respective obligations
hereunder or thereunder is modified in a manner materially prejudicial
to the Owner, Lessor or Lenders or is not granted or is revoked,
withdrawn or terminated or expires and is not renewed or otherwise
ceases to be in full force and
effect;

		
	18.1.10 	if the Lessee shall
repudiate the Lease or any of the Security Documents or do or cause or
permit to be done any act or thing evidencing an intention to repudiate
any of those;

		
	18.1.11 	if an event of
default or termination event, howsoever described, occurs under the
Other Leases or under any other material agreement between (i) the
Lessee or any of its Subsidiaries and  (ii) the Lessor or any of
its Subsidiaries or any company of which the Lessor is a Subsidiary, in
each case, except if remedied within any applicable grace periods or,
if no such grace period,  5 Business Days after receipt of notice
by the Lessee from the
Lessor;

		
	18.1.12 	any Indebtedness of the
Lessee in excess of USD *** becomes due or is declared due prior to the
date it would otherwise have become due and is not paid on the due date
and has not been remedied within 10 Business
Days;

		
	18.1.13 	if an event of default
(or equivalent) is duly declared by the relevant lessor under any other
aircraft lease agreements, entered into by the Lessee which has not
been remedied within  10 Business
Days;

		
	18.1.14 	a creditor attaches or
takes possession of, or a distress, execution, sequestration or other
process is levied or enforced upon, or issued against, a material
portion of the assets of the Lessee;

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	18.1.15 	the
Lessee suspends, or threatens to suspend, payment of its debts or is
unable, or is deemed by an appropriate authority or in accordance with
applicable law to be unable, to pay its debts or admits in writing its
inability to pay its debts as they fall due or a general moratorium is
imposed on the payment of any debts of the Lessee or the Lessee or
enters into negotiations with one or more of its creditors with a view
to the general readjustment or rescheduling of any of its debts or
proposes or enters into any composition or other arrangement for the
benefit of its creditors generally or any class of creditors or
proceedings with respect to the Lessee are commenced under applicable
law relating to reconstruction or readjustment of
debts;

		
	18.1.16 	the Lessee takes any
action or any legal proceedings are commenced and are not discharged,
dismissed or stayed within fifteen (15) days or other steps taken for
(i) the Lessee to be adjudicated or found bankrupt or insolvent, (ii)
the winding-up or dissolution of the or (iii) the appointment of a
liquidator, trustee, receiver, administrator, administrative receiver
or similar officer of the Lessee or the whole or any part of its
assets; or

		
	18.1.17 	to the extent not
due to the act or omission of the Owner or Lessor, the Aircraft is
arrested, confiscated, seized, taken in execution, impounded,
forfeited, detained in exercise or purported exercise of any possessory
lien or other claim, or otherwise taken from the possession of the
Lessee or the Sub-Lessee, and the Lessee fails to procure the release
of the Aircraft as soon as possible and in no event later than within
five (5) Business Days;

		
	18.1.18 	the
Lessee defaults in the due performance or observance of any of its
covenants, undertakings or obligations under the Lease and the Security
Documents (save for such covenants, undertakings or obligations where
non-compliance constitutes an Event of Default pursuant to the
foregoing provisions of this clause 18.1) and, if such default is
capable of remedy, the Lessee fails to remedy such default to the
satisfaction of the Lessor within a period of fifteen (15) Business
Days after receipt by the Lessee of notice from the Lessor requiring
the same to be remedied;
and

		
	18.1.19 	***

		
	18.2 	Following
an Event of Default

At any time after the occurrence of
an Event of Default the Lessor may, with or without notice to the
Lessee:

		
	18.2.1 	for the Lessee’s
account, do anything which may reasonably be required to remedy such
Event of Default and recover from the Lessee all costs and expenses
incurred in so doing;

		
	18.2.2 	enforce
its rights under the Security
Documents;

		
	18.2.3 	proceed by
appropriate court action to seek an order for immediate and final
repossession of the Aircraft and to export the Aircraft or an order to
otherwise enforce performance by the Lessee of the applicable covenants
and provisions of the Lease or to recover damages for the breach
thereof;

		
	18.2.4 	treat the occurrence of
the Event of Default as a repudiation by the Lessee of the Lease and
immediately terminate the Lease Period whereupon the same shall be
deemed automatically and immediately terminated
by

		
	18.2.4.1 	the retaking of possession
of the Aircraft and the Lessee agrees that the Lessor or its
representatives or agents may for this purpose enter upon any premises
belonging to or in the occupation or under the control of the Lessee
where the Aircraft may be located or cause the same to be redelivered
to the Lessor at such location as the Lessor may require and the Lessor
shall be entitled to act as attorney for the Lessee in causing such
redelivery or in directing pilots to fly the Aircraft to the required
location for redelivery thereof to the Lessor and shall have all the
powers and authorisation legally necessary for taking such action. In
the event of exercise by the Lessor of its powers under this clause
18.2.4.1 such termination shall be deemed to take effect on the taking
of possession by the Lessor at the required location;
or

		
	18.2.4.2 	serving notice of such
termination on the Lessee specifying the occurrence which is giving
rise to such Event of Default.

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	18.3 	After
termination due to Event of Default

Following
termination of the Lease Period, the Lessee shall redeliver possession
of the Aircraft to the Lessor at such location as the Lessor may
require and otherwise in accordance with the requirements of clause 16.
Upon such termination, all rights of the Lessee hereunder shall
henceforth absolutely cease and terminate but without prejudice to the
Lessee’s obligations under the Lease all of which shall continue
in full force and effect and the Owner and/or Lessor shall be entitled
to sell or otherwise deal with the Aircraft as if the Lease had never
been made.

		
	18.4 	Cumulative
rights

No remedy referred to in this clause 18 is
exclusive, but each remedy shall be cumulative and in addition to any
other remedy referred to herein or otherwise available to the Lessor.
The exercise or partial exercise by the Lessor of any of its remedies
hereunder shall not preclude any other or further exercise thereof or
the exercise by the Lessor of any one or more of such other remedies.
No failure or delay of the Lessor in exercising any right hereunder
shall operate as waiver thereof or of any one or more of such other
remedies.

		
	18.5 	Claim following Event of
Default

***

		
	19 	REPRESENTATIONS
AND WARRANTIES

		
	19.1 	Lessee
representations

Lessee makes the representations and
warranties set out in below. Lessee understands that these statements
must be true, both when the Lease is signed and on the Delivery
Date.

		
	19.1.1 	Status:    It
has been properly formed as a company with limited liability and has
since been maintained according to all laws and regulations applicable
to the
Lessee.

		
	19.1.2 	Non-Conflict:    In
entering into the Lease and carrying out its obligations, it does not
contravene or breach any law or regulation applicable to
Lessee.

		
	19.1.3 	Power and
Authority:    It has the authorisations it needs to enter into
the Lease and to carry out its obligations, and it has the power to
enter into the Lease, the Sub-Lease Agreement and the Security
Documents.

		
	19.1.4 	Legal
Validity:    Its obligations under the Lease, the Sub-Lease
Agreement and the Security Documents are legal, valid and
binding.

		
	19.1.5 	No Event of
Default: No Event of Default has occurred and is continuing or
would occur because of delivery of the Aircraft under the
Lease.

		
	19.2 	Lessor
representations

Lessor makes the representations and
warranties set out in below. Lessor understands that these statements
must be true, both when the Lease is signed and on the Delivery
Date.

		
	19.2.1 	Status:    It
has been properly formed as a company with limited liability and has
since been maintained according to all laws and regulations applicable
to the
Lessor.

		
	19.2.2 	Non-Conflict:    In
entering into the Lease and carrying out its obligations, it does not
contravene or breach any law or regulation applicable to the
Lessor.

		
	19.2.3 	Power and
Authority:    It has the authorisations it needs to enter into
the Lease and to carry out its
obligations.

		
	19.2.4 	Legal
Validity:    Its obligations under the Lease are legal, valid
and binding.

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	20 	COMPLETE
AGREEMENT

		
	20.1 	Complete
agreement

All prior negotiations between the Lessor and
the Lessee are merged into the terms of the Lease, and the Lease
supersedes all preceding correspondence, arrangements and stipulations
between the parties concerning the subject matter hereof and can be
amended only by written instrument signed by both
parties.

