Lease Assumption Agreement

Exhibit 10.8

LEASE ASSUMPTION AND OPTION AGREEMENT

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

RECITALS:

WHEREAS, DHL operates as an express delivery business; and

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

AGREEMENT:

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

2. Assumption of Existing Lease Obligations; Indemnification .

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

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

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

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

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

 

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

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

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

4. Lease Option .

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

 

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

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

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

5. Effect on ACMI Agreement .

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

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

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

 

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

 

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12. Jurisdiction; Waiver of Jury Trial .

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

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

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

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

 

(a)

If to DHL, to:

DHL Network Operations (USA), Inc.

1200 South Pine Island Road

Plantation, Florida 33324

Attention: Jon Olin – EVP, General Counsel & Secretary

Email: Jon.Olin@dhl.com

Facsimile: (954) 888-7159

 

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(b)

If to ABX, to:

ABX Air, Inc.

145 Hunter Drive

Wilmington, Ohio 45177

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

Email: Joe.Payne@atsginc.com

Facsimile: (937) 382-2452

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

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

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

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

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

 

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

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

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

[S IGNATURE P AGE F OLLOWS ]

 

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

 

 

 

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EXHIBIT A

TO

LEASE ASSUMPTION AND OPTION AGREEMENT

 

(Attached Description of Existing Leases)

 

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

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

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

Aircraft N789AX

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

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

 

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

 

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

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

Aircraft N790AX

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

 

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EXHIBIT B

TO

LEASE ASSUMPTION AND OPTION AGREEMENT

 

(Following Description of Owned Aircraft)

 

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

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

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

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

EXHIBIT C

TO

LEASE ASSUMPTION AND OPTION AGREEMENT

 

(Conversion Schedule)*

 

 

 

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

EXHIBIT D

TO

LEASE ASSUMPTION AND OPTION AGREEMENT

 

(Attached Form of New Leases)

 

AIRCRAFT LEASE AGREEMENT

(MSN                      )

Dated as of                      ,          , 20         

BETWEEN

[ABX A IR , I NC .] ¹ ,

AS L ESSOR

AND

[DHL N ETWORK O PERATIONS (USA), I NC .] ¹ ,

AS L ESSEE

R ELATING T O

O NE B OEING M ODEL 767-200SF A IRCRAFT

S ERIAL N UMBER                     

U.S. R EGISTRATION N O . N                          

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

 

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

AIRCRAFT LEASE AGREEMENT

(MSN                      )

THIS AIRCRAFT LEASE AGREEMENT (MSN                      ) (this “Agreement”), dated as of the              day of                          , 20__, is between ABX A IR , I NC ., a Delaware corporation (“ Lessor ”), and DHL N ETWORK O PERATIONS (USA), I NC ., an Ohio corporation (“ Lessee ”).

RECITALS

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

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

AGREEMENT

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

 

1.58. “ Rent ” shall mean Basic Rent.

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

2. Conditions Precedent .

2.1. Lessor’s Conditions Precedent .

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

2.2. Lessee’s Conditions Precedent .

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

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

 

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

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

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

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

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

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

 

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

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

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

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

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

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

3.6. Condition of the Aircraft; Modifications .

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

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

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

 

3.7. Inspection .

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

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

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

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

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

 

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

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

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

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

4. Guaranty; Payments; Method of Payment .

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

 

4.2. Basic Rent; Basic Rent Credit .

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

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

(2) the Return; or

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

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

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

4.3. Basic Rent Date .

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

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

4.4. Engine Maintenance Program .

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

 

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

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

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

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

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

5. Registration; Nameplates; Filings .

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

 

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

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

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

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

6.1. Possession of Aircraft; Wet-Lease .

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

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

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

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

 

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

6.2. Possession of Engines .

(a) During the Term, Lessee shall be entitled to the possession and use of each of the Engines. Lessee shall not, without the prior written consent of Lessor, transfer possession of any of the Engines to any person or entity; provided, however, that, so long as no Eve