		
	21 	NOTICES

		
	21.1 	Notices

All
notices, requests, demands or other communications to or upon the
respective parties hereto shall be deemed to have been duly given or
made:

			
		(a) 	if delivered by hand, at the time of
delivery;

			
		(b) 	if given or made, by facsimile,
when sent and addressed and upon receipt of identifying answer back as
follows:

			
		(i) 	if to the Lessor
to:

Maersk Aircraft A/S
 Copenhagen Airport
South
DK-2791 Dragoer

Denmark

Telefax
no. +45 32 31 44 95
Attention: The
President

			
		(ii) 	if to the Lessee
to:

Sterling Airlines A/S
Copenhagen
AirportSouth
DK-2791 Dragoer
Denmark

Telefax no.
+45 32 89 07 32
Attention: The President

or such
other addresses as the Lessor or the Lessee may from time to time
specify in writing to the other
party.

		
	22 	ASSIGNMENT

		
	22.1 	Lessee
no assignment

The Lease shall be binding upon and inure
to the benefit of each of the parties hereto and their respective
successors and permitted assigns provided that the Lessee may not
assign any of its rights or transfer or purport to transfer any of its
obligations hereunder.

		
	22.2 	Lessor
assignment

The Lessor shall be entitled to assign any of
its rights and benefits in and over the Aircraft and under the Lease
and the Security Documents as security.

Furthermore, the
Lessor shall be entitled to assign, without the Lessee’s
consent, all its rights and obligations under this Lease and the
Security Documents, provided that (i) the assignee shall be a
internationally reputable company, (ii) no such assignment shall give
rise to any obligation on the part of the Lessee to make any payment
which it would not have been required to make had the Lessor not
effected such assignment, (iii) such assignment shall be registered in
all registries and agencies in the State of Registration as may be
required by applicable law and (iv) the assignment shall not interfere
with the quiet enjoyment of the Lessee.

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	23 	APPLICABLE LAW AND
JURISDICTION

		
	23.1 	Governing
law

The Lease is governed by and shall be construed in
accordance with the Governing
Law.

		
	23.2 	Jurisdiction

For
the benefit of the Lessor, the Lessee irrevocably agrees that any legal
action or proceedings arising out of or in connection with the Lease
against the Lessee or any of its assets may be brought before the
Maritime and Commercial Court of Copenhagen (‘‘Sø-
og Handelsretten i København’’), Denmark, which
shall have jurisdiction to settle any disputes arising out of or in
connection with the Lease and irrevocably and unconditionally submits
to the jurisdiction of the Danish courts. The submission to such
jurisdiction shall not (and shall not be construed so as to) limit the
rights of the Lessor to take proceedings against the Lessee in the
courts of any other competent jurisdiction, nor shall the taking of
proceedings in any one or more jurisdictions preclude the taking of
proceedings in any other jurisdiction, whether concurrently or not. The
Lessee irrevocably waives any objection it may now or hereafter have to
the laying of venue of any action or proceeding in any court and any
claim it may now or hereafter have that any action or proceeding has
been brought in an inconvenient forum. Each of the Lessor and the
Lessee agrees that only the Maritime and Commercial Court of
Copenhagen, Denmark and no other courts shall have jurisdiction to
determine any claim which the Lessee may have against the Lessor
arising out of or in any way connected with the Lease .

		
	23.3 	No immunity

The Lessee
agrees that in any legal action or proceedings against it or its assets
in connection with the Lease and/or the Security Documents no immunity
from such legal action or proceedings (which shall include, without
limitation, suit, attachment prior to judgment, other attachment, the
obtaining of judgment, execution or other enforcement) shall be claimed
by or on behalf of the Lessee or with respect to its assets,
irrevocably waives any such right of immunity which it or its assets
now have or may hereafter acquire or which may be attributed to it or
its assets and consents generally in respect of any such legal action
or proceedings to the giving of any relief or the issue of any process
in connection with such action or proceedings including, without
limitation, the making, enforcement or execution against any property
whatsoever, (irrespective of its use or intended use) of any order or
judgment which may be made or given in such action or
proceedings.

		
	24 	COSTS

		
	24.1 	Costs

The
Lessor shall prepare lease agreement documentation and be responsible
for its own review (including legal expenses). The Lessee shall be
responsible for its review (including legal expenses) and shall pay all
its expenses associated with the transaction and any costs which may
result from registration, including registration of the Aircraft with
the Aviation Authority, and other public transactions which may be
advisable or necessary to complete from time to time to protect the
ownership interests and the interests of the Owner, Lessor and Lenders
in the Aircraft.

		
	25 	TIME OF THE
ESSENCE

		
	25.1 	Time of the
essence

Time shall be of the essence in relation to the
performance by the Lessee of all of its obligations hereunder, subject
to any grace periods expressly agreed by the
Lessor.

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	26 	RIGHTS OF THIRD
PARTIES

		
	26.1 	No third party
rights

No term of the Lease is enforceable by a person
who is not party to the Lease.

		
	27 	EXECUTION
PAGE

IN WITNESS WHEREOF this Aircraft Lease Agreement
has been duly executed by the duly authorised representatives of the
parties hereto on the date first above
written.

		
	27.1 	Maersk Aircraft
A/S

			
		By: 	/s/ Gert
Weisenstein                                

			
		Its: 	Attorney-in-fact                                        

			
		Name: 	Gert
Weisenstein                                      

		
	27.2 	Sterling
Airlines
A/S

										
	 			By:			/s/
Richard O. Richardsson, as attorney-in-fact			/s/ Knud K.
Pedersen
	 			Its:			for
Almar Orn Hilmarsson, its CEO			VP,
COO
	 			Name:			Richard
O. Richardsson			Knud K.
Pedersen
	

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Annex A

Form of Delivery
Acceptance Certificate

         September
2005

Maersk Aircraft A/S
Copenhagen Airport
South
DK-2791 Dragoer
Denmark

This Acceptance
Certificate is executed and delivered pursuant a specific aircraft
lease agreement dated          September  2005 between
Maersk Aircraft A/S as lessor and Sterling Airlines A/S as lessee (the
‘‘Agreement’’). Words and expressions
defined in the Agreement shall, except where the context otherwise
requires, have the same respective meanings when used in this
Acceptance Certificate.

The Lessee hereby irrevocably and
unconditionally confirms and agrees
that:-

		
	(a) 	on the date hereof at
                                                                
and at                  hours (local) the Aircraft more
particularly described in schedule 1 hereto was delivered to and
irrevocably and unconditionally accepted by the Lessee, the Lease
Period has commenced and henceforward the Aircraft shall be subject to
the terms and conditions of the
Agreement;

		
	(b) 	subject to the defects
referred to in schedule 2 (including the damage chart) and schedule 3
hereto, the Aircraft complies fully with the requirements of the
Agreement and is fully satisfactory to the
Lessee;

		
	(c) 	the representations and
warranties set forth in clause 19.1 of the Agreement are true, accurate
and fully observed as if the same had been made and given on and as of
the date hereof with respect to the facts and circumstances existing as
at the date hereof;

		
	(d) 	no Event of
Default has occurred and is continuing.

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Schedule 1 to Annex A, description
of Aircraft

One (1) Boeing B737-700 aircraft and two (2)
CFM56-7B22 aircraft engines:-

				
	Airframe
Serial No.			Engine Serial
Nos.
	28010			874956
	 			874957
	

Fuel
Status:        Kilos/lbs
                     ;
and

ACCEPTANCE
DETAILS:

																			
	AIRFRAME			DATE			FLIGHT
HOURS			CYCLES
	    			    			    			SINCE
NEW			SINCE LAST OH			SINCE NEW			SINCE LAST
OH
	    			    			    			 			 			 			 
	

																			
	LANDING

GEAR			P/N			S/N			FLIGHT
HOURS			CYCLES
	 			 			 			SINCE
NEW			SINCE LAST OH			SINCE NEW			SINCE LAST
OH
	Left
Gear			 			 			 			 			 			 
	Right
Gear			 			 			 			 			 			 
	Nose
Gear			 			 			 			 			 			 
	

																			
	ENGINES			TYPE			S/N			FLIGHT
HOURS			CYCLES
	 			 			 			SINCE
NEW			SINCE LAST OH			SINCE NEW			SINCE LAST
OH
	LH
Engine			 			 			 			 			 			 
	RH
Engine			 			 			 			 			 			 
	

																			
	AUXILIARY
POWER UNIT			P/N			S/N			APU
HOURS			AIRFRAME
HOURS
	 			 			 			SINCE
NEW			SINCE LAST OH			SINCE NEW			SINCE LAST
OH
	 			 			 			 			 			 			 
	

		
	Interior 	Equipment:

LOPA
– attached   ______________________

Emergency drawing
– attached   ______________________

Schedule
2 to Annex A, damage chart

Schedule 3 to Annex A,
cosmetic damage chart

Signed for and on behalf of
the Lessee

By:

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Annex B

Aircraft
Specification

One (1) Boeing B737-700 aircraft, airframe
manufacturer’s serial number 28010 with two (2) installed
CFM56-7B22 aircraft engines, engine manufacturer’s serial
numbers 874956 and 874957.

The Aircraft shall comply with
Boeing Detailed Specification D6-38808-2, revision D as modified from
time to time to reflect changes as a result of selected optional
features, service bulletins, modifications and Airworthiness
Directives.

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Table of Contents
Annex C

Aircraft
Documents

The following documentation and technical
records and publications shall be delivered/redelivered with the
Aircraft:

		
	A. 	Certificates

			
		– 	Certificate
of Airworthiness

			
		– 	Certificate of
Registration

			
		– 	Noise
Certificate

			
		– 	Radio
License

B.    Aircraft Status
Records

			
		– 	Technical Log Book

			
		– 	Airframe Log Book (if
applicable)

			
		– 	Aircraft Modification Log
Book (if applicable)

			
		– 	Aircraft current
Time & Cycles, with daily utilization reports (Master Time
Log)

			
		– 	Aircraft maintenance Inspection and
Status Report, including time – to–go and last compliance
times

			
		– 	Airworthiness Directive Status and
Summary Report (terminated and repetitive) for airframe, engines,
components and
appliances

			
		– 	Manufacturer’s Service
Bulletin Status and Summary Report

			
		– 	Local
Modification Status and Summary Report

			
		– 	Current Weighing Report, including current
Operational Weights

			
		– 	Damage
Chart

			
		– 	Accident and Incident
report

			
		– 	Service Difficulty
report

			
		– 	List of Deferred Maintenance Items
and Repetitive Inspections resulting from known aircraft or engine
defects

		
	C. 	Aircraft Maintenance
Records

			
		– 	Test Flight
Reports

			
		– 	Last two Boeing C-Check performed
(or the equivalent) including complete cycle of all lower level
maintenance checks and last lower level maintenance
check

			
		– 	Original Work Cards for all
historical major maintenance work packages (Including C and
D-check)

			
		– 	All Time Controlled Inspection
Maintenance Records

		
	D. 	Aircraft
History Records

			
		– 	Aircraft Structural
Repair History for all structural repairs including FAA Form 8110-3 and
FAA Form 337 where repairs outside
SRM

			
		– 	Major Repair and Alteration
Records

–    Aircraft Paint-Strip History including
Balancing Reports for flying control surfaces

			
		– 	Airworthiness Directive Records and
Compliance Documentation for airframe, components and appliances (dirty
fingerprints)

40

Table of Contents
			
		– 	Modification
Records Manufacturer’s Service Bulletins and method of
compliance (dirty fingerprints)

			
		– 	Local
Modification Records including Engineering Orders with Substantiating
Data and EASA approval for Major Modifications (dirty
fingerprints)

			
		– 	Life Limited Parts Status
(compliance data and time due off) including traceability to origin and
manufacture (dirty fingerprints)

			
		– 	Flight
Logs since new

		
	E. 	Engine Records (for
each engine)

			
		– 	Log
books

			
		– 	Overhaul and Repair Documents for
all shop visit (dirty fingerprints)

			
		– 	Life
Limited Parts Status (compliance data and time due off) including
traceability to origin and manufacture (dirty
fingerprints)

			
		– 	Engine Disk
Sheet

			
		– 	Engine Data Submittal
Sheet

			
		– 	Current (last) Test Cell Report

			
		– 	Airworthiness Directive Records and
Compliance Documentation (dirty
fingerprints)

			
		– 	Modification Records
Manufacturer’s Service Bulletins and method of compliance (dirty
fingerprints)

			
		– 	Borescope Inspection
Reports

			
		– 	Engine Trend Monitoring Reports
(take-off and cruise data)

		
	F. 	APU
Records

			
		– 	Log Book (updated with time and
method of determination the
time)

			
		– 	Overhaul and Repair Documents for
all shop visit (dirty fingerprints)

			
		– 	Life
Limited Parts Status (if applicable) including traceability to origin
and manufacture (dirty
fingerprints)

			
		– 	Modification Records
Manufacturer’s Service Bulletins and method of compliance (dirty
fingerprints)

			
		– 	Current (last) Test Cell
Report

			
		– 	Borescope Inspection
Reports

		
	G. 	Component Records (including Components
installed Engines and APU)

			
		– 	Component
Status Report (component fitted listing showing part number, serial
number, position, time since new, time since overhaul, cycles since
new, cycle since overhaul and time due off)

			
		– 	Component Documentation including
serviceable tags (EASA/JAA Form 1, FAA Form 8130-3), shop visit reports
and back-up documentation (traceability to origin and manufacture/last
overhaul as applicable for all life limited components) for components
replaced since delivery from Boeing

41

Table of Contents
		
	H. 	Manuals

–    1    Airplane
Flight Manual

–    1    Manufacturer’s
Flight Crew Operating Manual

–    2    Quick
Reference Handbook

–    1    Master Minimum
Equipment List

–    1    Weight and Balance Manual
including Supplement

–    1    Wiring Diagram
manual

–    1    Illustrated Parts
Catalog

–    1    Aircraft Maintenance
Manual

–    1    Aircraft System Schematics
Manual

–    1    Fault Isolation manual
(FIM)

–    1    Structural Repair
Manual

–    1    Boeing Maintenance Planning
Document

–    1    Boeing Aircraft Detailed
Specification

–    1    Vendor Manual
Seats

–    1    Vendor Manual
Galleys

–    1    Vendor Manual
Ovens

–    1    Vendor Manual Water
boilers

I.    Miscellaneous Technical
Documents

–    Maintenance Program
Specification/Requirements

–    Certified (FAA, JAA or
EASA approved) Interior Configuration Drawing
(LOPA)

–    Certified Emergency Equipment Drawing (FAA,
JAA or EASA approved)

–    Copy of STC’s (if
applicable)

–    Current Compass Swing
Report

–    Boeing Interior
Specification

–    Electrical Load Analysis Report

J.    Delivery Documentation ex
Boeing

–    Manufacturers Delivery
Documents

			
		– 	Export Certificate of
Airworthiness issued following manufacture in respect of the Airframe
and Engines

–    Aircraft Readiness
Log

–    Landing Gear Log (if
applicable)

–    Rigging
Brochure

–    Miscellaneous
Brochure

–    Fuel Measuring
Brochure

–    Boeing Weighing
Report

–    Boeing Production Test Flight
Report(s)

42

Table of Contents
–    Boeing PRR
Listing

–    Health
Certificate

–    Original FAA Airworthiness Directive
Compliance List

–    CFMI Engine Data Submittal Booklet
for each Engine

43

Table of Contents
Annex D

Conditions
Precedent Requirement

PART
I

		
	1. 	Preliminary
Conditions

Lessor shall receive from the Lessee, not
later than two Business Days prior to the Scheduled Delivery Date, each
of the following, satisfactory in form and substance to
Lessor:

			
		a. 	Opinions: If the
State of Registration or State of Incorporation is not Denmark,
evidence that legal opinions, satisfactory to the Lessor, will be
issued on the Delivery Date by independent legal counsel acceptable to
Lessor from the jurisdiction of the State of Registration and/or State
of Incorporation as the Lessor shall reasonably require and relating to
the Lease, the Security Documents, the Sub-Lease Agreement, execution,
enforcement, perfection, security, repossession and tax
issues;

			
		b. 	Letter of Credit:
If applicable, a draft Letter of
Credit.

			
		c. 	Signatory
evidence: Evidence that the persons having executed or shall
execute the Lease, the Security Documents, the Sub-Lease Agreement and
any other documents and agreements relative thereto were and are duly
authorised to do so on behalf of the party to such document or
agreement (save for the Lessor and the
Owner).

			
		d. 	Corporate
documents: Certified copies of the Lessee’s articles of
association.

			
		e. 	Insurances:
Draft certificates of insurance with required endorsement and other
evidence satisfactory to the Lessor that Lessee or the Permitted
Sub-Lessee is taking the required steps to ensure due compliance with
the provisions of the Lease as to Insurances with effect on and after
the Delivery
Date

			
		f. 	Approvals: Evidence
of the issue of each approval, license and consent which may be
required in relation to, or in connection with the performance by
Lessee of any of its obligations under the Lease.

			
		g. 	Licenses: copies of the
Lessee's and Permitted Sub-Lessee’s air transport license,
air operator's certificates and all other licenses, certificates
and permits required by the Lessee and the Permitted Sub-Lessee in
relation to, or in connection with, the operation of the
Aircraft;

			
		h. 	Air Traffic
Control: A letter from the Lessee and the Permitted Sub-Lessee in
the form of Annex
H;

			
		i. 	Deregistration power of
attorney: A deregistration power of attorney from the Lessee and
the Permitted Sublessee in the form of Annex
J.

			
		j. 	General: Such other
documents as the Lessor may reasonably
require.

		
	2. 	Final
Conditions

The Lessor shall receive on or before the
Delivery Date each of the
following:

			
		a. 	Acceptance
Certificate: The Acceptance Certificate, dated and fully
completed, and executed by Lessor and
Lessee;

			
		b. 	Opinions: The
signed original of each of the legal opinions referred to above and
dated on the Delivery Date;

			
		c. 	Payments: All sums due to
the Lessor under the Lease on or before the Delivery Date including the
first payment of Rent and Deposit (if
applicable);

			
		d. 	Letter of
Credit: The Letter of Credit (if
applicable):

			
		e. 	Insurances:
Certificates of insurance with required endorsement and other evidence
satisfactory to the Lessor that Lessee or the Permitted Sub-Lessee is
taking the required steps to ensure due compliance with the provisions
of the Lease as to Insurances with effect on and after the Delivery
Date;

44

Table of Contents
			
		f. 	Security
Documents: The Security
Documents;

			
		g. 	Filings:
evidence that on the Delivery Date all filings, registrations,
recordings and other actions have been or will be taken which are
necessary or advisable to ensure the validity, effectiveness and
enforceability of the Lease, the Sub-Lease Agreement and the Security
Documents and to protect the rights of the Owner and the Lessor;

			
		h. 	Lease Assignment:
acknowledgment of notice of assignment of the Lease in favour of the
Lenders in such form as the Lessor may reasonably require (if
applicable); and

			
		i. 	General:
Such other documents as Lessor may reasonably
require.

PART
II

		
	3. 	Lessee shall receive from the
Lessor, not later than two Business Days prior to the Scheduled
Delivery Date, each of the following, satisfactory in form and
substance to Lessee:

			
		a. 	Signatory
evidence: Evidence that the persons having executed or shall
execute the Lease and any other documents and agreements relative
thereto were and are duly authorised to do so on behalf of the party to
such document or agreement (save for the
Lessee).

			
		b. 	Corporate
documents: Certified copies of the Lessor’s articles of
association.

			
		c. 	General:
Such other documents as the Lessee may reasonably
require.

		
	4. 	Final
Conditions

The Lessee shall receive on or before the
Delivery Date each of the
following:

			
		a. 	Acceptance
Certificate: The Acceptance Certificate, dated and fully
completed, and executed by Lessor and
Lessee;

			
		b. 	Assignment of
Warranties; The assignments of warranties referred to in clause
12.1, it being understood that the Lessee shall reasonably accept that
such may not be available and may be delivered after Delivery;
and

			
		c. 	Lease declaration:
The lease declaration referred to in clause 9.1 in a format reasonably
acceptable to the Lessee, duly executed on behalf of the Lessor and
capable of being registered with first priority with the Danish
Register of Rights over
Aircraft.

			
		d. 	General: Such
other documents as Lessee may reasonably
require.

45

Table of Contents
Annex E

Form of Redelivery
Acceptance Certificate

To: The
Lessee                                                            (Redelivery
Date)

This Redelivery Certificate is executed and
delivered pursuant to a specific aircraft lease agreement dated
                             2005 (the
‘‘Agreement’’) between Maersk Aircraft A/S
as lessor and Sterling Airlines A/S as lessee. Words and expressions
not otherwise defined in this Redelivery Certificate shall have the
same meanings as given to them in the Agreement.

The
Lessor hereby confirms that:-

		
	(a) 	on
the date hereof at
                                                        
and at              hours (local) the Aircraft more
particularly described in schedule 1 hereto was redelivered to and
accepted by the Lessor; and

		
	(b) 	the
Aircraft complies fully with the requirements of clause 16 of the
Agreement save only for such defects (if any) as set forth in schedule
2 hereto, such defects to be rectified at the cost of the
Lessee.

46

Table of Contents
Schedule 1 to Annex E, description
of Aircraft

One (1) Boeing B737-700 aircraft and two (2)
CFM56-7B22 aircraft engines:-

				
	Airframe
Serial
No.			Engine
Serial
Nos.
	28010			874956
	 			874957
	

Fuel
Status:    Kilos/lbs
                     ;
and

ACCEPTANCE
DETAILS:

																
	AIRFRAME			DATE			FLIGHT
HOURS			CYCLES
	 			 			SINCE
NEW			SINCE LAST OH			SINCE NEW			SINCE LAST
OH
	 			 			 			 			 			 
	

																			
	LANDING
GEAR			P/N			S/N			FLIGHT
HOURS			CYCLES
	 			 			 			SINCE
NEW			SINCE LAST OH			SINCE NEW			SINCE LAST
OH
	Left
Gear			 			 			 			 			 			 
	Right
Gear			 			 			 			 			 			 
	Nose
Gear			 			 			 			 			 			 
	

																			
	ENGINES			TYPE			S/N			FLIGHT
HOURS			CYCLES
	 			 			 			SINCE
NEW			SINCE LAST OH			SINCE NEW			SINCE LAST
OH
	LH
Engine			 			 			 			 			 			 
	RH
Engine			 			 			 			 			 			 
	

																			
	AUXILIARY
POWER UNIT			P/N			S/N			APU
HOURS			AIRFRAME
HOURS
	 			 			 			SINCE
NEW			SINCE LAST OH			SINCE NEW			SINCE LAST
OH
	 			 			 			 			 			 			 
	

		
	Interior 	Equipment:

LOPA
– attached   ______________________

Emergency drawing
– attached   ______________________

Schedule
2 to Annex E, damage chart

Signed for and on behalf
of

Maersk Aircraft A/S as
lessor

By:

Signed for and on behalf of the
Lessee

By:

47

Table of Contents
Annex F

General Condition
Requirements –
Redelivery

***

48

Table of Contents
Annex G

Specific Condition
Requirements – Redelivery

The below conditions shall
amend or be supplemental to (as the case may be) Annex
F.

***

49

Table of Contents
Annex H

Letter of
Authorisation

(to be typed on headed notepaper of the
Lessee and Permitted Sub-Lessee)

to:

European Organisation for the Safety of Air
Navigation (‘‘Eurocontrol’’)

Rue
de Loi 72

B-1040
Brussels

Belgium

to:

[   ]
Airport

[address]

to:

whom
it may concern

Dear Sirs

Pursuant to the
terms of an Aircraft Lease Agreement (the
‘‘Lease’’) dated         
September  2005 between Maersk Aircraft A/S (the
‘‘Lessor’’) and Sterling Airlines A/S (the
‘‘Lessee’’) [and pursuant to the terms
of a further Aircraft Sub-Lease Agreement (the
‘‘Sub-Lease’’) dated         
September  2005 between the Lessee and ourselves] in respect
of one Boeing B737-700 aircraft MSN 28010 and Danish registration marks
OY-MRG (the ‘‘Aircraft’’), the Lessor has
agreed to lease to the Lessee [and the Lessor has consented to the
further sub-lease from the Lessee to ourselves of the Aircraft for the
Lease Period stated in the Lease and the Sub-Lease]. Under the
Lease [and Sub-Lease] we are required to and hereby request
and authorise you to provide to the Lessor upon such person’s
request from time to time, statements of account of all sums due from
us to you at the date of such request in respect of the Aircraft and/or
any aircraft operated by us or otherwise howsoever
arising.

The authority contained herein shall be revoked
only upon receipt by you of written revocation signed by both the
Lessor and ourselves requesting such revocation.

Signed
for and on behalf of

[Lessee/Permitted
Sub-Lessee]

	
		
	

By
its:    

50

Table of Contents
Annex I

Additional Rental
Adjustment

***

51

Table of Contents
Annex J

Deregistration
Power of Attorney

IRREVOCABLE POWER OF ATTORNEY

Sterling Airlines A/S, a company organised and
existing under the laws of Denmark whose principal office is at
Copenhagen Airport South, DK-2791 Dragoer, Denmark, (the
‘‘Lessee’’) hereby agrees as
follows:

WHEREAS:

		
	A. 	The
Lessee and Maersk Aircraft A/S (the
‘‘Lessor’’), a company registered in
Denmark, are parties to an aircraft lease agreement dated
         September  2005 between the Lessor as lessor and
the Lessee as lessee, as amended from time to time (the
‘‘Lease’’) pursuant to which the
Lessor has agreed to lease to the Lessee, on the terms and subject to
the conditions set out in the Lease, one (1) Boeing B737-700, having
manufacturer's serial number 28010 and Danish registration
marks OY-MRG (the
‘‘Aircraft’’).

		
	B. 	It
is a condition of the Lease that the Lessor receives from the Lessee a
duly executed irrevocable and unconditional power of attorney in the
form of this Power of Attorney.

NOW
THEREFORE, the Lessee grants to the Lessor this irrevocable
and unconditional power of
attorney.

		
	1. 	Unless the context
otherwise requires (or unless otherwise defined herein), words and
expressions defined in the Lease shall have the same meanings when used
in this Power of Attorney.

		
	2. 	The
Lessee hereby confers an irrevocable and unconditional power of
attorney in favour of the Lessor (with the right of substitution and
re-substitution, and with the right to revoke any substitution or
re-substitution granted):

			
		(a) 	to
represent the Lessee wheresoever and whatsoever in all matters and
affairs in connection with the export, deregistration or
re-registration of the
Aircraft;

			
		(b) 	to remove or export
the Aircraft from Denmark and to apply for and obtain permits, licences
or approvals with respect to any of the above matters on the
Lessee’s behalf and in its name or otherwise so that the Lessor
is empowered to do and perform all things which the Lessee is or would
hereafter be entitled and empowered to do and perform, without any
exception, in relation to those matters, all for the account of the
Lessee;

			
		(c) 	to release, terminate
and void on the Lessee’s behalf and in its name or otherwise any
and all of the interests of the Lessee in the
Aircraft;

			
		(d) 	to consent to the
transfer of the registration of the Aircraft and all other engines,
accessories or items in use at the time of such transfer thereon or
therein or otherwise held or used in substitution or replacement
therefor in whatsoever manner on the Lessee’s behalf and in its
name or otherwise;

			
		(e) 	to enable the
Lessor to enforce or exercise any of its rights under the Lease;
and

			
		(f) 	to sign, seal (if
appropriate), deliver and/or execute on the Lessee’s behalf and
in its name or otherwise any and all documents, agreements,
applications, consents or other instruments of whatsoever nature as the
Lessor considers in its absolute discretion necessary or desirable in
connection with any or all of the matters referred to in (a), (b), (c),
(d) or (e) above.

		
	3. 	The Lessor is
authorised to delegate to such person or persons as they may choose the
exercise of any or all of the powers conferred on the Lessor hereunder
AND to appoint one or more substitute or substitutes as attorney or
attorneys under them or any of them for all or any of the purposes
aforesaid and to revoke any such appointment from time to time and to
substitute or appoint any other or others in the place of such attorney
or attorneys as the Lessor shall from time to time think
fit.

52

Table of Contents
		
	4. 	The powers
as set out in this Power of Attorney shall become effective from the
date hereof.

		
	5. 	This Power of Attorney
shall be governed by and construed in accordance with the laws of
Denmark and cannot be revoked or cancelled by the signatory
thereof.

IN WITNESS whereof the Lessee has executed
this power of attorney.

Sterling Airlines
A/S

				
	 			 
	by			by
	

In
witness of the signatures being genuine, the date being true and
correct and the signatories being of
age:

				
	Signature:			Signature:
	Name
in print:			Name in
print:
	Occupation:			Occupation:
	Address:			Address:
	

53

Table of Contents
Annex K

Calculation of
Rent Control

***

54exv10w1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

          This EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of August 15, 2006
between Electric City Corp., a Delaware corporation (the “Company”), and Jeffrey R. Mistarz
(“Executive”).

W I T N E S S E T H:

          WHEREAS, Executive has been serving the Company as its executive vice president and chief
financial officer and the Company desires to contain to retain the services of Executive in such
capacities and Executive desires to continue to be employed by the Company, on and subject to the
terms and conditions of this Agreement;

          NOW, THEREFORE, the Company and Executive agree as follows:

          1. Employment and Duties. The Company agrees to employ the Executive as Executive
Vice President and Chief Financial Officer of the Company and the Executive agrees to be employed
by the Company, on and subject to the terms of this Agreement. The Executive shall report to and
be subject to the authority and direction of the Chief Executive Officer and the Board of Directors
of the Company and shall have such other responsibilities as may from time to time be reasonably
prescribed by the Chief Executive Officer or the Board of Directors of the Company.

          The Executive accepts such employment agrees to concentrate all of his professional time and
efforts to the performance of the services described therein, including the performance of such
other services and responsibilities as the Chief Executive Officer or the Board of Directors of the
Company may from time to time stipulate and which shall not be inconsistent with the position of
Executive Vice President and Chief Financial Officer. Without limiting the generality of the
foregoing, the Executive ordinarily shall devote not less than five (5) days per week (except for
vacations and regular business holidays observed by the Company) on a full-time basis, during
normal business hours Monday through Friday. The Executive further agrees that when the
performance of his duties reasonably requires, he shall be present on the Company’s premises or
engaged in service to or on behalf of the Company at such times except during vacations, regular
business holidays or weekends.

          Notwithstanding the foregoing, the Company agrees that the Executive shall have the right to
participate in outside activities, including but not limited to serving on boards of directors for
civic, charitable or business organizations, in a paid or unpaid capacity, so long as such
activities are not in direct conflict with the Executive’s obligations as outlined herein. Further,
the Executive shall have reasonable, limited use of the Company’s resources and reasonable time
during the Company’s business hours to pursue such activities so long as such activities do not
unreasonably interfere with his obligations as President of the Company. Upon request by the
Company, the Executive agrees to furnish to the Company a list of organizations in which he is
involved, including a description of his involvement in such organizations and the amount of any
remuneration received or expected to be received from such involvement.

 

 

          2. Term. The term of Executive’s employment under this Agreement (the “Employment
Period”) shall commence on the date hereof (the “Commencement Date”), and expire on the
day preceding the second anniversary of the Commencement Date unless terminated earlier according
to the terms of this Agreement (the date of termination being referred to herein as the
“Expiration Date”). Executive’s and the Company’s rights and obligations under Sections 9,
10, 11 and 15(g) shall survive the expiration of the term of this Agreement. At the end of the
Employment Period, the continuation of Executive’s employment with the Company shall be at the will
of the Company and the Executive on terms and conditions agreed to by the Company and Executive and
there shall be no obligation on the part of the Company or the Executive to continue such
employment.

          3. Compensation. During the term of this Agreement, Executive shall be paid a gross
salary (the “Salary”) at the annual rate of $210,000 as compensation for all services to
the Company. Such Salary shall be payable in 24 equal installments in accordance with the
Company’s regular payroll practices for salaried employees. The Company shall review Executive’s
compensation on an annual basis and give consideration to whether any increase is warranted, in the
Company’s sole discretion. Additionally, the Company shall reimburse Executive for all reasonable
expenses incurred by him in the course of performing his duties under this Agreement, consistent
with the Company’s policies in effect from time to time with respect to reimbursement of business
expenses, and subject to Executive’s submission of appropriate expense reimbursement requests and
supporting documentation.

          The Executive shall also be entitled to twenty (20) paid vacation days per year during the
Employment Period, which will accrue ratably over each twelve (12) month period, beginning on the
first day of the Employment Period; provided that he may take his vacation days for each
contract year at any time during such year. Up to five (5) vacation days may be accumulated and
carried over to the next contract year.

          4. Bonus. Executive will be eligible to participate in an annual bonus plan during
the term of this Agreement with goals (the “Annual Goals”) established and approved by the
Compensation Committee of the Board of Directors of the Company and subject to the approval of the
Board of Directors of the Company. At the conclusion of the Plan Year, the Compensation Committee
of the Board of Directors of the Company shall determine the level of success achieved by Executive
against the Annual Goals and determine the amount of the annual bonus plan payment to the
Executive. If Executive’s employment is terminated for reasons other than Due Cause or his
voluntary resignation, he will be entitled to receive any bonus earned up to the date of
termination as reasonably determined by the Board of Directors of the Company. All payments
related to the annual bonus plan are subject to the prior approval by the Board of Directors of the
Company.

          5. Stock Options. The Executive is hereby granted stock options (the “Stock
Options”) to purchase 300,000 shares of ELC’s common stock at a price (the “Exercise Price”)
equal to i) the closing price of the common stock on the first day of the Employment Period, or ii)
$1.00, which ever is greater. Such Stock Options shall vest in accordance with the following
schedule:

- 2 -

 

	 	•	 	Upon execution of this Agreement and the start of the Employment Period, Executive shall
become immediately vested in Stock Options to purchase 100,000 shares of the Company’s
common stock at the Exercise Price; and
	 
	 	•	 	On the first anniversary of the first day of the Employment Period, so long as Executive
is employed by the Company as its President on such date, Executive shall become
immediately vested in Stock Options to purchase 100,000 shares of the Company’s common
stock at the Exercise Price; and
	 
	 	•	 	On the second anniversary of the first day of the Employment Period, so long as
Executive is employed by the Company as its President on such date, Executive shall become
immediately vested in Stock Options to purchase 100,000 shares of the Company’s common
stock at the Exercise Price.

          For all purposes of this Section 5, a “Change in Control” shall be deemed to have occurred
when (i) ELC is merged or consolidated with another entity which is not then controlled by ELC and,
as a result, such merger or consolidation results in at least fifty-one percent (51%) or greater of
ELC’s common stock being controlled or owned by another entity, or (ii) a majority of the ELC’s
assets are sold or otherwise transferred to another entity that is not then controlled by or
affiliated with ELC. Upon the occurrence of a Change in Control, the Stock Options granted
pursuant to this Section 5 shall be automatically and immediately vested and become exercisable by
Executive, subject to the terms of Section 8 of this Agreement.

          Unless otherwise provided herein, the terms of the Stock Options granted pursuant to this
Section 5 shall be governed in accordance with the provisions of ELC’s 2001 Employee Stock
Incentive Plan (the “Plan”). The Stock Options issued pursuant to this agreement shall be
incentive stock options to the extent permitted by law and the terms of the Plan, and the balance
shall be non-qualified options. If Executive’ employment with the Company is terminated, as
provided in Section 8, such Stock Options (whether or not vested) shall survive or terminate as
provided under Section 8.

          6. Registration Rights. Executive shall have piggy-back registration rights for all
shares of ELC’s common stock obtained through the exercise of any Stock Options granted pursuant to
Section 5 for any registration statement filed by ELC with the Securities and Exchange Commission,
except that Executive agrees to waive his registration rights for any registration undertaken at
the request of, or registration that includes, the holders of shares of common stock having a right
to require that such shares receive priority treatment in such registration to the extent that such
waiver is requested by such holders. In addition, Executive agrees that his registration rights
shall be subject to underwriter cutbacks as may be requested by an underwriter with respect to an
underwritten registration of ELC’s common stock.

          7. Benefits. During the term of this Agreement, Executive shall be entitled to
participate in and receive all benefits generally provided to its senior executives by ELC from
time to time.

          8. Disability; Death; Resignation; Termination for Due Cause.

- 3 -

 

          (a) Termination for Due Cause. The Employment Period may be terminated by the Company
for “Due Cause”, meaning any of the following:

	(i)	 	a material breach by Executive of his covenants under this Agreement if such material breach
is not remedied within fifteen (15) calendar days following written notice thereof from the
Company or any Director of the Company, or, if the breach cannot be remedied within fifteen
(15) days, such longer time (not to exceed forty-five (45) days) as may be reasonably
necessary for Executive to remedy such breach if Executive commences and diligently pursues
efforts to remedy such breach;
	 
	(ii)	 	commission by Executive of a felony, or of theft or embezzlement of property of the Company;
	 
	(iii)	 	actions by Executive (other than actions taken with the approval of the Board) which result
in a material injury to the businesses, properties or reputation of the Company or any of its
subsidiaries;
	 
	(iv)	 	refusal to perform or substantial neglect of the duties assigned to Executive pursuant to
Section 1 of this Agreement if such refusal or neglect is not remedied within fifteen (15)
calendar days following written notice thereof from the Company or any Director of the
Company; or
	 
	(v)	 	any material violation of any statutory or common law duty of loyalty to the Company.

All compensation to Executive under this Agreement shall immediately terminate upon the effective
date of any termination of the Employment Period for Due Cause hereunder (other than any earned but
unpaid salary, bonus and vacation in accordance with Sections 3 and 4, respectively, herein for the
period ending on the date of termination) and all vested and unvested “Stock Options” (as defined
in Section 5) as of such date shall immediately expire, terminate and be of no further force or
effect; provided, however, that if the Employment Period is terminated for a reason stated
in clause (ii) or clause (iii) (or both) and no other reason is given, and it shall be subsequently
determined by a final decision of a court or arbitrator having jurisdiction that Executive did not
commit the alleged acts in question, or, in the case of clause (iii) that the acts did not result
in a material injury to the businesses, properties or reputation of the Company or any of its
subsidiaries, then such vested and unvested Stock Options shall be restored to Executive and he
shall be treated as having been terminated pursuant to Section 8(f) for the purposes of his rights
with respect to such Stock Options, except that the one year period shall commence on the date of
such final determination of such court or arbitrator, which shall be deemed to be the ‘termination
date’ for purposes of Section 8(f). Any salary, bonus and accrued vacation shall be payable as
follows: salary and accrued vacation shall be paid at the next regularly scheduled payroll date,
and any bonus shall be payable in accordance with the applicable bonus plan.

          (b) Termination Due to Death. The Employment Period shall automatically terminate
upon the death of Executive and all compensation to Executive shall immediately cease, other than
any earned but unpaid salary, bonus and vacation in accordance with Sections 3 and 4, respectively,
herein for the period ending on the date of termination. All unvested Stock Options

- 4 -

 

as of such date of death shall immediately vest. Stock Options which are vested prior to the
date of death or on the date of death pursuant to the preceding sentence may be exercised by his
estate or executor within one (1) year following the date of death. Any Stock Options which are
not exercised within such period of one (1) year thereafter shall thereupon expire, terminate and
be of no further force or effect. Any salary, bonus and accrued vacation shall be payable as
follows: salary and accrued vacation shall be paid at the next regularly scheduled payroll date,
and any bonus shall be payable in accordance with the applicable bonus plan.

          (c) Termination Due to Permanent Total Disability. In the event that Executive becomes
“Permanently Disabled” (as defined below), the Company, at its option, shall have the right to
terminate the Employment Period by written notice to Executive given in the manner required by
Section 15(d) hereof. For purposes hereof, “Permanently Disabled” shall mean physical or
mental inability of Executive to perform substantially all of the services required pursuant to
this Agreement, after reasonable accommodation on the part of the Company, for a continuous period
of one-hundred eighty (180) days or for a period aggregating at least one-hundred eighty (180) days
in any consecutive twelve (12) month period. In the event that Executive disputes the Company’s
determination that he is Permanently Disabled, the determination shall be made by a qualified
physician selected jointly by the Company and Executive. In the event of termination of the
Employment Period pursuant to this Section 8(c), all compensation to Executive shall immediately
cease, other than any earned but unpaid salary, bonus and vacation in accordance with Sections 3
and 4, respectively, herein for the period ending on the date of termination, and any vested Stock
Options as of the date of termination shall be exercisable for up to 90 days following such
termination. Any Stock Options which are vested on the date of termination may be exercised by
Executive within one hundred eighty (180) days following the date of termination. Any Stock
Options which are vested on the date of termination and are not exercised within such period of one
hundred eighty (180) and are not exercised by Executive within one hundred eighty (180) days
following the termination date shall thereupon expire, terminate and be of no further force or
effect. All unvested Stock Options as of such date of termination shall immediately terminate.
Any salary, bonus and accrued vacation shall be payable as follows: salary and accrued vacation
shall be paid at the next regularly scheduled payroll date, and any bonus shall be payable in
accordance with the applicable bonus plan.

          (d) Termination by Executive. Executive may terminate the Employment Period and his
employment hereunder (i) in the event the Company has breached a material term or condition of this
Agreement which is not cured or remedied within fifteen (15) days following Executive’s giving
written notice of such breach to the Board of Directors of the Company, or (ii) at Executive’s
convenience pursuant to Section 8(e) below. In the event that Executive terminates the Employment
Period due to an uncured breach by the Company, such action shall be deemed to be a termination of
the Employment Period by the Company without Due Cause pursuant to Section 8(f) hereof. Any
salary, bonus and accrued vacation payable with respect to such termination shall be in accordance
with Sections 3 and 4 hereof.

          (e) Executive’s Termination For Convenience. In the event that the Employment Period
is terminated by Executive at his convenience, then Executive will be due any earned but unpaid
salary, bonus and vacation in accordance with Sections 3 and 4, respectively, herein, and

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any vested Stock Options as of the date of termination shall be exercisable for up to ninety
(90) days following such termination. Any Stock Options which are vested on the date of
termination and are not exercised by Executive within ninety (90) days following the termination
date shall thereupon expire, terminate and be of no further force or effect. Any unvested Stock
Options as of the date of termination shall immediately terminate. Any salary, bonus and accrued
vacation payable under this Section 8(e) shall be payable as follows: salary and accrued vacation
shall be paid at the next regularly scheduled payroll date, and any bonus shall be payable, if at
all, to the extent provided in, and in accordance with, the applicable bonus plan.

          (f) Termination Other Than Due Cause, Death, Disability or Resignation. In the event
that the Employment Period is terminated for reasons other than Due Cause, death, becoming
Permanently Disabled, or Executive’s resignation under Section 8(d) or 8(e), then all Stock Options
then held by Executive and scheduled to vest within one (1) year of the date of such termination
shall vest immediately and be exercisable at any time within one (1) year after the date of such
termination. Any Stock Options which are not exercised within one (1) year following such
termination date shall thereupon expire, terminate and be of no further force or effect. Upon any
termination under this Section 8(f), the Company shall pay as severance compensation to Executive
(i) six (6) months’ salary compensation at his then annual salary compensation rate, plus (ii) any
bonus earned as of the termination date, and (iii) any accrued vacation. Such severance
compensation shall be paid to Executive as follows: (x) the six (6) months’ salary compensation
shall be payable in installments in accordance with the Company’s regular payroll; (y) any bonus
shall be payable in accordance with the applicable terms governing such bonus; and (z) accrued
vacation shall be paid on termination.

          (g) Surrender of Properties. Upon any termination of Executive’s employment with the
Company, regardless of the cause therefore, Executive shall be deemed to have resigned from the
Company’s Board of Managers and as an officer of the Company, if serving as such at that time, and
shall promptly deliver to the Company all property provided to him by the Company for use in
relation to his employment and any and all sales materials, lists of customers and prospective
customers, price lists, files, patent applications, records, models or other materials and
information of or pertaining to the Company or its customers or prospective customers or the
products, businesses and operations of the Company.

          9. Non-Competition Covenant.

          (a) Executive’s Agreements. Executive acknowledges and agrees that Executive
possesses skills and experience qualifying him for employment in other fields, and that the
restrictions and limitations imposed on Executive below will not unduly impair his ability to earn
a living if his employment with the Company is terminated. Further, Executive hereby acknowledges
and agrees that the Company’s and its subsidiaries’ products are sold throughout the United States.
Accordingly, Executive agrees that the geographic limitations and restrictions contained in the
non-competition covenant set forth below are reasonable and necessary to protect the market share
and business interests of the Company and its subsidiaries.

          (b) Non-Compete Covenant. Executive agrees that during the two (2) year period
commencing on the date of this Agreement, Executive shall not, directly or indirectly, engage in,

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own, be employed by, become involved or affiliated with, render services to or in any manner
provide services to any business or enterprise which is competitive with the business of the
Company and its subsidiaries. Nor shall Executive, during such period, interfere with, or attempt
to interfere with the relationship between the Company or any of its subsidiaries and any of their
respective customers, suppliers, clients, employees or consultants, whether by solicitation or
otherwise, whether alone or as a partner, officer, director, shareholder, employee, consultant or
independent contractor of any other entity. Notwithstanding the foregoing, solely as a passive
investor, Executive may own or invest in interests in a company or entity which competes with the
Company or any of its subsidiaries, if such ownership or investment is solely in securities which
are traded on any national or international securities exchange and does not at any time equal or
exceed five percent (5%) or more of any class of outstanding securities of such company or entity.

          10. Confidentiality Covenant.

          (a) Confidential Information. Executive recognizes and acknowledges that, by virtue
of and in the course of his employment with the Company, Executive shall come into contact with, be
exposed to, learn about, discover, develop, generate or contribute to trade secrets, proprietary
information or other Confidential Information. For the purposes of this Agreement, the term
“Confidential Information” means all information or data at any time in the possession of
or accessible to Executive relating to the business and affairs of the Company or of any subsidiary
of the Company (a “Company Affiliate”) and not generally known outside of the Company or
the Company Affiliates, whether or not the Company or a Company Affiliate invokes special measures
to protect such information or data, and shall include, without limitation, the Company’s and the
Company Affiliates’ data, designs, compilations of information, apparatus, computer programs,
identity of suppliers, identity of customers, customer requirements, cost or price data, research
data, business plans, marketing or sales plans and information, financial data, salary and wage
information, policies and procedures, manufacturing and sales know-how and any other information
that is proprietary to or a trade secret of the Company or any Company Affiliate, whether or not
such information is considered a trade secret within the meaning of applicable law. All
Confidential Information, in whatever form it may exist, whether in Executive’s memory or in some
physical or electronic or computerized form, is and shall be the sole and exclusive property of the
Company and the Company Affiliates. The rights and protections granted herein with respect to
Confidential Information are in addition to the rights, remedies and protections afforded to the
Company under any applicable law, statute or regulation.

          (b) Agreement Not To Disseminate Confidential Information. Executive agrees that he
will not, at any time or in any manner, either directly or indirectly, publish, communicate or
otherwise reveal to any person or entity, or use for any purpose whatsoever, except as may be
necessary in the course of performing his obligations to the Company, or as may be required by
applicable law, statute or regulation, any Confidential Information. Executive further agrees to
notify the Company before disclosing any Confidential Information under compulsion of law and to
cooperate with the Company in deciding the substance and manner of such disclosure. Executive
hereby specifically agrees that all Confidential Information is valuable, material and

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significantly affects the effective and successful conduct of the Company’s and the Company
Affiliates’ businesses and related good will.

          (c) Public Information. Notwithstanding the foregoing, the confidentiality
obligations set forth above shall not apply to any information that now is or hereafter becomes
generally known to the public (other than as a result of a breach of this Agreement or a similar
agreement under which the Company or a Company Affiliate has rights).

          (d) Protection of Confidential Information. Executive will take all necessary steps
and precautions to protect any Confidential Information. Upon termination of Executive’s
employment with the Company or upon the Company’s written request, Executive shall promptly turn
over to the Company any and all correspondence, notes, agreements, memoranda, computer disks and
tapes, documents and other media and other property of the Company in Executive’s control
containing or reflecting Confidential, Information, keeping no copies or extracts.

          11. Remedies. Executive agrees that money damages may not constitute an adequate
remedy for the violation by Executive of Section 9 or Section 10, and any such violation by
Executive is likely to cause irreparable damage to the Company and that such damages would be
difficult to determine. Accordingly, in the event of any such violation or any threatened
violation of Section 9 or Section 10, in addition to all other legal and equitable remedies
available to the Company, the Company shall be entitled to injunctive relief, both temporary and
permanent, without bond, to enforce the provisions of such Sections. The non-prevailing party in
any final, unappealable decision regarding enforcement of Section 9 or Section 10 shall be
responsible for and indemnify the prevailing party for all reasonable legal fees, court costs and
related expenses incurred by such prevailing party in seeking enforcement.

          12. Inventions and Discoveries. All discoveries, inventions, processes, methods and
improvements, conceived, developed, or otherwise made by Executive, alone or with others, at any
time while he is employed by the Company or any Company Affiliate, and which

     (i) in any way relates to the Company’s present or proposed business or products, or

     (ii) in any way relates to the Company’s actual or demonstrably anticipated research or
development, or

     (iii) results from work performed by Executive for the Company,

whether or not patentable or subject to copyright protection, and whether or not reduced to
tangible form or practice (“Developments”), shall be the sole property of the Company.
Executive hereby assigns to the Company all proprietary right, title and interest of Executive
throughout the world in and to all Developments. Executive hereby agrees that the Developments
constitute works made for hire under the patent and copyright laws of the United States of America.

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          13. Court Authorized to Modify Covenants. If a court or other body of authority and
competent jurisdiction determines that the covenant contained in Section 9 of this Agreement are
unenforceable, in whole or in part, due to the duration or geographic scope of the restrictions or
limitations imposed therein or for any other reason, then such court or other body of authority is
hereby authorized and directed by the Company and the Executive to make such modifications to
Section 9 as are necessary to render said covenants enforceable to the maximum extent permitted
under applicable law.

          14. Survival of Covenants. The covenants set forth in Sections 9 and 10 herein shall
survive the termination of the Employment Period or termination of this Agreement for a period of
two (2) years.

          15. Miscellaneous Provisions.

          (a) Governing Law. This Agreement shall be governed by the internal laws (as opposed
to conflicts of laws) and decisions of the State of Illinois.

          (b) Severability. Subject to the provisions of Section 13 above, if any provision of
this Agreement shall be held to be invalid by reason of the operation of any applicable law, or by
reason of the interpretation placed thereon by any court or other governmental body, (i) this
Agreement shall be construed as not containing such provision and a substitute provision shall be
inserted therefore by such court or other governmental body which effectuates to the maximum extent
permitted by law the intent of the parties hereto, (ii) such provision and the replacement thereof
shall not affect the validity of any other provision hereof, and (iii) any and all other provisions
hereof which otherwise are lawful and valid shall remain in full force and effect.

          (c) No Waiver. The failure of the Company to assert any of its rights under this
Agreement or the delay or partial enforcement of any of its rights hereunder shall not operate or
be construed as a waiver of any breach of this Agreement, except as such waiver may be expressly
set forth in writing and signed by the Company. The waiver by the Company of any breach of any
provision of this Agreement shall not be construed as a waiver of any subsequent breach, whether of
the same or of a different character.

          (d) Notices. All notices, demands and other communications which may or are required
to be given hereunder or with respect hereto shall be in writing, shall be given either by personal
delivery or by recognized overnight delivery service, and shall be deemed to have been given or
made when personally delivered, addressed as follows:

	 	 	 
	If to the Company to:

	 	c/o Electric City Corp.

1280 Landmeier Road

Elk Grove Village, Illinois 60007

Attn: Chief Executive Officer

Phone: (847) 437-1666

Fax: (847) 437-4969

or to such other address as the Company may from time to time designate to the Executive in
accordance with this section.

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	If to the Executive to:

	 	Mr. Jeffrey R. Mistarz
	 

	 	 

	 

	 	 

	 

	 	Phone: (____) ____-_____
	 

	 	Fax: (____) ____-_____

No notice, request, demand, instruction, or other document to be given hereunder to any party shall
be effective for any purpose unless personally delivered, or delivered by commercial overnight
delivery service, or sent by certified or registered mail, return receipt requested, to the
appropriate address, or transmitted by telecopier to the fax number provided herein. Notices that
are mailed shall be deemed to have been given on the third day following deposit of same in any
United States Post Office mailbox in the state to which the notice is addressed or on the fourth
day following deposit in any such post office box other than in the state to which the notice is
addressed, postage prepaid, addressed as set forth herein. Notices sent via commercial overnight
delivery service shall be deemed to have been given the next business day after deposit with the
commercial delivery service. Notices that are transmitted via telecopier shall be deemed to have
been given the business day transmitted, if transmitted before 3:00 p.m. recipient’s time, and on
the next business day, if transmitted after 3:00 p.m. recipient’s time, as evidenced by a
telecopier confirmation of successful transmission. The address and telecopier numbers for the
purposes of this Section may be changed by giving written notice of such change in the manner
herein provided for giving notice.

          (e) Modification. This Agreement shall not be amended, modified or supplemented
except in writing and signed by the Company and Executive.

          (f) Headings. The paragraph headings and captions used herein are intended solely for
convenience of reference and shall not control or effect the interpretation, meaning or
construction of any provision of this Agreement.

          (g) Arbitration. The parties hereto agree that in the event of any disagreements or
controversies arising from this Agreement or any other agreements between the Company and Executive
relating to the breach, termination or validity thereof or the past, present and future dealings
between the parties, such disagreements and controversies shall be subject to binding arbitration
in Cook County, Illinois, as arbitrated in accordance with the then current Commercial Arbitration
Rules of the American Arbitration Association (the “AAA”) before one neutral arbitrator. Such
arbitrator shall be selected by mutual agreement of the parties within thirty (30) days of written
notice of said disagreement or controversy. If the parties cannot mutually agree to an arbitrator
within thirty (30) days, then the AAA shall designate the arbitrator. Either party may apply to the
arbitrator seeking injunctive relief until the arbitration award is rendered or the controversy is
otherwise resolved. Without waiving any remedy under this Agreement, either party may also seek
from any court having jurisdiction any interim or provisional relief that is necessary to protect
the rights or property of that party, pending the establishment of the arbitral tribunal (or
pending the arbitral tribunal’s determination of the merits of the controversy). In the event of
any such disagreement or controversy, neither party shall directly or indirectly reveal, report,
publish or disclose any information relating to such disagreement or controversy to any person,
firm or corporation not expressly authorized by the

- 10 -

 

other party to receive such information or use such information or assist any other person in
doing so, except to comply with actual legal obligations of such party or unless such disclosure is
directly related to an arbitration proceeding as provided herein, including, but not limited to,
the prosecution or defense of any claim in such arbitration. The costs and expenses of the
arbitration (excluding attorneys’ fees) shall be paid by the non-prevailing party or as determined
by the arbitrator. This paragraph shall survive the termination of this Agreement.

[Balance of page intentionally left blank; signature page follows.]

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          IN WITNESS WHEREOF, the parties have caused this Employment Agreement to be executed as of the
date first above written.

	 	 	 	 	 
	 	ELECTRIC CITY CORP.

 	 
	 	By:  	/s/ David Asplund
 	 
	 	Name:  	David Asplund 	 
	 	Title:  	Chief Executive Officer 	 
	 
	 	 	 
	 	/s/ Jeffrey Mistarz
 	 
	 	Jeffrey R. Mistarz 	 
	 	 	 
	 

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